10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-K

[ x ] Annual Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the fiscal year ended 31 December 2002

OR

[   ] Transition Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Commission file number 1-3677

Alcan Inc.

Incorporated in:	I.R.S. Employer Identification No.:
Canada	Not applicable
1188 Sherbrooke Street West,
Montreal, Quebec, Canada H3A 3G2
Telephone:  (514) 848-8000
Securities registered pursuant to Section 12(b) of the Act:
Title	Name of each exchange on which registered
Common Shares without nominal or par value	New York Stock Exchange
Common Share Purchase Rights	New York Stock Exchange
4 7/8% Notes due 2012	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days:  Yes  x   No __.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ x ]

The aggregate market value of the voting stock
held by non-affiliates:	USD12,054 million, as of 28 June 2002
Common Stock of Registrant outstanding:	321,640,894 Common Shares,
	as of 24 March 2003
Documents incorporated by reference:	Portions of the Annual Report to security holders for the fiscal year ended 31 December 2002 (Parts I, II and IV)
	Portions of the Management Proxy Circular for the Annual Meeting to be held on 24 April 2003 (Parts III and IV)

INDEX TO ALCAN INC.
2002 ANNUAL REPORT ON FORM 10-K

		Page
PART I
Items 1 and 2 Business and Properties		3
	Overview of Operating Segments	3
	History/Recent Developments	4
	Business Groups	7
	Bauxite, Alumina and Specialty Chemicals	7
	Primary Metal	10
	Rolled Products Americas and Asia	15
	Rolled Products Europe	16
	Engineered Products	18
	Packaging	20
	Information by Geographic Areas	22
	Research and Development	22
	Environment, Health and Safety Matters	23
	Properties	23
	Employee Relations	23
	Patents, Licenses and Trademarks	24
	Competition and Government Regulations	24
Item 3  Legal Proceedings		25
	Environmental Matters	25
	Other Matters	27
Item 4  Submission of Matters to a Vote of Security Holders		27
PART II
Item 5  Market for the Registrant's Common Equity and Related Stockholder Matters		28
Item 6  Selected Financial Data		28
Item 7  Management's Discussion and Analysis of Financial Condition and Results of Operations		30
Item 7a Quantitative and Qualitative Disclosures about Market Risk		30
Item 8  Financial Statements and Supplementary Data		31
Item 9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		32
PART III
Item 10 Directors and Executive Officers of the Registrant		32
Item 11 Executive Compensation		34
Item 12 Security Ownership of Certain Beneficial Owners and Management		34
Item 13 Certain Relationships and Related Transactions		35
Item 14 Controls and Procedures		35
PART IV
Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K		35
Signatures		41
Certifications		43
Consent of Independent Accountants		45

 

PART I

In this report, unless the context otherwise requires, the following definitions apply:

"Alcan", "Company" or "Registrant" means Alcan Inc. and, where applicable, one or more Subsidiaries,

"Algroup" means Alusuisse Group Ltd. (now Alcan Holdings Switzerland Ltd., a Subsidiary of Alcan following the Combination),

"Annual Report" means Alcan's Annual Report to shareholders for the year ended 31 December 2002,

"Combination" means the process by which Algroup became a Subsidiary of Alcan on 17 October 2000, through the completion of a share exchange offer by Alcan for the shares of Algroup,

"Dollars" or "$" means U.S. Dollars, unless otherwise specified,

"EVA®" Economic Value Added is the registered trademark of Stern Stewart & Co. and a key measure of financial performance.  EVA represents the difference between the return on capital and the cost of using that capital over the same period,

"Joint Venture" means an association (incorporated or unincorporated) of companies jointly undertaking some commercial enterprise and proportionately consolidated to the extent of Alcan's participation,

"LME" means the London Metal Exchange,

"Management Proxy Circular" means the management proxy circular for Alcan's Annual Meeting of Shareholders to be held on 24 April 2003,

"Related Company" means a company in which Alcan owns, directly or indirectly, 50% or less of the voting stock and in which Alcan has significant influence over management, but does not include a company in a Joint Venture,

"Subsidiary" means a company controlled, directly or indirectly, by Alcan,

"tonne" means a metric tonne of 1,000 kilograms or 2,204.6 pounds, and

"UBC" means a used beverage can.

Unless otherwise expressly indicated, the financial and other information given in this report is presented on a consolidated basis. 

Certain information called for by Items of this Form is incorporated by reference to the Annual Report and to the Management Proxy Circular.  Such information is specifically identified herein, including by the reference "See Annual Report..." or "See Management Proxy Circular...".  With the exception of such information specifically incorporated by reference, the Annual Report and the Management Proxy Circular are not to be deemed filed as part of this Form 10-K Report.  Information incorporated by reference is considered to be part of this report, and information filed later with the SEC will automatically update and supersede this information.

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Special Note Regarding Forward-Looking Statements

Certain statements made or incorporated by reference in this Report are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Terms such as ''believes'', ''expects'', ''may'', ''will'', ''could'', ''should'', ''anticipates'', ''estimates'' and ''plans'' and the negatives of and variations on terms such as these signify forward-looking statements.  Because these forward-looking statements include risks and uncertainties, readers are cautioned that actual results may differ materially from the results expressed in or implied by the statements.

Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things:

• changes in global aluminum supply and demand conditions;
• changes in aluminum ingot prices;
• changes in raw materials costs and availability;
• changes in the relative values of various currencies;
• cyclical demand and pricing within the principal markets for Alcan's products;
• changes in government regulations, particularly those affecting environmental, health or safety compliance;
• fluctuations in the supply of and prices for power in the areas in which Alcan maintains production facilities;
• the effect of integrating acquired businesses and the ability to attain expected benefits;
• potential catastrophic damage, increased insurance and security costs and general uncertainties associated with the increased threat of terrorism or war;
• the effect of international trade disputes on Alcan's ability to import materials, export its products and compete internationally;
• relationships with and financial and operating conditions of customers and suppliers;
• economic, regulatory and political factors within the countries in which Alcan operates or sells products; and
• factors affecting Alcan's operations, such as litigation, labour relations and negotiations and fiscal regimes.

Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements include, but are not necessarily limited to, those discussed under the heading "Risks and Uncertainties" in the Management's Discussion and Analysis section of Alcan's Annual Report, on pages 38 and 39 thereof. The text under such heading is incorporated herein by reference.

Alcan undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

Alcan files annual, quarterly and special reports and other information with the SEC.  Any document so filed can be viewed at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Alcan's SEC filings are also available to the public over the Internet at the SEC's web site at http://www.sec.gov or through Alcan's website at http://www.alcan.com

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ITEMS 1 AND 2 BUSINESS AND PROPERTIES

Alcan is the parent company of an international group involved in many aspects of the aluminum and packaging industries. Through Subsidiaries, Joint Ventures and Related Companies around the world, the activities of Alcan include bauxite mining, alumina refining, production of specialty chemicals, power generation, aluminum smelting, manufacturing, recycling, packaging, as well as related research and development.  Alcan employs approximately 48,000 people.

In the 100 years since it was established, Alcan has developed a unique combination of competitive strengths. Alcan is a multicultural and multilingual market-driven company reflecting the differing corporate and social characteristics of the 38 countries in which it operates. Alcan is one of the most international aluminum and packaging companies and is the foremost global producer and marketer of rolled aluminum products.

1.          OVERVIEW OF OPERATING SEGMENTS

In November 2001, the Company announced the realignment of its operating management structure from four to six Business Groups, each responsible for the value creation of the different business units of which they are comprised. The new operating management structure became effective 1 January 2002.

The six operating segments are Alcan's six Business Groups: 

Bauxite, Alumina and Specialty Chemicals, headquartered in Montreal, Canada comprising Alcan's worldwide activities related to bauxite mining, alumina refining and the production of specialty chemicals, operating seven bauxite mines and deposits in five countries and five alumina plants in three countries;

Primary Metal, also headquartered in Montreal, comprising smelting operations, power generation and production of primary value-added ingot in the form of sheet ingot, extrusion billet, rod and foundry ingot, as well as engineering services and trading operations for alumina and aluminum, operating or having interests in 16 smelters in seven countries;

Rolled Products Americas and Asia, headquartered in Cleveland, U.S.A. encompassing aluminum sheet and light gauge products, operating 16 plants in six countries;

Rolled Products Europe, headquartered in Zurich, Switzerland comprising aluminum sheet, including automotive, can and lithographic sheet, plate and foil stock operating 11 plants in four countries;

Engineered Products, also headquartered in Zurich, producing fabricated aluminum products, including wire and cable, components for the mass transportation, automotive, building, display, electromechanical and other industrial markets, as well as sales and service centres throughout Europe, operating 47 plants in 17 countries; and

Packaging, also headquartered in Zurich, consisting of Alcan's worldwide food flexible, foil, specialty, pharmaceutical and cosmetics packaging businesses, operating 76 plants in 14 countries.

Alcan's corporate head office, located in Montreal, focuses on strategy development, while overseeing governance, policy, legal, compliance, human resources and finance matters.

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Following the Combination and up to 31 December 2001, the four operating segments were:  

Primary Metal, focusing on bauxite, alumina and specialty chemicals operations, the primary aluminum smelting facilities, power generation and the trading operations for alumina and aluminum.

Aluminum Fabrication, Americas and Asia, comprising the fabrication of aluminum sheet and light gauge rolled products as well as rod, cable and wire.

Aluminum Fabrication, Europe, comprising the European fabrication of rolled and engineered products.

Packaging, comprising Alcan's food flexible, foil, specialty, pharmaceutical, tobacco and cosmetics packaging businesses.

See Annual Report, pages 75 to 77, Note 28 to the Consolidated Financial Statements for selected information by operating segment.

Information is included for the current or an earlier period under the new basis consisting of six segments.  Certain prior year amounts have been reclassified to conform with the 2002 presentation.

2.          HISTORY / RECENT DEVELOPMENTS

Alcan is a limited liability Canadian company, incorporated on 3 June 1902, with its headquarters and registered office in Montreal, Canada. It was formed as a subsidiary of the Pittsburgh Reduction Company, one of the founding companies of the aluminum industry, to establish a smelter and hydroelectric power facility in Shawinigan, Quebec. In 1928, the international operations and domestic U.S. operations were separated into two competing companies that became Alcan and Alcoa Inc., respectively. During the Second World War substantial expansion of hydroelectric and smelting capacity took place in Quebec to supply aluminum for the war effort. In the 1950s, Alcan added hydroelectric and smelting capacity in British Columbia. During the postwar period, Alcan expanded internationally and invested in fabricating activities to stimulate demand for its primary metal production.

In 2000, Alcan entered into a combination agreement with Algroup which consisted of an independent exchange offer of Alcan's common shares for all of the outstanding shares of Algroup.  On 17 October 2000, after clearance from competition authorities, the Combination was completed with Alcan acquiring over 99% of the shares of Algroup by virtue of its exchange offer.  Alcan acquired the remaining shares in Algroup in 2001 by virtue of statutory right and caused Algroup to de-list from the Swiss Stock Exchange. 

Today, Alcan is a multinational company engaged in all aspects of the aluminum and packaging industries on an international scale.

In the past two years Alcan reported the following major events related to its business and corporate governance:

Following Jacques Bougie's resignation as Chief Executive Officer on 10 January 2001, the Board of Directors appointed W.R.C. (Bill) Blundell as interim President and Chief Executive Officer.  Effective 12 March 2001, Travis Engen, previously chairman and chief executive officer of ITT Industries, Inc. and a non-executive Director of the Company, was appointed as President and Chief Executive Officer of Alcan.

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On 1 February 2001, Alcan announced that it had completed the $393 million acquisition of the remaining 30% interest in the Gove alumina refinery and related bauxite mine in Australia. On 12 February 2003, the Company announced a definitive feasibility study, a significant step towards a potential expansion of alumina production capacity at Gove. The proposed expansion would increase the capacity of the refinery from 2 million tonnes per year to 3.5 million tonnes per year using proprietary Alcan technology to increase operating efficiency.

On 1 March 2001, Alcan changed its corporate name from Alcan Aluminium Limited to Alcan Inc. to reflect the Company's increasingly diversified product mix and global character.

On 17 April 2001, the Company announced the retirement of Suresh Thadhani, Executive Vice President and Chief Financial Officer. Subsequently, on 28 June 2001, the Company announced the appointment of Geoffery E. Merszei to the position of Executive Vice President and Chief Financial Officer. Prior thereto, Mr. Merszei had been vice president and treasurer of The Dow Chemical Company.

On 27 April 2001, Alcan, in response to the conditions imposed by the European Commission in respect of the Combination, announced the sale of the Martinswerk, Germany, plant to Albermarle Corporation of Richmond, Virginia, U.S.A.  As well, on 30 May 2001, the Palco foil container plant, located in Madrid, Spain, was sold to Aliberico S.A. of Spain and 12 presses for smooth wall containers in Ohle, Germany were sold to Alupak AG of Switzerland. On 18 June 2001, the Company announced the sale of its lithographic sheet production plant, Star Litho, located in the U.K. to Elval Hellenic Aluminium Industry S.A. of Greece.

On 31 May 2001, the Company completed the sale of its bauxite and alumina operations in Jamaica to Glencore AG, a privately held company based in Switzerland. These assets comprise two alumina refineries and related bauxite reserves and mine sites.

In October 2001, in light of increased competitive pressures and market outlook, the Company announced a restructuring program that would result in a series of plant sales, closures and divestments as well as a reduction of approximately 6% of the workforce. As part of this, changes were effected to the rolled products businesses in the U.K. and Italy as well as to the aluminum foil activities in the U.K. and Switzerland.

On 20 November 2001, the Company announced the establishment of the Office of the President  and a realigned operating management structure comprised of six business groups and four corporate functions.  The Office of the President, which is based at the Company's Corporate Head Office in Montreal, includes Travis Engen, President and Chief Executive Officer and Executive Vice Presidents Richard B. Evans and Brian W. Sturgell. It was intended that the new organizational and management structure effective 1 January 2002 will substantially raise Alcan's performance, move the Company closer to its markets and improve its responsiveness.

In February 2002, Alcan announced that it had concluded an agreement with the Société générale de financement du Québec (SGF) to purchase for approximately $165 million a 20% interest in the Aluminerie Alouette consortium, which operates a 243,000 tonne aluminum smelter in Sept-Iles, Quebec, Canada. The transaction was completed on 24 April 2002.

On 21 March 2002, the Board announced the appointment of Mr. L. Yves Fortier as a Director.  He was subsequently elected as a Director at the Annual Meeting of Shareholders on 25 April 2002, and  became Chairman of the Board.  Mr. Fortier is chairman and a senior partner of the law firm Ogilvy Renault in Montreal. Also at the Annual Meeting on 25 April 2002, Mr. Roland Berger was elected as a Director. Mr. Berger is chairman and global managing partner of Munich-based Roland Berger Strategy Consultants.

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On 22 March 2002, the Company received a demand for payment in the amount of $100 million from Powerex Corp. (a subsidiary of BC Hydro) ("Powerex") (see section entitled "Legal Proceedings" on page 25 of this report.)  On 17 January 2003, the Company received a decision following arbitration hearings held in December 2002 on a contractual dispute between Powerex and Alcan. The arbitrator confirmed Powerex's claim for $100 million.  A standstill agreement currently is in effect whereby Alcan and Powerex have agreed that no action will be taken to set aside or enforce the arbitrator's decision pending discussions between the parties.

On 6 June 2002, Alcan announced an agreement in principle to form a joint venture with Qingtongxia Aluminum Company (QTX), for participation in its smelter. The proposed joint venture is an opportunity for Alcan to acquire a 50% ownership position in the 130,000 tonne aluminum smelter located in the Ningxia Autonomous Region, China. In addition, Alcan has an option to secure a 50% interest in the planned and approved 150,000 tonnes expansion of this smelter. 

On 6 September 2002, the Company announced a public offering in the U.S. of $500 million 4 7/8 % global notes, due 15 September 2012. Net proceeds to the Company from the sale of the notes were used to repay existing long-term debt and commercial paper borrowings.

On 17 September 2002, the Company announced that it had completed the $165 million acquisition of Corus Group plc's 20% interest in the Aluminerie Alouette consortium, bringing the Company's participation to 40%. 

On 3 October 2002, the Board announced the appointment of Mr. William R. Loomis as a Director. Mr. Loomis is a limited managing director of Lazard Frères & Co., LLC. 

On 17 October 2002, the Company announced that greenhouse gas emissions from its Quebec facilities would be reduced by an average of 285,000 tonnes from their 1999 levels based on equivalent production capacity. The new target was expected to be reached by the end of 2003, according to an agreement signed with the government of the province of Quebec.

On 20 December 2002, Alcan announced that it had signed a definitive agreement with Norsk Hydro to purchase VAW Packaging (FlexPac). FlexPac includes 14 high-quality flexible packaging plants in eight countries and 5,400 employees. On 24 February 2003, the European Commission gave the Company clearance to complete its previously announced agreement to purchase FlexPac from Norsk Hydro.

On 5 March 2003, the Company announced that it had entered into agreements to acquire Baltek Corporation, the world's leading supplier of balsa-based structural core materials, for approximately $35 million.

On 17 March 2003, Alcan announced that Messrs. L. Denis Desautels and Milton K. Wong would be candidates for election to the Board of Directors at the annual meeting to be held in Montreal on 24 April 2003.  Mr. Desautels is executive director of the University of Ottawa Centre on Governance and was Auditor General of Canada from 1991 to 2001.  Mr. Wong is chairman of HSBC Asset Management (Canada) Limited and Chancellor of Simon Fraser University in British Columbia.

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3.          BUSINESS GROUPS

1.          Bauxite, Alumina and Specialty Chemicals

1.1        Products

1.1.1    Bauxite: Aluminum is one of the most abundant metals in the earth's crust but is never found in its pure form.  Bauxite is the basic aluminum-bearing ore.

1.1.2    Smelter-Grade Alumina: Alumina (aluminum oxide) is produced from bauxite by a chemical process. Depending upon quality, between four and five tonnes of bauxite are required to produce approximately two tonnes of alumina.  The alumina produced is generally used to supply the Company's own smelting requirements.

1.1.3     Specialty Chemicals: Alcan produces a range of specialty aluminas and hydrates for different uses, such as ceramics, refractories, water treatment chemicals, catalysts, coagulants, flame-retardants and smoke suppressants.

1.2       Sales

The Bauxite, Alumina and Specialty Chemicals Business Group, with third-party revenues of $435 million, made up 3% of Alcan's 2002 revenues.  Average realized prices for alumina decreased both in 2002 and 2001 in line with LME prices.  The Company continues to attempt to lower its costs in the face of ongoing pricing pressure.  Production costs improved by 6% in 2002, due to divestment of high-cost operations, lower raw material prices and ongoing cost reduction efforts. A decrease in production volumes and lower alumina prices, only partially offset by improved production costs, contributed to lower earnings in 2002.

In 2002, Alcan used 10.3 million tonnes of bauxite and had revenues of $99 million in third party bauxite sales.  Alcan produced 4.1 million tonnes of smelter-grade alumina, of which some 3.4 million tonnes were transferred to its current smelting operations at market prices. The remainder was sold to third parties. It also produced approximately 200,000 tonnes of chemical-grade alumina, which was sold to third parties in the form of various alumina chemicals. 

1.3       Production / Facilities

1.3.1    Canada: Alcan owns an alumina facility at Jonquière, Quebec.  Bauxite for this operation is obtained from Brazil, Guinea, Ghana and Australia (see below).  Alumina and alumina-based chemicals produced at Jonquière supply, in part, the smelters in Quebec and are also sold in chemical markets in the U.S.A. and Canada.

1.3.2   Australia: As a result of the Combination and subsequent acquisitions (see section titled "History / Recent Developments" above), Alcan acquired the entire 100% interest in the Gove bauxite mine and refinery plant in Northern Australia.  In 2002, the amount of bauxite mined at Gove was 6.1 million tonnes and the refinery produced 1.9 million tonnes of smelter-grade alumina.  Alcan has a 21.4% interest in Queensland Alumina Ltd., which operates an alumina plant at Gladstone (Queensland). Each participant in that plant supplies bauxite for toll conversion. Alcan's bauxite is purchased from Comalco Limited ("Comalco") in Australia under a long-term contract. Alcan's share of production from Gladstone is used to supply the Alcan smelter at Kitimat, British Columbia, with the balance being sold to third parties.  Alcan and Comalco have an agreement providing for the future development of Alcan's Ely bauxite mine in Cape York, Queensland, Australia, with Comalco's adjacent operations.

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1.3.3    Brazil: Alcan purchased approximately 1.2 million tonnes of bauxite in 2002 from a 12.5% owned company, Mineração Rio do Norte S.A. ("MRN"). MRN's Trombetas mine in the Amazon region has an operating capacity of about 16.3 million tonnes per year, following an expansion realized in the course of 2002. Bauxite purchased from MRN is processed at the Jonquière plant (see above) and at the Alumar alumina refinery in São Luis, Brazil, which has an annual capacity of about 1.3 million tonnes; Alcan owns a 10% interest in the Alumar refinery. Alcan also owns alumina facilities (and related bauxite mining facilities) with a capacity of about 135,000 tonnes of alumina per year at Ouro Preto, which supply smelters in Brazil.

1.3.4     Ghana: Alcan purchased about 700,000 tonnes of bauxite in 2002 from Ghana Bauxite Co. Ltd. in which it holds an interest of 80%. The bauxite purchased was used for processing at the Burntisland plant, which closed on November 2002 (see below), the Jonquière plant (see above) and is also sold to third parties.

1.3.5    Guinea: Alcan purchased about 4 million tonnes of bauxite in 2002 under contracts in effect through 2011 from Compagnie des Bauxites de Guinée S.A. ("CBG"). Alcan has a 33% interest in Halco (Mining) Inc.; Halco holds a 51% interest in CBG, the remaining 49% being held by the Republic of Guinea. CBG's mine in the Boké region of Guinea has an operating capacity of about 12.7 million tonnes per year. Bauxite purchased from CBG is processed at the Jonquière plant (see above) and is also sold to third parties.

1.3.6    India: Alcan holds a 35% interest in the proposed Utkal bauxite and alumina project in Orissa, India. The planned project would include a one million tonne integrated alumina plant and bauxite mine, with potential to further expand production capacity.

1.3.7    United Kingdom: Alcan operated an alumina plant in Burntisland, Scotland, which had an annual capacity of approximately 100,000 tonnes of specialty alumina and other chemicals for sale to the chemical market.  This plant was closed on 30 November 2002.

With respect to smelter-grade alumina and specialty alumina, Alcan operates the following production facilities:

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Alumina capacities - As at 31 December 2002
Locations†		% of ownership by Alcan	Annual Capacity (thousands of  tonnes)
Smelter - grade alumina
Australia.......................	Gladstone	21.4	800	*
	(Queensland)
	Gove	100	1,900
	(Northern Territories)
Brazil............................	Ouro Preto	100	135
	(Saramenha, Minas Gerais)
	Alumar	10	130	*
	(São Luís)
Canada.........................	Vaudreuil	100	1,140
	(Jonquière, Quebec)
Total smelter-grade alumina			4,105
Specialty chemical aluminas and hydrates
Brazil............................	Ouro Preto	100	10
	(Saramenha, Minas Gerais)
Canada.........................	Vaudreuil	100	160
	(Jonquière, Quebec)
Total specialty chemical aluminas and hydrates			170
Total			4,275

†    Includes Joint Ventures, proportionately consolidated.
*    This represents Alcan's share of total plant capacity.

1.4       Source Materials

1.4.1    Bauxite: Alcan obtains its bauxite from mining Subsidiaries, Joint Ventures, consortium companies and third-party suppliers.  In 2002, the Company consumed 10.3 million tonnes of bauxite. Alcan has more than sufficient bauxite reserves to meet its needs over the next 30 years and, based on bauxite deposits in numerous locations around the world, does not believe that availability of bauxite will constrain its operations in the foreseeable future.

Bauxite Interests - As at 31 December 2002
Locations		% of Ownership by Alcan	Annual Capacity (thousands of tonnes)
Australia.........................	Gove	100	6,000
	Ely	100	0	*
Brazil..............................	Mineração Rio do Norte S.A.	12.5	2,000	**
	Ouro Preto	100	500
Ghana............................	Ghana Bauxite Co. Ltd.	80	700	**
Guinea............................	Compagnie des Bauxites de Guinée S.A.	16.8	2,100	**
India................................	Utkal	35	0	*
Total			11,300

*      Bauxite deposits not yet in operation.
**    This represents Alcan's share of total plant capacity.

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1.4.2        Chemicals and Other Materials: Certain chemicals and other materials required for the production of alumina, such as caustic soda, fuel oil, fluorspar and petroleum coke, are purchased from third parties.

2.         Primary Metal

2.1       Products / Business Units

The Primary Metal Business Group represents all Alcan primary aluminum facilities, power generation installations and trading operations worldwide.

2.1.1    Power Operations: The smelting of one tonne of aluminum requires between 13.5 and 18.5 megawatt-hours of electric energy to separate the aluminum from the oxygen in alumina. Alcan produces low-cost electricity at its own hydroelectric generating plants in Canada, Brazil and the U.K.

2.1.2     Smelter Operations: Primary aluminum is produced through the electrolytic reduction of alumina. Approximately two tonnes of alumina yield one tonne of metal.  Alcan operates and has interests in 16 smelters in seven countries.  Products include sheet ingot, extrusion billet, wire bar and foundry ingot for conversion into fabricated products for end-use markets in consumer goods, transportation, construction and other industrial applications.

2.1.3    Trading: Alcan Trading AG, a wholly-owned subsidiary of Alcan, trades on behalf of Alcan's aluminum and downstream Subsidiaries. It also engages in limited aluminum and related trading activities for third parties. In 2002, sales volumes for aluminum trading activities for third parties amounted to approximately 398,000 tonnes.  Trading services include four main activities: sales of excess raw materials such as alumina and anodes, purchases of metal and other raw materials to cover requirements that exceed internal supplies, managing risk exposures through LME transactions and managing the supply logistics between smelters and fabricating plants. The Company's third party trading function has a focus on metal transactions.

2.1.4    Engineering: Alcan Alesa Engineering AG ("Alesa") provides engineering services and custom-made engineering solutions on a global basis to Alcan Subsidiaries as well as to third parties. Alesa subsidiaries maintain engineering offices in Switzerland, Canada and Australia. The main areas of activity are:

- Raw Materials Technologies, including carbon and reduction technology, alumina refining, anode production and smelter technology;

- Materials Handling Technologies, including shiploaders and unloaders, silo systems, airlifts and air gravity conveyors, dense phase conveying systems, flyash handling and special applications; and

- Process Automation, including electrolytic cell control systems and general purpose automation.

The Australian office also provides technical services to the Gove alumina refinery on an ongoing basis.

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2.2       Sales

The Primary Metal Business Group, with third-party revenues of $2.4 billion, made up 20% of Alcan's 2002 revenues. Earnings increased compared to 2001, as the Company's additional sales volumes, lower operating costs and benefits from merger synergies and the restructuring program more than offset a 6% reduction in LME prices and the unfavourable effects of foreign currency balance sheet translation.

The Company is the second largest aluminum producer in the Western World.  62% of its primary metal is produced using company-owned power, constituting a major competitive advantage.  With its focus on continuous improvement in technology and cost, Alcan has a favourable low-cost primary metal position with more than 50% of its capacity in the world's lowest cost tier. 

Approximately half of the primary aluminum produced in Alcan's North and South American smelters is sold at market prices to Alcan's fabricating facilities, primarily in the form of sheet ingot, extrusion billet, rod or molten metal.  The remainder is sold to third party customers, primarily in North America and Asia, in the form of value-added ingot, primarily extrusion billet, sheet ingot or foundry ingot and remelt ingot, with North American sales focused on both customized extrusion billet and foundry ingot. In 2002, the Business Group sold 1.188 million tonnes of primary aluminum to third parties.

Although Alcan's fabrication of aluminum products in Europe exceeds its production of primary aluminum, the duty barrier for aluminum from outside the European Union, including Canada, and high logistics costs have made it uneconomical to ship significant tonnages of metal to Europe. Alcan's European smelter production is mainly consumed by Alcan's fabricating facilities. Alcan covers the remainder of its metal requirements in Europe with purchases of aluminum. 

Alcan's average ingot product realizations were $1,507 per tonne in 2002 compared to $1,581 per tonne in 2001 and  $1,667 per tonne in 2000.

2.3       Production / Facilities

2.3.1    Smelting:  Alcan operates and has interests in 16 primary aluminum smelters with a nominal rated annual capacity of 2.365 million tonnes. Eight of these smelters, having a total nominal rated capacity of 1.578 million tonnes, are located in Canada; the other smelters are located in Brazil, Iceland, Norway, Switzerland, the U.K. and the U.S.  During 2002, Alcan's smelters produced 2,237,800 tonnes of primary aluminum: 1,457,000 tonnes in Canada, 193,200 tonnes in the U.S., 205,000 tonnes in the U.K., 102,000 in Brazil, 173,500 tonnes in Iceland, 66,900 tonnes in Norway and 40,200 tonnes in Switzerland. 

For many years, Alcan has been engaged in smelter modernization and rebuilding programs to retrofit or replace some of its older facilities. It intends to continue these programs with a view to increasing productivity, improving working conditions and minimizing the impact of its operations on the environment. One of these steps was the acquisition of 40% of Aluminerie Alouette, which operates a modern aluminum smelter in Sept-Iles, Quebec, Canada. Alouette and Alma, Alcan's newest smelter, use the same smelting technology and present opportunities for value-creating synergies within Alcan's Quebec smelter system. Alouette is currently embarking on a cost-effective brownfield expansion to reach a capacity of 550,000 tonnes by 2005 as a result of being awarded a long-term supply of power from the provincial power authority. (See section 2.4.1)

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Smelter capacities - As at 31 December 2002
Locations		% of Ownership by Alcan	Annual Capacity (thousands of tonnes)
Canada.........................	Alma	100	400
	(Quebec)
	Alouette	40	97	*
	(Sept-Iles, Quebec)
	Arvida	100	248
	(Jonquière, Quebec)
	Grande-Baie	100	196
	(La Baie, Quebec)
	Laterrière	100	219
	(Chicoutimi, Quebec)
	Shawinigan	100	91
	(Quebec)
	Beauharnois	100	50
	(Melocheville, Quebec)
	Kitimat	100	277
	(British Columbia)
Total in Canada			1,578
Brazil.............................	Ouro Preto	100	51
	(Saramenha, Minas Gerais)
	Aratu	100	58
	(Bahia)
Iceland..........................	ISAL	100	172
	(Reykjavik)
Norway.........................	SOERAL	50	66	*
	(Husnes)
Switzerland....................	Steg	100	40
	(Valais)
United Kingdom............	Lynemouth	100	164
	(Northumberland, England)
	Lochaber	100	40
	(Inverness-shire, Scotland)
United States................	Sebree	100	196
	(Kentucky)
Total outside Canada			787
Total			2,365

*  This represents Alcan's share of total plant capacity.

2.3.2    Other Aluminum Sources: Other sources of aluminum include the following: purchases of primary aluminum under contracts and spot purchases, purchases of UBCs and aluminum scrap for recycling and purchases of customer scrap returned against ingot or semi-fabricated product sales contracts. Alcan purchased in 2002 of aluminum of all types from all sources amounted to 1.804 million tonnes, compared with 1.822 million tonnes in 2001 and 1.67 million tonnes in 2000. Such purchases are mainly from third party smelters, traders and from the scrap from customers and dealers.

Alcan operates extensive recycling operations (see sections 3.4.2 and 4.4.2 below).

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2.4       Source Materials

2.4.1    Electrical Power: In Canada, Alcan's plants have an installed generating capacity of 3,583 megawatts, of which about 2,759 megawatts may be considered to be hydraulically available over the long term. These facilities supply electricity to Alcan's Canadian smelters.  All water rights pertaining to Alcan's hydroelectric installations are owned in perpetuity by Alcan, except for those relating to the Peribonka River in Quebec. An annual charge is payable to the Quebec provincial government based on total energy generation, escalating at the same rate as the Consumer Price Index in Canada. In 1984, Alcan and the Quebec provincial government signed a lease extending the Company's water rights relating to the Peribonka River to 31 December 2033, with an option to extend the term to 2058, against an annual payment based on sales realizations of aluminum ingot. In British Columbia, water rentals for electricity used in smelting and related purposes are directly tied to the sales realizations of aluminum produced at Kitimat. For electricity sold to third parties within that province, Alcan pays provincial water rentals at rates which are fixed by the British Columbia provincial government, similar to those paid by BC Hydro, the provincially-owned electric utility.

One third of Alcan's installed hydroelectric capacity in Canada was constructed prior to the end of 1943, another third by the end of 1956 and the remainder by the end of 1968. All these facilities are regularly maintained and are expected to remain fully operational over the foreseeable future.

In addition to electricity generated at its own plants, as described above, Alcan agreed to purchase, under a long-term agreement, between one billion and three billion kilowatt-hours of electrical energy annually from Hydro-Quebec, the provincially-owned electric utility, beginning in 2001.  On 26 February 2002, the provincial power authority announced that Aluminerie Alouette was the successful bidder for a block of 500 megawatts of power to support the proposed expansion of the Sept-Iles smelter.  A 25-year power purchase agreement was entered into with Hydro-Quebec on 27 September 2002 for the supply of this power with delivery starting in 2005.

Any electricity that is surplus to Alcan's needs is sold to neighbouring utilities or customers under both long-term and short-term arrangements.

For smelters located outside of Canada, electricity is obtained from a variety of sources. The smelters in England and Scotland operate their own coal-fired and hydroelectric generating plants, respectively.  The smelters in Brazil obtain about 25% of their electricity requirements from owned hydroelectric generating plants and purchase the balance. The smelter in the U.S. purchases electricity under a long-term contract through 2011 as well as a short-term contract. The smelter in Iceland is supplied with hydroelectric power from Iceland's national power company. The Norwegian smelter has a number of contracts for energy supply. The smelter in Switzerland is supplied with power from Lonza Energie AG  (the former Algroup energy division).

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Electrical power capacities - As at 31 December 2002
		% of	Installed
		Ownership	Capacity
Locations		by Alcan	( MW)
Canada.........................	Isle Maligne	100	402
	(Quebec)
	Chute à Caron	100	224
	(Quebec)
	Shipshaw	100	896
	(Quebec)
	Chute du Diable	100	205
	(Quebec)
	Chute à la Savane	100	210
	(Quebec)
	Chute des Passes	100	750
	(Quebec)
	Kemano	100	896
	(British Columbia)
Total in Canada			3,583
Brazil.............................	Ouro Preto Power Stations	100	32
England.........................	Lynemouth Power Station*	100	420
Norway.........................	Vigelands	50	20	**
Scotland........................	Highlands Power stations	100	80
Total outside Canada			552
Total			4,135

*      Coal-fired
**    This represents Alcan's share of total plant capacity.

2.4.2    Anodes: Anodes are used and consumed in the smelting process.  Most of Alcan's smelters produce their anodes at their own on-site facilities.  Anodes are also produced in a stand-alone facility in the Netherlands ("Aluchemie"). Alcan holds 66% of Aluchemie directly while SOERAL, its 50% joint venture, owns a further 13%. The remainder of the shares is held by Hydro Aluminium A.S.

Each of the shareholders of Aluchemie is entitled to a volume of anodes corresponding to their shareholding at prices determined by formula. Alcan's share of anodes produced by Aluchemie is currently used at the ISAL and SOERAL smelters or sold to third-party customers.

The main raw materials for anode production are calcined petroleum coke and pitch. The production process involves the mixing of the raw materials followed by cold shaping of the anode and baking of the anode at elevated temperature.

2.4.3    Chemicals and Other Materials: Certain chemicals and other materials, e.g., aluminum fluoride, required for the production of aluminum at Alcan's smelters, are also produced by its chemical operations. Other materials, e.g., caustic soda, fuel oil, fluorspar and petroleum coke, are purchased from third parties.

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3.         Rolled Products Americas and Asia

3.1       Products

Through an extensive network of 16 rolled products facilities in North and South America and Asia, the Rolled Products Americas and Asia Business Group manufactures aluminum sheet and light gauge products, including can stock, automotive sheet and industrial products.  In addition, the Business Group manages Alcan's global can sheet business.

3.2       Sales

In 2002, the Rolled Products Americas and Asia Business Group shipped 1.613 million tonnes of rolled products that included 229,000 tonnes of customer-owned metal. The Business Group's third-party revenues for 2002 were $3.3 billion, representing 27% of Alcan's total revenues for the year. 

Sales increases in 2002 were driven by higher volumes despite lower average realized prices.  In 2002, record shipments in North America and Asia were made despite difficult economic and market conditions.  Volumes increased by 4% in North America and 23% in Asia, offsetting market declines in South America caused largely by currency volatility. 

Principal markets are beverage can sheet, containers and packaging, transportation (including automotive), building products, and other industrial applications.

3.3       Production / Facilities

At the end of 2002, Alcan's annual rolled products manufacturing capacity was:

a)   North America, 1.25 million tonnes, divided among Saguenay (Quebec), Kingston (Ontario), Logan (Kentucky), Oswego (New York), Terre-Haute (Indiana), Fairmont (West Virginia), Louisville (Kentucky), Warren (Ohio);

b)   Asia, 475,000 tonnes, divided among Yeongju (Korea), Ulsan (Korea), Bukit Raja (Malaysia), Rangsit (Thailand); and

c)    South America, 280,000 tonnes, divided among Pindamonhangaba (Brazil), Utinga (Brazil).

At the partially-owned Logan plant, Alcan's capacity varies by production centre. Alcan's ownership of: a) the Yeongju and Ulsan plants correspond to its shareholding in Alcan Taihan Aluminum Ltd. (''ATA'') (68%); b) the Bakit Raja plant corresponds to its shareholding in Aluminium Company of Malaysia Berhad (36%); and c) the Rangsit plant corresponds to its shareholding in Alcan Nikkei Siam Ltd. (60%).

3.4       Source Materials

3.4.1    Sheet Ingot: In 2002, 319,000 tonnes of sheet ingot were purchased from the Primary Metal Business Group and 100,000 tonnes were purchased from third party suppliers for the North America Rolled Products Business Unit. In Brazil, 43,000 tonnes of sheet ingot were purchased from the Primary Metal Business Group.  There were no purchases of sheet ingot from third party suppliers for Brazil.  For operations in Korea, 46,000 tonnes were purchased from the Primary Metal Business Group and 59,000 tonnes from third party suppliers.

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3.4.2   Recycling: As a matter of course, Alcan operates facilities in many plants to recycle aluminum scrap generated internally by fabricating activities. Recycled metal is primarily utilized by Alcan's own rolling facilities to produce can sheet.

Alcan also has a dedicated UBC recycling plant, which has an ultimate capacity of 80,000 tonnes per year, at Pindamonhangaba, Brazil.  In Korea, a recycling operation was started during March 2002 with an annual capacity of 22,000 tonnes.  In addition, Alcan operates three specialized recycling plants in the U.S. for the recycling of UBCs and process scrap returned from customers.  In the case of UBCs, Alcan has a well-established North American recycling network.  In 2002, Alcan's U.S. plants processed more than 24 billion UBCs.

Recycling plant capacities - As at 31 December 2002
Locations		% of Ownership by Alcan	Annual Capacity (thousands of   tonnes)
Sheet ingot from UBCs and customer process scrap
Brazil....................................................................	Pinda	100	80
	(Pindamonhangaba, Sao Paulo)
Korea...................................................................	ATA	68	22
	(Ulsan)
United States.......................................................	Berea	100  }
	(Kentucky)
	Greensboro	100  }	550
	(Georgia)
	Oswego	100  }
	(New York)
Total			652

4.         Rolled Products Europe

4.1       Products

The Rolled Products Europe Business Group supplies markets with a variety of aluminum rolled products including bare and coated sheet, coil, plate and shate which are used by customers for applications such as building, transport, cans and closures, lithographic, foils, automotive and industrial applications.

4.2       Sales

In 2002, Rolled Products Europe Business Group shipped 836,000 tonnes of rolled products to third parties, that included 162,000 tonnes of customer-owned metal. The Business Group's sales and operating revenues for 2002 were $1.8 billion, representing 15% of total Alcan revenues for the year.

Although most end-user markets remained weak all year, higher realized prices and a 10% increase in shipments resulted in increased sales in 2002. Rolled Products Europe's realized prices improved as a result of portfolio changes towards higher value-added products in more economically attractive markets.  Increased volumes, at a sustained higher-value mix, as well as benefits from merger synergy and restructuring programs resulted in higher earnings. In addition, the strengthening of the Euro and Swiss franc against the U.S. dollar also contributed to earnings in 2002.

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Principal markets are beverage can sheet, packaging, automotive and transportation, building products, lithographic sheet, electrical and other industrial applications.

Alcan continues to work with DaimlerChrysler, Ford (including Jaguar), General Motors, Audi, BMW, and other automakers in Europe to develop lighter, more efficient vehicles.

4.3              Production / Facilities

At the end of 2002, Alcan's annual rolled products manufacturing capacity in Europe was 1.25 million tonnes of finished goods, divided among the following rolling plants: Rogerstone and Falkirk (U.K.), Norf, Nachterstedt, Göttingen and Singen (Germany), Sierre (Switzerland), Bresso and Pieve Emanuele (Italy).

Norf, in Neuss, Germany is the world's largest rolling plant and is operated as a 50% joint venture with Hydro Aluminum A.S.  The other plants are wholly owned by Alcan.

4.4       Source Materials

4.4.1    Sheet Ingot: In 2002, 369,000 tonnes of sheet ingot were purchased from the Primary Metal Business Group and 289,000 tonnes were purchased from third party suppliers.

4.4.2    Recycling: Alcan operates a UBC collection system in the U.K., which feeds into a specialized recycling plant for the recycling of UBCs and process scrap returned from customers, with a capacity of 83,000 tonnes per year.

Alcan plays leading roles in joint industry programs to promote aluminum collection and recycling in many of the countries where it operates. Alcan operates facilities in many plants to recycle aluminum scrap generated internally by fabricating activities.  It operates a facility in the U.K. for the production of 65,000 tonnes per year of sheet ingot from aluminum scrap, and a secondary aluminum smelter in Borgofranco, Italy, which has a capacity of 70,000 tonnes per year for the production of secondary aluminum from aluminum scrap.

Recycled metal is primarily utilized by Alcan's own rolling facilities to produce can sheet.

Recycling plant capacities - As at 31 December 2002
		% of	Annual
		Ownership	Capacity
Locations		by Alcan	(thousands of  tonnes)
Foundry alloys and remelt scrap ingot     Italy..........................................	Borgofranco di Ivrea	100	70
	(Piemonte region)
Sheet ingot from UBC & can scrap     United Kingdom......................	Warrington	100	83
	(England)
Sheet ingot from miscellaneous scrap     United Kingdom......................	Warrington	100	65
	(England)
Total			218

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5.         Engineered Products

5.1       Products / Business Units

Alcan's Engineered Products Business Group produces engineered or fabricated aluminum products. These include cable, wire and rod as well as fabricated and cast products for the automotive, mass transportation, electromechanical and industrial markets. In addition, the group manufactures composites for facade, display and transportation end uses.

The Business Group's product range is divided according to its following business units:

5.1.1          Composites: Products include: aluminum plastic composites, comprising an outer and inner skin of aluminum sheet surrounding a plastic core; foam plastic materials, covered, if required by specific market requirements, with paper or plastic layers; and fibre-reinforced plastic components, mainly for transportation applications. The main applications for these products are ventilated facades for which composites have a number of advantages over more traditional materials because of their low weight-to-stiffness ratio, ease of application and design variety. In addition to facade applications, composites are now commonly used in display and transportation markets.

5.1.2        Cable: Aluminum is cast and rolled into rod, which is then drawn into wire and stranded into cable for the transmission and distribution of electricity. Rod is also used for mechanical applications such as screen wire and cable armouring.

5.1.3        Extruded Products: The extrusion process involves forcing hot metal through a die to create profiled shapes for the machine and building industries.  Examples of end-products using extrusions include rail cars, buses and automotive components.

5.1.4        Automotive and Transportation: This group includes the Mass Transportation unit, which supplies product and design services to rail and bus manufacturers, as well as the Engineered Shaped Products and Structures and Design businesses that offer products such as structures, including crash systems, and high quality castings to automotive customers. In addition, the airfreight container business is located in Singen, Germany.

5.1.5        Service Centres: Service centres are located in many European countries. They typically offer various forms of fabricated aluminum including plates, extrusions and composite panels and perform value-added services for local customers such as cutting, shaping, machining and assembling.

5.2            Sales

In 2002, Alcan third-party revenues from the Engineered Products Business Group were $1.6 billion, representing 13% of total Alcan revenues for the year. Earnings were slightly below 2001 due to the difficult business conditions in light of the strengthening Euro, particularly in extrusions and distribution markets in Europe.

5.2.1        Composites: Composites activities had third-party revenues of $309 million in 2002. The market segments for the Composite products are display, architecture, transportation and industry.

5.2.2        Cable: Cable activities had third-party revenues of $457 million in 2002. Alcan cable has the largest aluminum cable position in North America. Alcan Cable supplies many sectors of the electrical industry and investor-owned utilities, electrical distributors and original equipment manufacturers.

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5.2.3        Extruded Products: Extrusions activities had third-party revenues of $356 million in 2002. The Extruded Products business unit is a leading supplier of large and hard alloy extrusions with customers in rail, bus, marine, automotive and in engineering applications.

5.2.4       Automotive and Transportation: This business unit achieved record sales in 2002. Automotive and transportation activities had third-party revenues of $301 million in 2002. This trend reflects the continuing growth in public-sector projects, mainly involving new high-speed trains, metro trams and light-rail systems.  Alcan's portfolio of aluminum alloys, design innovation and processing capabilities has made it a long-standing supplier with major automobile manufacturers world-wide including: Audi, BMW, DaimlerChrysler, Ford (including Jaguar), General Motors, Peugeot, Porsche, Renault, and Volkswagen. The automotive activities from this unit as well as from Rolled Products Europe, Rolled Products Americas and Asia and Primary Metal Business Groups are marketed to the global automotive industry using the Alcan Automotive brand.

5.2.5      Service Centres: Alcan Service Centres supply mainly small and mid-sized industrial companies with specialist services largely utilising Alcan's specialist fabricated products including plate, composite and extrusions. The extensive Service Centre network offers a customised processing service depending on the clients' needs.  This business unit had third-party revenues of $222 million in 2002.

5.3          Production / Facilities

Alcan's Engineered Products Business Group consists of 47 production facilities around the world.

5.3.1     Composites: Composites has the following ten plants: Shanghai (China), Camacari (Brazil), Osnabrueck and Singen (Germany), Sins, Gunzen and Altenrhein (Switzerland), Chelmsford (U.K.), and Benton and Richmond (U.S.A.).

5.3.2    Cable: Alcan's main wire and cable businesses are located in Canada and the U.S.: Jonquière and Shawinigan (Quebec), Bay St. Louis (Mississippi), Roseburg (Oregon), Sedalia (Missouri), and Williamsport (Pennsylvania).

5.3.3    Extruded Products: Alcan produces extruded products at the following plants: Decin (Czech Republic), St. Florentin (France), Singen (Germany), Pieve (Italy), Sierre (Switzerland), and Shenzen (China), which is part of Rolled Products Americas and Asia Business Group.

5.3.4    Automotive and Other Transportation: Among the product lines included in this Business Unit are:

- Extrusion-based safety systems and other structural automotive components and airfreight containers are produced in Dahenfeld, Gottmadingen, Rastatt, Markt Schwaben and Singen (Germany); and

- Diecastings are produced in Markt Schwaben (Germany) and in Alcan-Tomos d.o.o. (Slovenia) and suspension parts and forgings are produced in the Strojmetal joint venture (Czech Republic).

The two mass transportation facilities are located in Altenrhein and Zurich (Switzerland).

5.3.5    Service Centers: The Service Centre network operates across most of Europe.  Alcan Service Centres are established in: Schwarzach and Vienna (Austria); Brussels (Belgium); Lyon, Nantes and Ozoir-la-Ferrière (France); Budapest (Hungary); Bologna, Florence, Padua and Treviglio (Italy); Breda (Netherlands); Lisbon (Portugal); Ljubljana (Slovenia); Molins de Rey (Spain); Niederglatt (Switzerland); and Walsall (U.K.).  In 2002, a new centre was established in Budapest to serve the growing Hungarian market.

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5.4       Source Materials

Aluminum used to produce engineered products is purchased from other Business Groups and from third party suppliers, which include producers and traders.  Recycled metal is also purchased from customers and traders.

6.         Packaging

6.1       Products / Business Units

Packaging is used to protect and present consumer goods in individual formats. Alcan offers packaging made out of aluminum, plastics, paper, cartonboard, glass and steel.  These products are mainly used for consumer branded goods.

The Packaging Business Group is divided into the following business units:

6.1.1         Food Flexibles Europe and Brazil and Food Flexibles and Foil North America: Principal activities of these units include the printing, coating and laminating of plastic film, aluminum foil and paper into primary packaging materials for food manufacturers. The sector's products are typically produced in wide reel format and then slit into narrow reels for delivery to customers, where they are formed into sealed packages (around the customer's product) on automated machinery. Other types of flexible packaging manufactured by the same processes include lidding materials (e.g., for dairy cups) and certain types of labels (especially for carbonated soft drinks packed in plastic bottles).

6.1.2       Containers Europe: The principal activities include producing aluminum containers for human and pet food products. Die stamping presses are used to form plain, coated or laminated foil materials into shallow trays for various food markets. Foil containers are used for many convenience and ready meal applications. Die stamping presses are used in various food markets. Foil trays are also used for premium pet food products. The containers are supplied to customers in either printed or plain form.

6.1.3        Foil Rolling and Technical Products Europe: The foil products unit uses cold rolling mills to roll the foil to its required thickness, while retaining shape and surface quality across the whole width of the foil. Other applications involve laminating, coating and printing to convert the foil. Foil is used for household and commercial packaging applications and for industrial products. One of the largest applications for plain foil is the liquid beverage carton industry; beverage carton materials for certain products, such as long-life milk and fruit juices, include a layer of aluminum foil to provide the protection necessary to preserve the product.

6.1.4      Pharmaceutical and Cosmetics Europe and Pharmaceutical and Cosmetics Americas: Alcan produces and sells a full range of packaging products for pharmaceutical and cosmetic companies. Principal products include: blister lidding, strip packs, pouches, barrier form packs, flexible tube laminates, plastic containers and closures, glass tubing vials, folding cartons, glass ampoules, aerosols and contract packaging services.

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6.1.5    Specialty Packaging: The main activity is the manufacture of tobacco packaging. The principal products include folding carton blanks, flexible packaging, decorated tinplate containers, cigarette cartons, booklet covers for tobacco papers, film and foil overwraps, tobacco pouches, and decorated tinplate containers.  Apart from its tobacco packaging operations, the unit also has facilities focused on providing print finishing services, steel cans mostly for petfood and food markets, as well as high quality decorated tinplate containers for a wide range of markets.

6.2       Sales

Alcan is a global leader in the manufacture and sale of individual packages to the producers of consumer goods supplying the food, pharmaceutical, personal care, and tobacco markets.  Packaging sales to third parties were $2.8 billion in 2002.  The Packaging Business Group's revenues represented 22% of Alcan's total revenues for the year.

In 2002, pricing pressures associated with customer consolidation and over-capacity in a weakened  economic environment characterized the packaging markets.  However, benefits from cost initiatives, largely related to synergy and restructuring programs, compensated for the weak economic environment resulting in comparable earnings performance relative to 2001. 

6.2.1     Food Flexibles Europe and Brazil and Food Flexibles and Foil North America: Food Flexibles Packaging, particularly in Europe, was significantly impacted by adverse price pressure in 2002. Third-party sales revenues for 2002 were $973 million. European volumes weakened in the early months of 2002, although North American volumes remained strong.  Earnings were nonetheless sustained, and in the case of North America significantly improved, both through leveraging Alcan's strong service offering to key accounts and by successes in restructuring and other cost initiatives.  The main markets served by the food flexibles business are confectionery, beverages, dairy products, savoury snacks, instant dried products, biscuits and breakfast cereal.

6.2.2     Containers Europe: Alcan Packaging has a long-standing relationship in the market having been a developer of the use of foil trays.  2002 third-party sales revenues were $257 million.

6.2.3    Foil Rolling and Technical Products Europe: Alcan sells plain and converted foil for consumer and industrial applications.  2002 third-party sales revenues were $354 million. The foil rolling operations supply foil and related technical products to internal and external customers.  The foil conversion business supplies metalised paper and tobacco laminate to customers in the tobacco industry.

6.2.4    Pharmaceutical and Cosmetics Europe and Pharmaceutical and Cosmetics Americas: The pharmaceutical and cosmetics packaging sector accounted for third-party sales of $813 million in 2002, of which pharmaceuticals accounted for the major portion.  The 2002 sales include $88 million generated by the molded glass operations, which were sold in the third quarter of 2002.  Alcan is a leading supplier of pharmaceutical packaging in both Europe and North America. 

6.2.5    Specialty Packaging: Sales revenues from third parties were $415 million in 2002. Alcan is one of the world's largest packaging suppliers to the tobacco industry with carton, flexible, foil and decorated containers manufactured and supplied to global customers.

6.3       Production / Facilities

Alcan has 76 main packaging plants in 14 countries.

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6.3.1    Food Flexibles Europe and Brazil and Food Flexibles and Foil North America: Alcan produces an extensive range of products at its manufacturing facilities in Brazil, Canada, France, Germany, Ireland, Italy, the Netherlands, Spain, Switzerland, the U.K. and the U.S.

6.3.2    Containers Europe: Alcan produces container products at plants in Germany, the Netherlands and Switzerland.

6.3.3     Foil Rolling and Technical Products Europe: Alcan's European Foil Rolling mills and other manufacturing facilities are in Germany, Switzerland and in the U.K.  A new metallizing and laminating plant for cigarette package inner liners in Berlin was at an advanced stage of construction by the end of 2002.

6.3.4    Pharmaceuticals and Cosmetics Europe and Pharmaceutical and Cosmetics Americas: Manufacturing facilities are located in Brazil, Canada, France, Germany, Puerto Rico, the Netherlands, Switzerland, U.K. and the U.S. The Company's molded glass operations were sold at the end of the third quarter in 2002.  Alcan also sold its two Pharmatech rubber stopper and aluminum seals operations located in Salisbury, Maryland.  

6.3.5    Specialty Packaging: The tobacco and specialty markets are served by 12 main plants in seven countries. The main activity of Specialty Packaging is the manufacture of tobacco packaging in: Germany, the Netherlands, Turkey, the U.K., Kazakhstan, Canada and the U.S. Apart from its tobacco packaging operations, the sector also has facilities in the U.K. focused on providing print finishing services, manufacturing steel cans mostly for the food industry and also for decorated tinplate containers.

At the close of 2002, an agreement was finalized to acquire the VAW Flexible Packaging operations from Norsk Hydro for €345 million. This acquisition will yield substantial synergies for Alcan's European packaging activities and will make Alcan the only major packaging multinational with significant operations in North America, Europe and Asia.

6.4       Source Materials

Packaging is made from a variety of materials including aluminum, plastics, paper board, glass and steel.  Aluminum foil stock used in packaging is mainly purchased from other Business Groups.  Other source materials are purchased from many third party suppliers.

4.         INFORMATION BY GEOGRAPHIC AREAS

See Annual Report, pages 72 to 74, Note 27 to the Consolidated Financial Statements for financial information by geographic areas.

5.         RESEARCH AND DEVELOPMENT

Research and development ("R&D") comprises a global system of research laboratories, applied engineering centres and plant technical departments. The research laboratories, responsible for approximately 60% of the total R&D expenses for Alcan, play a major role in innovation through basic and applied research. Two laboratories are located in Canada (at Kingston, Ontario, and Jonquière, Quebec), and one in Switzerland (Neuhausen). The activities carried out in the U.K. laboratory (Banbury, Oxfordshire) will be transferred to Kingston and Neuhausen in the framework of the re-organization of the fabrication technology sites.  Together, they employ about 550 people.

In recent years, Alcan's R&D efforts have been refocused on core processes and products, assisting operating units to achieve increased productivity, higher quality and reduced costs. Expenses for Alcan were $115 million in 2002, $135 million in 2001 and $81 million in 2000.  In addition, intellectual property management safeguards Alcan's process and product technologies and trademarks. 

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Alcan manages applied engineering centres and technical departments located close to key markets and operating divisions. These include the Applied Materials Center located in North America for canning technology, and technical centres in North America and Europe for automotive technologies. These centres are focused on major products and provide technical and product development support to customers, drawing extensively on the resources and scientific disciplines in the research centres.

6.         ENVIRONMENT, HEALTH AND SAFETY MATTERS

In 2002, Alcan renewed its commitment to continuous improvement in Environment, Health and Safety ("EHS") performance while increasing value for the Company's stakeholders.  Significant efforts have been put into developing Alcan's EHS First system, a new management system, which recognizes EHS as a top priority and an essential element of the Company's management and decision-making process. EHS First is a global model to be applied at all Alcan sites.  This system is largely based on Alcan's revised EHS Policy and Worldwide Code of Employee and Business Conduct, both of which establish a proactive framework for responding to EHS concerns within and outside the Company's site boundaries. 

In addition, the Company produced its first sustainability report entitled Alcan's Journey Towards Sustainability that charts Alcan's progress in measuring and managing its economic, environmental and social impacts and draws a definitive link between Alcan's business success and its EHS activities.  It also introduced Project Target, Alcan's long-term management commitment to reduce greenhouse gas.

Alcan believes that its existing and planned EHS measures allow it to exceed statutory and regulatory demands, while improving its competitive position and efficiency.  The revised EHS Policy identifies the need to be in full compliance with regulations and internal standards, such as the Environmental (ISO 14001) and Health and Safety systems (OHSAS 18001) requirements, which require extensive reviews of regulations and standards applicable to the production site concerned.

Alcan's capital expenditures to protect the environment and improve working conditions at the smelters and other locations were $67 million in 2002. Similar expenditures for 2003 and 2004 are projected to be $106 million and $147 million, respectively. In addition, expenditures charged against income for environmental protection were $140 million in 2002, and are expected to be $137 million both in 2003 and 2004.

7.         PROPERTIES

Alcan believes that its properties, most of which are owned, are suitable and adequate for its operations. 

8.         EMPLOYEE RELATIONS

As at 31 December 2002, Alcan employees were located as follows: approximately 19,000 in North America, 22,000 in Europe, 2,900 in South America, 4,200 in Asia, Pacific and other areas.  A majority of the hourly-paid employees are represented by labour unions. 

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There are 26 collective labour agreements in effect in Canada.  Labour agreements for unionized employees at Alcan facilities in Quebec expire at the end of 2006 or in 2007.  In British Columbia, the Collective Labour Agreement at Kitimat expires in 2005.

In all other locations, collective agreements are negotiated on a site, regional or national level, and are of different durations.

9.         PATENTS, LICENSES AND TRADEMARKS

Alcan owns, directly or through Subsidiaries, a large number of patents in Canada, the U.S. and other countries which relate to the products, uses and processes of its businesses. The life of a patent is most commonly 20 years from the filing of the patent application.  Alcan is continually filing new patent applications.  All significant patents will be maintained until their normal expiration.  Therefore, at any point in time, the range of life of the Company's patents will be from one to 20 years.

Alcan owns a number of trademarks that are used to identify its businesses and products. The Company's trademarks have a term of three to ten years.  As a result, at any point in time, the Company will have trademarks at the end of their term and others with a full ten-year term.  At the end of their term, significant trademarks will be renewed for a further three to ten years.

Alcan has also acquired certain intellectual property rights under licenses from others for use in its businesses.

Alcan's patents, licenses and trademarks constitute valuable assets; however, the Company does not regard any single patent, license or trademark as being material to its sales and operations viewed as a whole.  The Company has no material licenses or trademarks the duration of which cannot, in the judgment of management, be extended or renewed as necessary.

10.       COMPETITION AND GOVERNMENT REGULATIONS

The aluminum and packaging businesses are highly competitive in price, quality and service.  The Company experiences competition from a number of companies in all major markets.  In addition, aluminum products face competition from products fabricated from several other materials such as plastic, steel, iron, copper, glass, wood, zinc, lead, tin, titanium, magnesium, cement and paper. The Company believes that its competitive standing in aluminum production is enhanced by its ability to supply its own power to Canadian and U.K. smelters at low cost.

The operations of the Company, like those of other international companies, including its access to and cost of raw materials and repatriation of earnings, may be affected by such matters as fluctuations in monetary exchange rates, currency and investment controls, withholding taxes and changes in import duties and import restrictions.  Imports of ingot and other aluminum products into certain markets may be subject to import regulations and import duties. These affect the Company's sales realizations and may affect the Company's competitive position. Shipments of the Company's products are also subject to the anti-dumping laws of the importing country, which prohibit sales of imported merchandise at less than defined fair values.

The Investment Canada Act (the "Act") provides that the acquisition of control of a Canadian business, such as Alcan's Canadian business, by a "non-Canadian" (as defined in the Act) may be subject to review under the Act and, if so, may not be implemented unless the Minister of Industry determines that the proposed acquisition is, or is likely to be, of net benefit to Canada. The acquisition by a non-Canadian of a majority of the voting shares of a Canadian company is deemed to constitute the acquisition of control of that company. In addition, the acquisition by a non-Canadian of more than one-third but less than the majority of the voting shares of a Canadian company is presumed to constitute an acquisition of control, unless it can be established that on the acquisition the corporation is not controlled in fact by the non-Canadian.

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ITEM 3 LEGAL PROCEEDINGS

ENVIRONMENTAL MATTERS 

The Company's U.S. Subsidiary, Alcan Aluminum Corporation ("Alcancorp"), and third parties are defendants in a lawsuit instituted in July 1987 by the U.S Environmental Protection Agency ("EPA") relating to the Pollution Abatement Services site, a third-party disposal site, in Oswego, New York ("PAS").  Alcancorp is alleged to have contaminated this site by waste materials disposed by contractors employed by Alcancorp (and other companies).  Alcancorp's defense is that the waste was not hazardous.  The Federal District Court for the Northern District of New York found (in January 1991) Alcancorp liable for a share of the clean-up costs for the site, and in December 1991 determined the amount of such share to be $3,175,683. Alcancorp appealed this decision to the United States Circuit Court of Appeals for the Second Circuit.  In April 1993, the Second Circuit reversed the District Court and remanded the case for a hearing on what, if any, liability might be assigned to Alcancorp depending on whether Alcancorp can prove that its waste did not contribute to the costs at the site.  This matter was consolidated with another case, instituted in October 1991 by the EPA against Alcancorp in the Federal District Court for the Northern District of New York seeking clean-up costs in regard to the Fulton Terminals site in Oswego County, New York, which is also owned by PAS.  The remand hearing was held in October of 1999. The trial court re-instituted its judgment holding Alcancorp jointly and severally liable with other defendants.  The amount of the judgment plus interest is $13.5 million as of December 2000.  The case was appealed. In the first quarter 2003, the Second Circuit affirmed the decision of the trial court.  Alcancorp is seeking a rehearing.  At 31 December 2002, the Company had a reserve of $15.2 million for this matter.  Alcancorp has also been sued by other Potentially Responsible Parties ("PRP") at PAS seeking contribution for costs incurred in cleaning up the PAS site which are being contested. 

Alcancorp is a party in a 1989 EPA lawsuit before the Federal District Court for the Middle District of Pennsylvania involving the Butler Tunnel site, a third-party disposal site.  In May 1991, the Court granted summary judgment against Alcancorp in the amount of $473,790 for alleged disposal of hazardous waste.  After unsuccessful appeals, Alcancorp in 1995 paid $652,371, representing the judgment amount plus interest, and is disputing about $400,000 associated with that judgment, representing additional enforcement costs incurred after the date of the initial judgment in a separate lawsuit.  The EPA has filed a new action for additional sums for further remedial activities at the Butler Tunnel site.

In February 1996, the Company's U.K. Subsidiary, British Alcan Aluminium plc ("British Alcan"), sold its investment in Luxfer USA Limited.  As part of the sale, British Alcan agreed to indemnify the purchaser for certain liabilities, including those arising out of the following proceeding.  Luxfer is a participant in a joint defense group being sued by the EPA in regard to waste Luxfer sent, from 1976 to 1991, to the Omega chemical waste site, a third-party disposal site in Whittier, California.  At various times during 1995, Luxfer contributed various amounts totaling $11,800 for defense group costs and the removal of waste from the site.  Large waste generators are cleaning up the site.  Luxfer, being a small contributor, is discussing settlement offers.  In 2000, Luxfer and other members of the joint defense group entered into a consent decree with the EPA to complete the remediation. 

Alcancorp is a third party defendant in a suit initiated in December 1995 by the State of New Jersey alleging that a disposal company that had been used by Alcancorp disposed of hazardous material in the Pennsauken landfill.  Including Alcancorp, there are 277 third-party defendants in this action.  Various discovery issues remain outstanding.  In 2002, the court granted the third-party defendants the right to conduct depositions of the other party's experts. 

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The Company's Brazilian wholly-owned Subsidiary, Alcan Alumínio Do Brasil Ltda. ("Alcanbrasil") was sued by the Municipality of Formiga for inadequate disposal of solid waste from its flexible packaging plant. The waste was being disposed by a third party.  Some of the waste was found in unauthorized landfills.  The third party is also being sued but under Brazilian law, Alcanbrasil is jointly and severally responsible.  In 2002, a settlement has been reached where Alcanbrasil will not be liable for any damages if Alcanbrasil's waste is removed from the landfills.  Alcanbrasil is presently obtaining the necessary environmental licenses to proceed to the removal of the waste.

In 1982, Alusuisse Lonza France SA ("ALF"), a subsidiary of Algroup, sold land in Marseilles, France to the local community, which contained red mud deposits on two different sites.  Buildings were erected on this land.  In 1997, French law changed to have the responsibility for deposits lie with the originator and ALF paid $1.68 million for remediation.  ALF has been engaged in litigation and appeals with government agencies for further remediation; ALF is trying to establish the partial responsibility of the local community.  In 2002, the appeal court rejected ALF's position for the two sites and ALF intends to appeal the decision for one site.

In certain government investigations of contamination by alleged hazardous wastes at sites in New York State on which waste material is alleged to have been deposited by disposal contractors employed in the past directly or indirectly by Alcancorp and other industrial companies, Alcancorp has contested the assertion of liability on the ground that the waste was not hazardous.  The EPA has responded that it may file lawsuits against Alcancorp regarding this alleged contamination. Alcancorp was advised by various authorities that additional sites are undergoing similar investigation and that it may be liable to contribute to the cost of the investigations and any possible remedial action for such sites.  There can be no assurance that Alcancorp will not incur material clean-up costs as a result of these investigations.

In 1997, Wheaton USA Inc. ("Wheaton"), a wholly-owned Subsidiary, began building new furnaces at its Millville, New Jersey glass plant that are alleged to not be in compliance with applicable air emission regulations.  The New Jersey Department of Environmental Protection (NJDEP) issued a citation for violation of permits. The EPA was involved.  Wheaton made modifications to the furnaces. Wheaton is awaiting a review and approval from the NJDEP.  There were no further developments in 2002.

Lawson Mardon USA Inc. ("LM USA"), a wholly-owned Subsidiary, is undertaking a site investigation and clean-up of the land at its Clifton plant, in compliance with a NJDEP permit.  According to studies, offsite contamination was not a result of LM USA's operations.  LM USA has reached an agreement with the NJDEP for alleged on-site contamination whereby LM USA would isolate the area and would monitor the ground water for two years. 

In 1999, an investigation was carried out at the Lawson Mardon Trentesaux SA site ("LM Trentesaux"), a Subsidiary, at Tourcoing, France.  The land was found to be contaminated by solvent, fuel and chemical products resulting from engraving and packaging activities.  An estimate of clean-up cost was established.  The investigation was also conducted to determine whether the contamination was the sole responsibility of LM Trentesaux and whether the migration of the contamination was possible.  Any ground contamination by solvent was treated in 2001.

Beginning in 1995 environmental investigations have been conducted into the presence of oil, gasoline and volatile organic compounds (VOCs) in the soil and groundwater at the Algoods plant site in Ontario, Canada and third party properties adjacent to this site.  Algoods was sold in 1996 and under the terms of the agreement, the Company retains liability for this case.  A remediation plan was approved with the Ministry of Environment ("MOE") for the oil removal and recovery is approximately 85% complete. MOE requested and has received from Alcan a delineation study with respect to VOCs in the surrounding area.  This report is currently under review by the MOE. An initial remediation plan for VOCs will be implemented in 2003.  A gasoline recovery system was commissioned by Alcan and accepted by the property owner.

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Reviews and Remedial Actions

The Company has established procedures for reviewing environmental investigations and any possible remedial action on a regular basis.  Although the Company cannot estimate the costs which may ultimately be borne by it, the Company has no reason to believe that any remedial action will materially impair its operations or materially affect its financial condition.

OTHER MATTERS

In 1997, as part of the claim settlement arrangements related to the British Columbia Government's cancellation of the Kemano Completion Project, Alcan obtained the right to transfer a portion of a power supply contract with BC Hydro to a third party. Alcan sold the right to supply this portion to Enron Power Marketing Inc. (EPMI), a subsidiary of Enron Corporation (Enron) for cash consideration. In order to obtain the consent of BC Hydro to this sale, Alcan was required to retain residual liability for EPMI's obligations arising from the supply contract, including in the event that EPMI became unable to perform. This contingent liability is subject to a maximum aggregate amount of $100 million, with mitigation and subrogation rights. On 2 December 2001, EPMI and Enron filed for protection under Chapter 11 of the U.S. Bankruptcy Code.  Powerex, the BC Hydro affiliate which now holds the rights to the power supply contract, maintains that it has terminated the power supply contract and as a result has filed a claim for $100 million against Enron on 15 March 2002 as a necessary step prior to making the same claim against the Company.  Enron did not respond to that claim and the Company received, on 22 March 2002, a demand for payment in the amount of $100 million from Powerex.  On 17 January 2003, the Company received a decision following arbitration hearings held in December 2002 on a contractual dispute between Powerex and Alcan. The arbitrator confirmed Powerex's claim for $100 million.  A standstill agreement is in effect whereby Alcan and Powerex have agreed that no action will be taken to set aside or enforce the arbitrator's decision pending discussions between the parties. A provision of $100 million was recorded in the fourth quarter of 2002.

There are no other proceedings which, according to the Company's belief, could materially impair its operations or materially affect its financial condition. 

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company has not submitted any matter to a vote of security holders, through solicitations of proxies or otherwise, during the fourth quarter of the year ended 31 December 2002.

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PART II

ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required is incorporated by reference to the Annual Report.  See section entitled "Common Shares" on page 83.

The number of holders of record of Shares on 28 June 2002 was approximately 17,820.

While the Company intends to pursue a policy of paying quarterly dividends, the level of future dividends will be determined by the Board of Directors in light of earnings from operations, capital requirements and the financial condition of the Company.  The Company's cash flow is generated principally from operations and also by dividends and interest payments from Subsidiaries, Joint Ventures and Related Companies.  These dividend and interest payments may be subject, from time to time, to regulatory or contractual restraints, withholding taxes (see Annual Report, page 67, note 21 to Consolidated Financial Statements) and foreign governmental restrictions affecting repatriation of earnings. (See section entitled "Competition and Government Regulations" on page 24 of this report.)

Dividends paid on Shares held by non-residents of Canada will generally be subject to Canadian withholding tax which is levied at the basic rate of 25%, although this rate may be reduced depending on the terms of any applicable tax treaty.  For residents of the U.S., the treaty-reduced rate is currently 15%.

ITEM 6  SELECTED FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL DATA
(in millions of Dollars except for per Share amounts)

	Years ended 31 December
	2002	2001*	2000*	1999*	1998
Sales and operating revenues	12,540	12,626	9,148	7,324	7,789
Net income (Canadian GAAP)	374	2	610	448	399
Net income (loss) (U.S. GAAP)	(336)	(54)	606	455	417
Total assets	17,538	17,458	18,389	9,839	9,901
Long-term debt (including current portion)	3,482	3,536	3,528	1,322	1,703
Net income (loss) per share (Canadian GAAP) - Basic	1.15	(0.02)	2.42	2.01	1.71
Net income (loss) per share (Canadian GAAP) - Diluted	1.14	(0.02)	2.42	2.01	1.71
Net income (loss) per share (U.S. GAAP)**	(1.06)	(0.19)	2.40	2.04	1.79
Cash dividends per share	0.60	0.60	0.60	0.60	0.60
*    Certain financial data under Canadian GAAP has been restated.  Refer to note 3 - Accounting Changes; Deferred Foreign      Exchange Translation Gains and Losses in the Consolidated Financial Statements in the 2002 Annual Report.
**  Basic and diluted.

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Commencing 1998, the Company retroactively adopted, without restating prior years, the recommendations of the Canadian Institute of Chartered Accountants ("CICA") concerning accounting for income taxes.  The principal change under the new recommendations is the requirement to revalue deferred income taxes for changes in tax rates and exchange rates.  Further details may be obtained in the 1998 Annual Report, page 46.

Commencing 1998, the Company retroactively adopted the recommendations of the CICA concerning segment disclosures.  The new recommendations require the disclosure of certain information about operating segments and also about their products and services so as to provide information about the different types of business activities in which the Company engages and the different economic environments in which it operates.

Commencing 2001, the Company retroactively adopted the recommendations of the CICA concerning earnings per share.  The standard requires the disclosure of the calculation of basic and diluted earnings per share and the use of the treasury stock method for calculating the dilutive impact of stock options.

Commencing in 2001, the Company prospectively adopted the recommendations of the CICA concerning business combinations.  All business combinations initiated on or after 1 July 2001 are now required to be accounted for under the purchase method.

Commencing 2002, the Company prospectively adopted the recommendations by the CICA concerning goodwill and other intangible assets.  Under this standard, goodwill and other intangible assets with an indefinite life are no longer amortized but are carried at the lower of carrying value and fair value. Goodwill and other intangible assets with an indefinite life are tested for impairment on an annual basis.  For further details see page 47 of the Annual Report.

Commencing 2002, the Company retroactively adopted, with restatement of prior years back to 1999, the recommendations of the CICA concerning deferred foreign exchange translation gains and losses.  Under this standard, the Company no longer amortizes the exchange gains and losses arising from the translation of long-term foreign currency denominated monetary assets and liabilities that have a fixed or ascertainable life extending beyond the end of the following fiscal year.  These exchange gains and losses are now recognized in income immediately. For further details see page 47 of the Annual Report.

Commencing in 2002, the Company adopted the recommendations of the CICA concerning disclosure of stock options and other stock-based compensation.  This standard encourages but does not require that the fair value method be used for transactions with employees.  If the fair value method is not used, note disclosure of pro forma net income and net income per common share - basic and diluted is required as if the fair value based method had been applied to all stock option awards.  For further details see page 47 of the Annual Report.

See Annual Report, pages 51 to 53, note 7 to Consolidated Financial Statements for a comparison, for certain items listed, of the amounts as reported by the Company under Generally Accepted Accounting Principles ("GAAP") in Canada with amounts that would have been reported under U.S. GAAP.

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ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The section entitled "Management's Discussion and Analysis" in the Annual Report, pages 23 to 39, is incorporated by reference.

References to "EVA" on page 25 of the Annual Report refer to Economic Value Added, a registered trademark of Stern Stewart & Co. and viewed by the Company as a key measure of its financial performance.  EVA represents the difference between the return on capital and the cost of using that capital over the same period.  Return on capital for this purpose means reported income before interest, taxes and minority interest, adjusted for such amounts as non-recurring items to which a tax charge, based on a 25% tax rate, is applied.  Return on capital for 2002 is $768 million, from which a cost of capital charge of $1,442 million is taken to obtain an EVA of negative $674 million.  In 2002, the cost of capital for purposes of EVA was calculated by applying a rate of 10% to the average EVA capital for the period from December 2001 to November 2002, compared to a rate 9.5% for 2001 and 9.5% for 2000.

The non-recurring charges of $117 million after tax on page 25 of the Annual Report are detailed in the first paragraph of footnote 1 of the Quarterly Financial Data on page 79 of the Annual Report.

As the Company follows Canadian GAAP, reference should be made to note 7 to the Consolidated Financial Statements on pages 51 to 53 of the Annual Report which compares, for certain items listed, the amounts as reported with the amounts that would have been reported under U.S. GAAP. Beginning in 2001, the Company adopted for supplementary U.S. GAAP reporting purposes only, Financial Accounting Standards Boards Statements 133 and 138.  These standards require that all derivatives be recorded in the financial statements and valued at fair value.

Refer to the section entitled "Competition and Government Regulations" on page 24 of this report for a brief description of the application of the Investment Canada Act.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is not a substitute for net income, cash flows and other measures of financial performance as defined by generally accepted accounting principles, and may be defined differently by other companies.  The Company considers EBITDA to be a key financial performance measure used by management for the six operating segments. Management believes that, for the Company, EBITDA provides a measure of operating results that is unaffected by the differences in capital structures among otherwise comparable companies. 

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has estimated the potential impact of a 10% adverse change in interest rates, in foreign currency exchange rates or in aluminum prices based upon its financial instrument and derivative commodity contract positions outstanding at 31 December 2002.

Interest Rates

The impact of a 10% increase in interest rates on the Company's variable rate debt outstanding at 31 December 2002 net of its invested surplus cash and time deposits at 31 December 2002 would be to reduce net income by $2 million.  Transactions in interest rate financial instruments for which there is no underlying interest rate exposure to the Company is prohibited.  For accounting policies for interest rate swaps used to hedge interest costs on certain debt, see page 45 of the Annual Report.

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Foreign Currency Exchange Rates

The effect on net income of a movement of plus or minus 10% in foreign currency exchange rates on the Company's financial instruments (principally forward and option contracts) outstanding at 31 December 2002 is detailed below*.

 In millions of US$

Currency	Plus 10% movement	Minus 10% movement
AUD	19	(18)
EUR	(2)	2
USD	2	(3)
BRL	3	(3)
Other	2	-
Total	24	(22)

*Increase (decrease) net income.

Any negative impact of currency movements on the currency contracts that the Company has taken out to hedge identifiable foreign currency commitments to purchase or sell goods and services, would be offset by an equal and opposite favourable exchange impact on the commitments being hedged. Transactions in currency related financial instruments for which there is no underlying foreign currency exchange rate exposure to the Company are prohibited.  For accounting policies relating to currency contracts, see page 44 of the Annual Report.

Derivative Commodity Contracts

The effect of a reduction of 10% in aluminum prices on the Company's aluminum forward and options contracts outstanding at 31 December 2002 would be to reduce 2003 net income by approximately $37 million, of which $2 million relates to the net cost of option premiums and $35 million to forward contracts (principally forward purchase contracts). These results reflect a 10% reduction from the 2002 year-end, three-month LME aluminum closing price of $1,350 and assume an equal 10% drop has occurred throughout the aluminum forward price curve existing as at 31 December 2002.

Virtually all of the Company's aluminum forward contract positions are taken out to hedge those future purchases of metal which are required for firm sales commitments to fabricated products customers.  Consequently, any negative impact of movements in the price of aluminum on the forward contracts would be offset by an equal and opposite impact on the purchases being hedged.

Transactions in metal related financial instruments for which there is no underlying metal price exposure to the Company are prohibited, except for a small trading portfolio of metal forwards not exceeding 10,000 tonnes, which is marked to market.  In addition, see Annual Report, pages 38 and 39.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required is incorporated by reference to the Annual Report, Consolidated Financial Statements on pages 41 through 77 and the "Auditors' Report" on page 40 and the section entitled "Quarterly Financial Data" on pages 78 and 79.

The location of Financial Statements and other material required under this Item is found under Item 15 of this report.

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ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company has nothing to report under this Item.

PART III

Information in this part is based on information contained in the Company's Management Proxy Circular dated 14 February 2003.

ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a)        IDENTIFICATION OF DIRECTORS

The information required is incorporated by reference to the Management Proxy Circular, pages 7 and 8.

The term of office of each Director runs from the time of his or her election to the next succeeding annual meeting or until he or she ceases to hold office as such.

(b)       IDENTIFICATION OF EXECUTIVE OFFICERS

As at 1 January 2003, the required particulars with respect to the Officers of the Issuer are as follows:

TRAVIS ENGEN, 58, President and Chief Executive Officer.  Mr. Engen  became a non-executive Director of the Company in 1996. Prior to joining the Company on 12 March 2001, Mr. Engen was chairman and chief executive of ITT Industries, Inc.

RICHARD B. EVANS, 55, Executive Vice President, Office of the President. Mr. Evans has held this position since 1 January 2002 and oversees three of the six business groups: Primary Metal, Bauxite, Alumina and Specialty Chemicals, and Engineered Products. Prior to taking on this role, Mr. Evans was based in Zurich and was responsible for the integration of the Company and Algroup following the merger.  He has held several positions within the Company: Executive Vice President, President, Aluminum Fabrication, Europe (March 1999), Executive Vice President, Fabricated Products-North America and President of Alcan Aluminum Corporation (July 1997) and Senior Advisor, Corporate Development (January 1997). Prior to joining the Company in January 1997, Mr. Evans held senior management positions with Kaiser Aluminum & Chemical Corporation.

BRIAN W. STURGELL, 53, Executive Vice President, Office of the President.  Mr. Sturgell has held this position since 1 January 2002 and oversees three of the six business groups: Rolled Products Americas and Asia, Rolled Products Europe, and Packaging.  He has held several positions with the Company: Executive Vice President, Aluminium Fabrication, Americas and Asia (November 2000), Executive Vice President, Corporate Development (January 1999), Executive Vice President, Asia/Pacific (July 1997) and Executive Vice President, Fabricated Products, North America and President of Alcan Aluminum Corporation (1996).

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GEOFFERY E. MERSZEI, 51, Executive Vice President and Chief Financial Officer.  Mr. Merszei joined the Company in September 2001.  Prior to his current position, he was vice president and treasurer of The Dow Chemical Company.  He worked for over twenty years in senior financial positions with his previous employer.

MICHAEL HANLEY, 37, Senior Vice President, President, Bauxite, Alumina and Specialty Chemicals.  Mr. Hanley has held this position since 1 January 2002.  He has held several positions with the Company: Vice President, Investor Relations (September 2000), Vice President and Assistant Financial Controller, Global Fabrication (July 1999) and Director, Finance, Bauxite, Alumina and Chemicals Group (June 1998). Prior to joining the Company in June 1998, Mr. Hanley was vice president and chief financial officer of Gaz Metropolitain Inc.

CYNTHIA CARROLL, 46, Senior Vice President, President, Primary Metal.  Mrs. Carroll has held this position since 1 January 2002 and her responsibilities include Alcan primary metal facilities and power generation installations.  She has held several positions with the Company: Vice President, President Bauxite, Alumina and Specialty Chemicals (1999), Managing Director of Aughinish Alumina Limited (1996) and Vice President/General Manager of Alcan Foil Products (1991).

MARTHA FINN BROOKS, 44, Senior Vice President, President, Rolled Products Americas and Asia.  Mrs. Brooks joined the Company in this capacity on 1 August 2002.  Prior to joining the Company, she was vice president, engine business, marketing, sales and engineering worldwide at Cummins Inc.  During her 16 years with her previous employer, she held various senior positions in business development, marketing, sales and general management positions.

CHRISTOPHER BARK-JONES, 56, Senior Vice President, President, Rolled Products, Europe.   Mr. Bark-Jones has held this position since 1 January 2002.  Mr. Bark-Jones has held several positions with the Company: Vice President, Corporate Development and Chief Financial Officer, Alcan Europe (August 2000), Chairman and Chief Executive Officer of Indian Aluminium Company, Limited (1998) and Chief Financial Officer, Europe, Rolled Products (1996).

KURT WOLFENSBERGER, 62, Executive Vice President, President, Engineered Products. Mr. Wolfensberger has held this position since 1 January 2002.  He joined Alcan in October 2000, following Alcan's merger with Algroup.  Prior to the merger, he was head of Alusuisse Primary Materials and Fabricated Products (1997).

ARMIN WEINHOLD, 53, Senior Vice President, President, Packaging.  Mr. Weinhold has held this position since 1 January 2002 and his responsibilities include food flexible and foil, pharmaceutical, cosmetics/personal care and specialty packaging applications.  He joined Alcan in October 2000, following Alcan's merger with Algroup.  Prior to the merger, he was President Food Flexibles & Foil, Europe/Brazil of Algroup (2000) and Chief Operating Officer of Lawson Mardon Packaging Foil Products (a subsidiary of Algroup) (1995).

DANIEL GAGNIER, 56, Senior Vice President, Corporate and External Affairs.  Mr. Gagnier's responsibilities include corporate communications, government relations and environment health and safety.  Mr. Gagnier was appointed Vice President, Corporate Affairs, in December 1994, and in 1995 his responsibilities were expanded to include environment, occupational health and safety issues for Alcan on a worldwide basis.  Prior to joining Alcan, Mr. Gagnier held senior administrative positions with the Government of Canada.

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DAVID L. McAUSLAND, 49, Senior Vice President, Mergers and Acquisitions and Chief Legal Officer.  Mr. McAusland has held this position since October 2000 and his responsibilities include worldwide legal and regulatory affairs, mergers, acquisitions and major transactions as well as corporate development initiatives.  He joined the Company in June 1999 as Vice President, Chief Legal Officer and Secretary.  Prior to joining, he was managing partner at Byers Casgrain, a Montreal law firm and was president of the Montreal Board of Trade.

GASTON OUELLET, 60, Senior Vice President, Human Resources.  Mr. Ouellet has held this position since October 2000.  He first became Vice President, Human Resources in April 1993.  Mr. Ouellet joined the Company in 1967.

GLENN R. LUCAS, 49, Vice President and Treasurer.  Mr. Lucas became treasurer of the Company in April 1999 and his responsibilities include financing, foreign exchange risk management, cash management and insurance.  He has held various senior positions with the Company in Asia: President, Alcan Japan (1998), President, Alcan Nikkei Asia Company (1997) and Vice President, Planning & Finance, Alcan Pacific Limited (1994).  Mr. Lucas joined the Company in 1979.

THOMAS J. HARRINGTON, 44, Vice President and Controller.  Prior to joining the Company in November 2002, Mr. Harrington was employed at General Electric Company where he was global controller for GE Medical Systems. Prior to joining GE, Mr. Harrington was a manager with Deloitte & Touche LLP, in California.

MICHEL JACQUES, 50, Vice President, Strategic Management Support. Mr. Jacques has held this position since 1 January 2002 and he assists the Office of the President and the executive management team in addressing high value at stake issues and also provides expertise to business groups.  He has also held various positions with the Company: Director, Corporate Development (September 2000), Vice President, Metal Management, Business Planning and Development, Alcan Europe (1997), and Director, Metal Management, Logistics and Information Technology (September 1996).

ROY MILLINGTON, 43, Corporate Secretary.  Mr. Millington has held this position since July 2001. As senior legal counsel, he was previously based in Zurich and was active in the global legal integration of the Company and Algroup.  He has been a member of Alcan's legal department since 1989 and was seconded to British Alcan Aluminium plc in 1995-1997.

ITEM 11 EXECUTIVE COMPENSATION

The information required is incorporated by reference to the Management Proxy Circular, pages 20 to 25, in the section entitled "Executive Officers' Remuneration".

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required is incorporated by reference to the Management Proxy Circular, pages 7 and 8, in the section entitled "Nominees for Election as Directors".

Directors and Executive Officers as a group beneficially own 351,917 Shares (including Shares over which control or direction is exercised). This represents 0.11% of Shares issued and outstanding. In addition, Executive Officers as a group have Options (as defined in the Management Proxy Circular) to purchase 2,542,251 Shares.

34

In the case of each of the Directors and Named Executive Officers of Alcan, the percentage of Shares held amounts to less than 0.08% of the outstanding Shares.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

The information required is incorporated by reference to the Management Proxy Circular, pages 27 and 28, the section entitled "Indebtedness of Directors and Executive Officers".

The interest rate is currently nil on all outstanding option loans.

ITEM 14 CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's management, including Alcan's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Alcan's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. No significant changes were made in Alcan's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART IV

ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   1.   FINANCIAL STATEMENTS

The information required is incorporated by reference to the Annual Report, pages 41 to 77 and the Auditors' Report on page 40 thereof.

       2.   FINANCIAL STATEMENT SCHEDULES

             The required information is shown in the consolidated financial statements or notes thereto.

       3.   EXHIBITS

References to documents filed by the Company prior to April 1987 are to SEC File No. 1-3555.  References to documents filed by the Company after April 1987 are to SEC File No. 1-3677.

(3)  Articles of Incorporation and By-laws:
3.1.	Certificate of Amalgamation dated 1 January 1995, Certificate of Amendment dated 8 May 1995. (Incorporated by reference to exhibit 3.1 to the Annual Report on Form 10-K of the Company for 1996.)
3.1.1	Certificate of Amendment dated 1 March 2001. (Incorporated by reference to exhibit 3.11 to the Annual Report on Form 10-K of the Company for 2000.)
3.2	Restated Articles of Incorporation dated 12 September 2002. (Incorporated by reference to exhibit 3 to the Quarterly Report on Form 10-Q of the Company for the quarter ended 30 September 2002.)
3.3	By-law No. 1A. (Incorporated by reference to exhibit 3.5 to the Annual Report on Form 10-K of the Company for 1987.)
3.3.1	Amendment to By-law No. 1A. (Incorporated by reference to exhibit 3.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended 30 June 2002.)

35

(4)      Instruments defining the rights of security holders:

4.1.1	Indenture, dated as of 15 May 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.1 to the Company's Registration Statement on Form S-3 (No. 33-29761) filed with the Commission on 7 July 1989).
4.1.2	First Supplemental Indenture dated as of 1 January 1986 to the Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.2 to the Company's Registration Statement on Form S-3 (No. 33-29761) filed with the Commission on 7 July 1989).
4.1.3	Second Supplemental Indenture dated as of June 30, 1989 to the Indenture dated as of May 15, 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.3 to the Company's Registration Statement on Form S-3 (No. 33-29761) filed with the Commission on 7 July 1989).
4.1.4	Third Supplemental Indenture dated as of 19 June 1989 to the Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit (4)(a) to the Company's Current Report on Form 8-K dated 26 July 1989 filed with the Commission on 26 July 1989 (Commission File Number 1-3677)).
4.1.5	Fourth Supplemental Indenture dated as of 17 July 1990 to the Indenture dated as of May 15, 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.5 to the Company's Registration Statement on Form S-3 (No. 33-35977) filed with the Commission on 20 July 1990).
4.1.6	Fifth Supplemental Indenture dated as of 1 January 1995 to the Indenture dated May 15, 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.6 to the Company's Registration Statement on Form S-3 (No. 333-76535) filed with the Commission on 19 April 1999).
4.1.7	Sixth Supplemental Indenture dated as of 8 April 2002 to the Indenture dated May 15, 1983 between Alcan Inc. and Bankers Trust Company, as Trustee. (Incorporated by reference to exhibit 4.7 to the Company's Registration Statement on Form S-3 (No. 333-85998) filed with the Commission on 11 April 2002).
4.1.8	Specimen Form of Debt Security (Incorporated by reference to exhibit 4.1 to Form 8-A filed with the Commission on 10 September 2002).
4.2	Form of certificate for the Registrant's Common Shares (Incorporated by reference to exhibit 4.2 to the Annual Report on Form 10-K of the Company for 1989.)
4.3	Shareholder Rights Agreement as re-confirmed on 25 April 2002 between Alcan and CIBC Mellon Trust Company as Rights Agent, which Agreement includes the form of Rights Certificates. (Incorporated by reference to exhibit 4 to the Quarterly Report on Form 10-Q for the quarter ended 30 June 2002.)

36

(10)	Material Contracts
10.1	Alcan Pension Plan (Canada), restated version, as of October 1990. (Incorporated by reference to exhibit 10.1 to the Annual Report on Form 10-K of the Company for 1990.)
10.1.1	Amendments dated 1 January 1992. (Incorporated by reference to exhibit 10.1.1 to the Annual Report on Form 10-K of the Company for 1991.)
10.1.2	Amendments dated 1 January 1990, Schedule 93-2.  (Incorporated by reference to exhibit 10.1.2 to the Annual Report on Form 10-K of the Company for 1994.)
10.1.3	Amendments dated 1 January 1994, Schedule 93-3 and Schedule 93-4.  (Incorporated by reference to exhibit 10.1.3 to the Annual Report on Form 10-K of the Company for 1994.)
10.1.4	Amendments dated 31 December 1994, Schedule 95-1, 1 January 1996 Schedule 95-2, 1 January 1992, Schedule 95-3 and 1 January 1995, Schedule 95-4. (Incorporated by reference to exhibit 10.1.4 to the Annual Report on Form 10-K of the Company for 1995.)
10.1.5	Amendments dated 1 July 1996, Schedule 96-1, 1 November 1996, Schedule 96-2, 1 January 1992 for paragraphs 1, 2 and 3 of Schedule 96-3 and 1 January 1996 for paragraph 4 of Schedule 96-3. (Incorporated by reference to exhibit 10.1.5 to the Annual Report on Form 10-K of the Company for 1996.)
10.1.6	Amendments dated 1 January 1998, Schedule 97-1, 30 March 1998, Schedule 98-1 and 1 November 1998, Schedule 98-2. (Incorporated by reference to exhibit 10.1.6 to the Annual Report on Form 10-K of the Company for 1998.)
10.1.7	Amendments dated 1 May 1999, Schedule 99-1, 1 October 1999, Schedule 99-2, 1 January 2000 and 1 July 2000, Schedule 00-1, 1 October 2000, Schedule 00-2 and 31 December 2000, Schedule 00-3. (Incorporated by reference to exhibit 10.1.7 to the Annual report on Form 10-K of the Company for 2000.)
10.1.8	Amendments dated 1 July 2001, Schedule 01-1 and 1 October 2001, Schedule 01-2.  (Incorporated by reference to exhibit 10.1.8 to the Annual Report on Form 10-K of the Company for 2001.)
10.1.9	Amendments dated 15 October 2002, Schedules 02-1, 02-2, 02-3 and 29 November 2002, Schedule 02-4. (filed herewith.)
10.2	Alcan Executive Share Option Plan. (Incorporated by reference to the section entitled "The Plan" on pages 3 through 8 and on pages 3 through 7 of the Prospectuses dated 30 April 1990 and 28 April 1993, respectively, filed as part of the Company's Registration Statements on Form S-8, Registration Nos. 33-34716 and 33-61790.)

37

10.3	Alcan Executive Performance Award Plan revised as of October 1994. (Incorporated by reference to exhibit 10.3 to the Annual Report on Form 10-K of the Company for 1994.)
10.4	Alcan Financial Counselling Plan. (Incorporated by reference to the exhibit of that name filed with the Annual Report on Form 10-K of the Company for 1981.)
10.5	Alcan Executive Automobile Program revised as of 1 January 1992.  (Incorporated by reference to exhibit 10.5 to the Annual Report on Form 10-K of the Company for 1991.)
10.6	Alcan Flexible Perquisites Program. (Incorporated by reference to exhibit 10.6 to the Annual Report on Form 10-K of the Company for 1995.)
10.7	Form of Supplemental Retirement Benefits Agreement. (Incorporated by reference to exhibit 10.6 filed with the Annual Report of the Company on Form 10-K for 1983.)
10.8	Alcan Supplemental Retirement Benefit Plan (Canada), February 1992 edition. (Incorporated by reference to exhibit 10.8 to the Annual Report on Form 10-K of the Company for 1991.)
10.8.1	Amendments dated 1 January 1994, Schedule 93-1.  (Incorporated by reference to exhibit 10.7.1 to the Annual Report on Form 10-K of the Company for 1994.)
10.8.2	Amendments dated 23 September 1993.  (Incorporated by reference to exhibit 10.8.2 to the Annual Report on Form 10-K of the Company for 1994.)
10.8.3	Amendments dated 1 November 1998, Schedule 98-1. (Incorporated by reference to exhibit 10.8.3 to the Annual Report on Form 10-K of the Company for 1998.)
10.8.4	Amendments dated 1 May 1999, Schedule 99-1 and 1 January 2000, Schedule 00-1. (Incorporated by reference to exhibit 10.8.4 to the Annual Report on Form 10-K of the Company for 2000.)
10.8.5	Amendments dated 15 October 2002, Schedules 02-1 and 02-2. (Filed herewith.)
10.9	Alcan Retirement Compensation Plan for Non-Executive Directors dated 27 April 1995. (Incorporated by reference to exhibit 10.10 to the Annual Report on Form 10-K of the Company for 1995.)
10.10	Amendment dated 1 January 1997. (Incorporated by reference to exhibit 10.10.1 to the Annual Report on Form 10-K of the Company for 1996.)

38

	10.11	B.C./Alcan 1997 Agreement. (Incorporated by reference to exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended 30 June 1997.)
	10.12	Employment Agreement dated 23 February 2001 with Travis Engen. (Incorporated by reference to exhibit 10.14 to the Annual Report on Form 10-K of the Company for 2000.)
	10.13	Alcan Inc. Stock Price Appreciation Plan dated 27 September 2001.  (Incorporated by reference to exhibit 99.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended 30 September 2001.)
	10.14	Alcan Inc. 2001 Deferred Share Unit Plan for Non-Executive Directors dated 1 April 2001 (Incorporated by reference to exhibit 99.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended 30 September 2001.)
	10.15	Employment Agreement dated 31 December 2001 with Richard B. Evans. (Incorporated by reference to exhibit 10.18 to the Annual Report on Form 10-K of the Company for 2001.)
	10.16	Employment Agreement dated 31 December 2001 with Brian W. Sturgell. (Incorporated by reference to exhibit 10.19 to the Annual Report on Form 10-K of the Company for 2001.)
	10.17	Total Shareholder Return Performance Plan as of 1 January 2002.  (Incorporated by reference to exhibit 10.20 to the Annual Report on Form 10-K of the Company for 2001.)
	10.18	Change of Control Agreement dated 1 August 2002 with Travis Engen. (Filed herewith.)
	10.19	Change of Control Agreement dated 1 August 2002 with Richard B. Evans.  Substantially similar agreements have been entered into with B.W. Sturgell, G. E. Merszei and C. Carroll.)
(13)	Annual Report. (Filed herewith.)
(21)	Subsidiaries and Related Companies of the Company. (Filed herewith.)

39

(23)	Consent of Independent Accountants is on page 45.
(24)	Powers of Attorney. (Filed herewith)
	24.1	Power of attorney of R. Berger
	24.2	Power of attorney of L.Y. Fortier
	24.3	Power of attorney of B.M. Levitt
	24.4	Power of Attorney W. R. Loomis
	24.5	Power of attorney of J.E. Newall
	24.6	Power of attorney of G. Saint-Pierre
	24.7	Power of attorney of G. Schulmeyer
(99)	Management Proxy Circular. (Filed herewith.)

(b)     REPORTS ON FORM 8-K

The Company has filed a report on Form 8-K during the quarter ended 31 December 2002 concerning Item 5 thereof: "Other Events". The filing date was 22 November 2002.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALCAN INC.
27 March 2003	By :*
	L. Yves Fortier, Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on 27 March 2003.

/s/ Travis Engen

Travis Engen,  Director, President and
Chief Executive Officer
(Principal Executive Officer)

*

Roland Berger, Director

Clarence J. Chandran, Director

*

L. Yves Fortier, Chairman of the Board

*

Brian M. Levitt, Director

*

William R. Loomis, Director

*

J. E. Newall, Director

*

Guy Saint-Pierre, Director

*

Gerhard Schulmeyer, Director

41

Paul M. Tellier, Director

/s/ Geoffery E. Merszei

Geoffery E. Merszei, Executive Vice President and Chief Financial Officer  (Principal Financial Officer)

/s/ Thomas J. Harrington

Thomas J. Harrington, Vice-President and
Controller
(Principal Accounting Officer)

* By: Roy Millington as Attorney-in-fact

42

CERTIFICATION

I, Travis Engen, President and Chief Executive Officer of Alcan Inc. ("Alcan"), certify that:

1.   I have reviewed this annual report on Form 10-K of Alcan;

2.  Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.  Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.   The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: 27 March 2003	/s/ Travis Engen
	Travis Engen
	President and Chief Executive Officer

43

CERTIFICATION

I, Geoffery E. Merszei, Executive Vice President and Chief Financial Officer of Alcan Inc. (''Alcan''), certify that:

1.   I have reviewed this annual report on Form 10-K of Alcan;

2.   Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.  Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.   The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: 27 March 2003	/s/ Geoffery E. Merszei
	Geoffery E. Merszei
	Executive Vice President and
	Chief Financial Officer

44

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-6070, 33-34716, 33-61790 and 333-89711) and on Form S-3 (Nos. 2-78568, 2-78713, 33-82754, 333-83336 and 333-85998) of Alcan Inc., of our report, dated 9 February 2003 relating to financial statements  and our comments by auditors on Canada-U.S. Reporting Difference dated 9 February 2003 which appears on page 40 of the 2002 Annual Report to Shareholders, which is incorporated by reference in this Annual Report on Form 10-K.

Montreal, Canada
27 March 2003

                                                                                                /s/ PricewaterhouseCoopers LLP
                                                                                                PricewaterhouseCoopers LLP

45

EX-10.1.9

EXHIBIT 10.1.9. : ALCAN PENSION PLAN (CANADA)

SCHEDULE OF AMENDMENTS 02-1

1.      The following subsection is added immediately after subsection 1.01:

        "1.01.1    Plan Amendments (from the Effective Date to June 2002)

During this period, the Plan was amended on numerous occasions for the purpose of augmenting pensions, improving pension benefits and implementing changes required by Applicable Pension Laws.  Nine pension augmentations were granted which collectively provided inflation adjustments, catch-up augmentations to restore the purchasing power of pensions and  special augmentations of smaller pensions. The bridge benefit was improved and options were added.  Early retirement factors were significantly improved for all Members.  CAW Members had their benefits defined by pension multipliers.  A new payment guarantee was added providing a 60% spousal with a 10 year guarantee.  Several pension payment guarantees now apply as well to the bridge benefit.  A temporary contribution holiday was granted to all active Members other than CAW Members.  Finally, Member representation on the Pension Committee was increased from two to four."

2.       The sole paragraph of subsection 5.04 is replaced by the following:

"The annual rate of Interest credited to Member Contributions for a calendar year shall be the annual return for that calendar year derived from the investment of the assets of the Plan, less investment expenses and administration costs, as determined by the Actuary of the Plan."

3.       The sole paragraph of subsection 5.05 is replaced by the following:

"The rate of interest credited on a lump sum payment which falls due shall be at  such rate prescribed by Applicable Pension Laws in respect of each month of the period starting from either the Date of Determination or the last calendar year-end when interest was computed and credited in accordance with subsection 5.04, whichever applies, and ending with the first of the month of payment."

4.       Paragraph 6.02 (ii) is replaced by the following:

"he has attained age 55 and he is not entitled to a refund under subsection 12.01."

1

5.       Paragraph 8.02(c) is amended by replacing the clause which reads

"the bridge benefit begins on the Pension Commencement Date of his retirement pension and is payable in monthly instalments until the earlier of the following dates:  (i) his date of death and, (ii) the limit date and, is reduced by any bridge benefit or its equivalent payable from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b)."

by the following clause

"The bridge benefit begins on the Pension Commencement Date of his retirement pension and is payable to him in monthly instalments until the limit date; or until his death if before the limit date and thereafter is payable to his Spouse or Beneficiary, as the case may be, in accordance with the retirement pension guarantee elected by the Member under Section 10 and, is reduced by any bridge benefit or its equivalent payable from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b)."

6.      Subsection 8.03 is amended by inserting in the second paragraph immediately after the words "subsection 8.02(b)" the following words "or 8.02(b.1) as the case may be".

7.       Paragraph 9.03(b)(i) is replaced by the following:

"twenty-five percent (25%) of the average of the YMPE's for the year of Pension Commencement date and for each of the two immediately preceding years divided by thirty-five (35);".

8.      The following subsection is added immediately after subsection 10.02:

          "10.02.1    Adjustment for Early Retirement Pension from Another Company Source

The retirement pension determined under Section 8 in respect of a Member, is reduced or increased as the case may be by the total of all amounts each of which is the amount, in respect of a pension payable from another company source deducted under subsection 7.01, determined by the formula

                                 A - - B

                                 times

the amount of normal pension payable from the other company source deducted under subsection 7.01

2

where

"A"    equals the early retirement factor applied under Section 8,

"B"    equals the early retirement factor applied to the normal pension from the other company source deducted under subsection 7.01,

subject to a minimum retirement pension equal to the amount determined under subsections 7.02 or 7.03 multiplied by the early retirement factor applied under Section 8."

9.      Clause (a) of the first paragraph of subsection 10.03 is replaced by the following:

         "(a.1)    the Spouse's pension payment guarantee (option 1)

Under this guarantee the pension is payable during the Member's lifetime with a provision that if his Spouse survives him 50% of such pension as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.        

Should the Spouse die before the Member's Pension Commencement Date, the election of this guarantee shall be null and void.

         (a.2)     the Spouse's pension payment guarantee (option 2)

Under this guarantee the pension is payable during the Member's lifetime with a provision that if his Spouse survives him, either 60% (not available to Provincial Employees of Manitoba) or 66 2/3% (only available to Provincial Employees of Manitoba), 75% or 100% of such pension as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.

3

Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit, a corresponding percentage of the bridge benefit will be payable after his death to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

Should the Spouse die before the Member's Pension Commencement Date, the election of this guarantee shall be null and void.

         (a.3)     the Spouse's pension payment guarantee (option 3)

Under this guarantee the pension is payable during the Member's lifetime with a provision that if his Spouse survives him and his death occurs prior to having received 120 monthly payments, payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 payments in all have been made and thereafter 60% of the pension will be payable during the remaining lifetime of such Spouse.  If such Spouse predeceases the Member or dies before the 120 monthly payments have been made, payments will be continued to the Member's Beneficiary until 120 monthly payments in all have been made.

Furthermore under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began before he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c), (iii) the death of the Member occurs before having received 120 bridge benefit payments and (iv) his Spouse survives him, bridge benefit payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 bridge benefit payments in all have been made and thereafter 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived,  would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of the Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before 120 bridge benefit payments have been made, bridge benefit payments will be continued to the Member's Beneficiary until 120 bridge benefit payments in all have been made.  If under condition (iii) above the death of the Member occurs after having received 120 bridge benefit payments and all other conditions remain unchanged, 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

4

Alternatively under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began on or after he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c) and (iii) his Spouse survives him, payments will be continued to such Spouse nominated by the Member at the time of electing the guarantee until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c), payments will be continued to the Member's Beneficiary until the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c).

Should the Spouse die before the Member's Pension Commencement Date, the election of this guarantee shall be null and void."

10.    Table A of clause (b) of the first paragraph of subsection 10.03 is amended by inserting after the second entry of the first column the words "60%/10yr. guar." and after the second entry of the second column the words "96 2/3%".

11.     The second sub-clause of clause (c) of the first paragraph of subsection 10.03 is replaced by the following:

"Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit and before having received 120 bridge benefit payments, payments of the bridge benefit will be continued to the Member's Beneficiary until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date at which 120 payments in all have been made.

If the Member elects such guarantee at his Early Retirement Date, Normal Retirement Date or Postponed Retirement Date, his retirement pension is multiplied by the greater of 95% and a factor, in percent, which will make the resulting pension the Actuarial Equivalent of his retirement pension in the normal payment guarantee and his bridge benefit is multiplied by a factor which will make the resulting bridge benefit the Actuarial Equivalent of his bridge benefit that without this guarantee would normally have terminated at the earlier of his death or the limit date, as such term is defined in paragraph 8.02 (c)."

5

12.     Subsection 10.04 is amended by adding the following paragraph:

"The right of the surviving Spouse of a Member to a joint and survivor pension shall terminate and the pension payment guarantee elected by the Member under paragraph 10.03(a.1), 10.03(a.2) or 10.03(a.3) or under an equivalent provision of the Plan as it read prior to 1 January 2001 shall be null and void following modification effected pursuant to subsection 10.10."

13.     Subsection 10.06 is amended by replacing the paragraph

"The temporary pension is subject to the Spouse's pension payment guarantee elected by the member in respect of his retirement pension.  If the Member dies prior to the end of the period selected for the payment of the temporary pension, the Spouse shall be paid the guaranteed percentage of the temporary pension for the remainder of the period."

by the following paragraph

"The temporary pension is subject to the Spouse's pension payment guarantee elected by the member in respect of his retirement pension.  If the Member dies prior to the end of the period selected for the payment of the temporary pension, the Spouse nominated by the Member at the time of electing the guarantee or the Beneficiary, as the case may be, shall be paid the guaranteed percentage of the temporary pension for the remainder of the period."

14.    The following subsections are added immediately following subsection 10.09:

         "10.10  Pension Redetermination after Pension Commencement Date

This subsection applies to only to a member who at the relevant time is a Provincial Employee of Quebec.  If after Pension Commencement Date the right of a Spouse to a joint and survivor pension is terminated under Applicable Pension Law and there exists no legal obligation or demand pending upon the Plan to pay such joint and survivor pension upon the Members death, the Administrator must upon application by the Member or upon partition of the retirement pension under subsection 7.04 redetermine, as of the effective date of such termination or if the Spouse's right terminated prior to 1 January 2001, as of the date of application by the Member, the Member's retirement pension that has been established based on the election by the Member of a Spouse's pension payment guarantee under paragraph 10.03(a.1), 10.03(a.2) or 10.03(a.3) or under an equivalent provision of the Plan as it read prior to 1 January 2001. The redetermined retirement pension shall be in the same amount and have the same characteristics as the retirement pension according to the normal guarantee.  The redetermination of a retirement pension under this subsection cannot alone operate to reduce the amount of the retirement pension paid to the Member.

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         10.11   Pension Payment Guarantee (transition)

Where a Member whose Pension Commencement Date occurred during the period beginning 1 January 2001 and ending 30 September 2001 dies while still in receipt of a bridge benefit and is survived by the Spouse nominated by the Member at the time of electing the Spouse's pension payment guarantee (option 1) described in paragraph 10.03(a.1), 60% of the bridge benefit will be payable after the Member's death to that Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of that Spouse's death."

15.     Subsection 11.01 is amended by deleting paragraph (a), by deleting the designation "b" of paragraph (b) and the words "after the completion of two years of Continuous Service as a Member or two years of Credited Service, and".

16.     Subsection 11.04 is amended by replacing the reference to "paragraph 11.01(b)" by a reference to "subsection 11.01".

17.     The two paragraphs of subsection 11.07 are replaced by the following:

"The amount payable to a Member's Beneficiary of any retirement pension under the normal guarantee, the ten year guarantee or the spouse's pension payment guarantee (option 3) and of any bridge benefit under the spouse's pension guarantee (option 3) or the ten year guarantee may, if so requested by the Beneficiary, be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement pension payments or bridge benefit payments under the guarantee.

The amount payable to a Member's estate of any retirement pension under the normal guarantee, the ten-year guarantee or the spouse's pension payment guarantee (option 3) and  of any bridge benefit under the spouse's pension payment guarantee (option 3) or the ten year guarantee shall be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement pension payments or bridge benefit payments under the guarantee."

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18.    The sole paragraph of subsection 11.08 is replaced by the following:

"  The Beneficiary designation made in accordance with subsection 11.05 shall apply to any retirement pension payments payable upon the death during retirement of a Member who received a retirement pension under the normal guarantee, the 10-year pension payment guarantee or the spouse's pension payment guarantee (option 3), to any remaining retirement pension payments payable upon the death of the Member's Spouse who received pension payments under the spouse's pension payment guarantee (option 3), to any bridge benefit payments payable upon the death of a Member who received a retirement pension under the spouse's pension payment guarantee (option 3) or under the ten year guarantee and to any remaining bridge benefit payments payable upon the death of the Member's Spouse who received pension payments under the spouse's pension payment guarantee (option 3).  Should the Spouse or the Contingent Annuitant nominated under any other pension payment guarantee not survive the Member in retirement, any payment made in accordance with subsection 10.07 shall be made to the Member's estate."

19.    The first paragraph of subsection 11.09 is amended by inserting after the words "60% Spouse Pension Payment Guarantee" the words "(option 2)" and the second paragraph is amended by replacing the reference to subsection "11.01(b)" by a reference to subsection "11.01".

20.     The sole paragraph of subsection 12.01 is replaced by the following:

"a)    A Member, other than a Member who is a Provincial Employee of Quebec, whose employment with the Company and its Affiliated Companies is terminated prior to the completion of two (2) years of Continuous Service while a Member or two years of Credited Service, for any reason other than Normal or Postponed Retirement, shall receive a lump sum payment equal to the greater of the Actuarial Equivalent of a deferred retirement pension defined in paragraph 12.03(a) and the Member's Contributions with Interest, unless the Member elects to transfer his rights under the Plan to another retirement plan in accordance with a Transfer Agreement.

b)           A Member who is a Provincial Employee of Quebec and whose employment with the Company and its Affiliated Companies is terminated for any reason other than Normal or Postponed Retirement shall, subject to notice requirements under Applicable Pension Law, receive a lump sum payment equal to the Actuarial Equivalent of a deferred retirement pension defined in paragraph 12.03(a), unless such payment is equal to 20% or more of the YMPE for the year in which the Member's employment is terminated."

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21.     The opening paragraph of subsection 12.03 is replaced by the following:

"A Member, other than a Member who is a Provincial Employee of Quebec, whose employment with the Company and its Affiliated Companies is terminated after the completion of two years of Continuous Service while a Member or two years of Credited Service, (or for a Provincial Employee of Saskatchewan, a continuous period of one year if his age and the number of years of service or Credited Service when added equals at least 45) for any reason other than death or retirement, shall receive benefits under (a) unless he elects those under (b) or (c); a Member who is a Provincial Employee of Quebec, whose employment with the Company and its Affiliated Companies is terminated for any reason other than death or retirement and who has not received a lump sum payment under paragraph 12.01(b), shall receive benefits under (a) unless he elects those under (b) or (c):"

22.     Paragraph 12.03(a) is replaced by the following:

"(i)    a deferred retirement pension computed in accordance with Section 7 using the Member's date of termination of employment as the Date of Determination and payable at Normal Retirement Date, plus

(ii)         if the Member is a Provincial Employee of Quebec, a deferred retirement pension that is the Actuarial Equivalent of the excess benefit, if any, calculated in accordance with paragraph 13.01(a) using the date of termination as the Date of Determination and payable at Normal Retirement Date, or if the Member is not a Provincial Employee of Quebec, a lump sum equal to the excess benefit, if any, calculated in accordance with paragraph 13.01(a) using the date of termination as the Date of Determination, plus

(iii)       a deferred retirement pension that is the Actuarial Equivalent of the excess benefit, if any, calculated in accordance with paragraph 13.01(b) using the date of termination as the Date of Determination, subject to a maximum amount equal to the amount by which the maximum retirement pension determined in accordance with Revenue Rules exceeds the sum of the deferred retirement pension determined under (i) above and the deferred retirement pension that is the Actuarial Equivalent of the excess benefit, if any, calculated in accordance with paragraph 13.01(a) using the date of termination as the Date of Determination and payable at Normal Retirement Date, plus

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(iv)        the portion of the value of the excess benefit that may not be used to constitute a pension, if any, by reason of the maximum set in accordance with (iii) above, shall be paid in a lump sum in cash."

23.     Paragraph 12.03(b) is replaced by the following:

"a lump sum payable in accordance with subsection 12.05 and equal to the sum of (i), (ii) and (iii) below:

(i)                 the Actuarial Equivalent of the deferred retirement pension defined in (a)(i), plus

(ii)               the excess benefit calculated in accordance with Section 13.01(a) using the Member's date of termination as the Date of Determination, plus

(iii)             the excess benefit calculated in accordance with Section 13.01(b) using the Member's date of termination as the Date of Determination."

24.    The following subsections are added immediately after subsection 12.06:

          "12.07   Ceasing to be a Canadian Resident

A Member whose employment with the Company and its Affiliated Companies was terminated while he was a Provincial Employee of Quebec and who has not been residing in Canada for at least two years is entitled, upon application to the Administrator, to receive a lump sum payment equal to the value, according to his entitlement, of his retirement pension.

         11.08   Ontario Growing-in rights - Bracebridge Works Closing

For a Member whose employment at the Bracebridge Works, Province of Ontario (the "Works") was terminated as a result of the closure of the Works on 14 May 2002 (the "Closing Date"), the provisions of Sections 73 and 74 of the Ontario Pension Benefits Act, as they read on the Closing Date, and that would apply if the closure of the Works were determined to be a partial wind up of the Plan, shall be taken into consideration for the determination of the Member's pension benefits and his entitlement thereto pursuant to the provisions of this Section 12 of the Plan as they read on the Closing Date."

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25.     Subsection 13.01 is replaced by the following:

"The excess benefit as of a Member's Date of Determination is equal to the sum of

(a)         the amount, if any, by which Member Contributions together with Interest to Date of Determination, exceed 50% of the Actuarial Equivalent value of the retirement pension at Date of Determination; and

(b)         the amount, if any, by which A exceeds B

where

"A"    equals the sum of (i) the Actuarial Equivalent value of a hypothetical retirement pension at Date of Determination having the same characteristics as the normal pension, based on the assumption that payment of the retirement pension begins at the Member's Normal Retirement Date and allowing for adjustment of the retirement pension between the Date of Determination and the date that precedes by ten years his Normal Retirement Date.  The adjustment shall be the percentage corresponding to 50% of the change in the seasonally unadjusted All Items Consumer Price Index for Canada published by Statistics Canada between the month of the Date of Determination and the month the adjustment ceases;  however, the annualized adjustment rate cannot be less than 0% or greater than 2%; and (ii) the excess benefit as of the Date of Determination equal to the amount, if any, by which Member Contributions together with interest to Date of Determination, exceed 50% of amount determined under (i) above;

"B"    equals the sum of (i) the Actuarial Equivalent value of the retirement pension at Date of Determination; and (ii) the excess benefit as of the Date of Determination equal to the amount, if any, by which Member Contributions together with interest to Date of Determination, exceed 50% of the Actuarial Equivalent value of the retirement pension determined under (i) above."

26.    The paragraph of subsection 16.05 is replaced by the following:

"Two persons, one of whom must be an active Member and one of whom must be a non-active Member, will be elected by the Members in the manner described below.  These two persons will be Committee Members and will have the right to vote in respect of all decisions to be taken by the Pension Committee (hereinafter referred to as "Voting Committee members").

Two additional persons, one of whom must be an active Member and one of whom must be a non-active Member, will be elected by the Members in the manner described below.  These two additional persons will be Committee Members and will have the same rights as the other Committee Members except the right to vote in respect of all decisions to be taken by the Pension Committee (hereinafter referred to as "Non-voting Committee Members")."

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27.     The paragraph of subsection 16.07 is replaced by the following:

"The Pension Committee shall send or cause to be sent, with the notice calling the annual meeting of Members at which an election of Committee members is to be held, the following documents:

to each active Member

a)     a list of all active Members who have filed their candidacy with the secretary of the Pension Committee within the prescribed delay and with the required endorsements;

b)     a proxy form under the terms of which the active Member shall be asked to vote (i) to proceed in the manner set out in the Plan for the election of Committee members and (ii) by selecting one or two persons from the said list of active Members;

to each non-active Member

c)      a list of all non-active Members who have filed their candidacy with the secretary of the Pension Committee within the prescribed delay and with the required endorsements;

d)     a proxy form under the terms of which the non-active Member shall be asked to vote (i) to proceed in the manner set out in the Plan for the election of Committee members and (ii) by selecting one or two persons from the said list of non-active Members."

28.    The heading of subsection 16.08 is amended by deleting the words "by Majority" and the sole paragraph of subsection 16.08 is replaced by the following:

"Provided a majority of the votes cast by Members shall be in favour of the rules set out in the Plan for the election of four Committee members, the active Member and the non-active Member who has received the greatest number of votes shall be elected as the Voting Committee members for a term of three years beginning immediately after the annual meeting of Members and the active Member and non-active Member who has received the second greatest number of votes shall be elected as the Non-voting Committee members for a term of three years beginning immediately after the annual meeting of Members."

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29.    Subsection 16.09 is amended by replacing the words "one active and one non-active Member" by the words "two active and two non-active Members".

30.    Subsection 16.10 is amended by deleting the word "two".

31.    The paragraph of subsection 16.11 is replaced by the following:

"For the purposes of Sections 16 and 17 only, "active Member" shall mean a Member whose employment has not been terminated and a "non-active Member" shall mean any Member other than an active Member and, for the purposes only of receiving notice of the annual meeting referred to in subsection 17.01 and voting for Committee members, non-active Member shall include a Beneficiary who is in receipt of a pension under the Plan pursuant to Section 10 or 11."

32.    Subsection 17.01 is amended by replacing in subclause (c)(i) of the fourth paragraph the word "two" by the words "one to four", and by replacing in subclauses (c)(ii) and (c)(iii) and in clause (d) the words "or two" by words "to four".

The above amendments are effective from 1 January 2001 except for section 1 which is effective from 1 June 2002 and that part of section 24, which adds subsection 12.08 to the Plan, which is effective from 14 May 2002.

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SCHEDULE OF AMENDMENTS 02-2

1.     A new Section 5 entitled "CONTRIBUTIONS BY A PARTICIPATING COMPANY AND RIGHT TO TAKE A CONTRIBUTION HOLIDAY" is added to the plan and contains the following subsections:

"5.0.01   A Participating Company shall contribute to the Plan such amount, in addition to the Member Contributions, as shall be considered necessary on the advice of the Actuary to provide the pensions, benefits and other payments provided under the Plan and to defray fees and expenses provided under subsections 16.12 and 16.13.  A Participating Company will pay such contributions on a monthly basis during each fiscal year.

5.0.02        For greater certainty but without restricting the generality of the foregoing, any surplus assets while the Plan is ongoing, as determined by the Actuary of the Plan, or a part thereof, may at the discretion of the Company, be appropriated to the payment of the contributions of a Participating Company (such appropriation is hereinafter referred to as a "Contribution Holiday").  Effective on 1 January 2003, the right of a Participating Company to take a Contribution Holiday, is confirmed pursuant to the provisions of the Supplemental Pension Plans Act (R.S.Q., chapter R.15.1) as amended by An Act to Amend the Supplemental Pension Plan Act and Other Legislative Provisions (S.Q. 2000, chapter 41).

5.0.03        Effective 1 January 2003, the provisions of this Section 5.0 prevail over any other provision of the Plan or any agreement and are binding on every person having rights or obligations under the Plan."

2.      A new Section 5.1 entitled "MEMBER CONTRIBUTIONS" is added and contains articles 5.01 to 5.05 of the current Section 5 which are renumbered 5.1.01 to 5.1.05 respectively.

3.      The current Section 5 is deleted.

4.      Subsections 1.01, 2.22 and 2.24  are amended by replacing the reference to Section "5" by a reference to Section "5.1".

5.      Subsection 5.1.01 is amended by replacing the reference to subsection "5.02" by a reference to subsection "5.1.02".

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6.      Subsection 5.1.02.1 is amended by replacing the reference to subsections "5.01 and 5.02" by a reference to subsections "5.1.01 and 5.1.02".

7.      Subsection 5.1.05 is amended by replacing the reference to subsection "5.04" by a reference to subsection "5.1.04".

The above amendments are effective from 1 January 2003.

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SCHEDULE OF AMENDMENTS 02-3

1.      The following subsection is added immediately following subsection 19.09:

19.10    Pension Augmentation at 1 October 2002

19.10.1          The retirement pension, the deferred retirement pension and the Disability Pension of a Member who has retired, terminated his employment or became disabled as the case may be, before 2 September 2002, including the pension payable under any attached elected pension payment guarantee, either contingent or in payment, and the pension, either deferred or in payment, to a surviving spouse, shall be augmented on 1 October 2002.

The monthly amount of the augmentation on any date of calculation on or after 1 October 2002 is equal to the product of the Adjusted Augmentation Factor and the Monthly Pension.

Notwithstanding the preceding, this pension augmentation is not applicable if a Member at his Commencement Date has less than 100% of the Company's contributions to his retirement income vested and has less than 10 years of Credited Service.

19.10.2     For the purposes of this subsection 19.10 only, the following expressions shall have the meanings set out below:

"Commencement Date" means the earliest of a Member's retirement date;  the date he became disabled;  the date of termination of service;  the date he became eligible to an unreduced early retirement pension but not before 1 January 2001, if on 30 December 2000 he had been on the non-active payroll of a Participating Company and, in the case of a pre-retirement surviving spouse's pension, the first of the month following the Member's date of death.

"Consumer Price Index" for a month means the Consumer Price Index for the month as published by Statistics Canada under authority of the Statistics Act or the corresponding index of the country in whose currency the Monthly Pension is paid at a fixed rate of exchange.

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"Monthly Pension" means the monthly equivalent of the pension referred to in paragraph 19.10.1 excluding, in the case where the pension commenced between 1 April 1975 and 1 January 1976 inclusively or in the case where the termination date was before 1 February 1976, any increase paid under the provisions of the Government Annuity Improvement Act, Chapter 83, Statutes of Canada 1974-75-76.

"Adjusted Monthly Pension" means the Monthly Pension payable at 1 October 2002, excluding that portion which ceases to be paid at age 65, or payable at normal retirement date in the case of a deferred pension.

"Augmentation Factor" means the factor determined by the following formula[1]:

the greater of

(i)         A + B - 1
and
(ii)        nil

where

"A" equals the lesser of

(i)         1.03^C/12
and
(ii)        CPI₁ / CPI₂,

"B" equals the greater of

(i)         0.5 x (CPI₁ / CPI₂ - 1.03^C/12)
and
(ii)        nil

"C" equals the lesser of

(i)         12
and
(ii)        the number of months that the Commencement Date precedes 1 October 2002,

_______________________

[1] The formula may also be expressed as follows:
              Max. {nil;  [ Min. (1.03^C/12; CPI₁ /  CPI₂ ) + 0.5 x Max. (nil; CPI₁ /  CPI₂ - 1.03^C/12 ) ] - 1}

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"CPI₁"  equals the average Consumer Price Index for the 12-month period ending 30 June 2002,

                                       and

"CPI₂"  equals the average Consumer Price Index for the 12-month period ending the later of

(i) three calendar months prior to the month during which the Commencement Date occurred
and
(ii)       30 June 2001.

"Adjusted Augmentation Factor" means the factor determined by the following formula:

Augmentation Factor x A
- ----------------------------------------------
Adjusted Monthly Pension

where A equals the lesser of

(i)      Adjusted Monthly Pension
and
(ii)     $25,000.00 or where the Monthly Pension is paid at a fixed rate of exchange in a currency other than Canadian dollars, the equivalent of $25,000.00 in that other currency converted at the rate of exchange of 30 June 2002.

19.10.3     The retirement pension of a Member, who retires on or after 1 October 2002 and who immediately prior to such retirement was in receipt of an Approved Disability Benefit, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had his date of disability been his Commencement Date for the purpose of calculating such augmentation.

19.10.4     The retirement pension of a Member, who retires on or after 1 October 2002 and, who on 30 December 2000 and immediately prior to such retirement was on the non-active payroll of a Participating Company, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had the date of his eligibility to an unreduced early retirement pension, but not before 1 January 2001, been his Commencement Date for the purpose of calculating such augmentation.

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19.10.5     Unless it is an integral number of hundreds of 1%, the sum, on a compounded basis, of the augmentation factors under this and all previous pension augmentations since Commencement Date shall be rounded to the next higher multiple of 0.01%.

19.10.6     The Monthly Pension payable for a particular month on or after the effective date of this augmentation shall not exceed the maximum pension augmented with increases of the Consumer Price Index as required by Revenue Rules.

2.      Section 2.38 is amended by adding the following paragraphs immediately after the first paragraph:

"For the purposes of qualifying as a spouse under a conjugal relationship, the birth or adoption of a child during a marriage or a period of conjugal relationship prior to the period of conjugal relationship existing on the day as of which spousal status is established may qualify a person as a spouse.

For the purposes of qualifying as a spouse and in addition to a marriage or a conjugal relationship described above, any other form or quality of relationship provided for or recognized under Applicable Pension Laws may qualify a person as a spouse."

3.     Paragraph 12.04(b) is amended by replacing the words "date on which he attains the age of 55 years" by the words " earliest date on which his Number of Points is at least 75 and he is 55 years of age or over,".

4.      The following subsection is added immediately after subsection 16.14:

"16.14.1    Power of Pension Committee to recommend

The Pension Committee may, at all times, submit its recommendations regarding amendments to be made to the Plan in accordance with Section 18."

The above amendments shall come into force on the following dates:  Section 1 on 1 October 2002, Sections 2 and 4 on 1 January 2001 and Section 3 on 31 December 2000.

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SCHEDULE OF AMENDMENTS 02-4

1.      Subsection 5.1.02.1 is amended to read as follows:

"Notwithstanding paragraphs 3.07(i) and 4.05(b) and subsections 5.1.01 and 5.1.02 and with effect from 31 December 2000 to and including 31 December 2002, a Member other than a CAW Member is exempted from contributing to the Plan.

A Member who otherwise would have been required to contribute to the Plan if not for the exemption granted under this subsection shall be deemed to have been contributing to the Plan throughout the exemption period for the purpose only of qualifying under the fifth clause of subsection 1.01, under paragraphs 8.02(c) and 14.01(a) and under Annexes C and D."

The above amendment shall come into force on 31 December 2002.

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EX-10.8.5 4 ex108.htm

EXHIBIT 10.8.5. : ALCAN SUPPLEMENTAL RETIREMENT BENEFIT PLAN (CANADA)

SCHEDULE OF AMENDMENTS 02-1

1.            The following subsection is added immediately after subsection 1.01:

"1.01.1      Supplemental Plan Amendments (from the Effective Date to June 2002)

During this period, the Supplemental Plan was amended on numerous occasions for the purpose of augmenting and improving pension benefits and coordinating the provisions of the Supplemental Plan with those of the Plan.  Eight pension benefit augmentations were granted, a bridge benefit was added and early retirement factors were improved.  A new payment guarantee was added providing a 60% spousal with a 10 year guarantee.  Several pension payment guarantees now apply as well to the bridge benefit."

2.            The sole paragraph of subsection 5.02 is replaced by the following:

"The annual rate of Interest credited for a calendar year shall be the annual return for that calendar year derived from the investment of the assets of the Plan, less investment expenses and administration costs, as determined by the Actuary of the Plan."

3.      The sole paragraph of subsection 5.03 is replaced by the following:

"The rate of interest credited on a lump sum payment which falls due shall be at the rate applied to similar payments under the Plan in respect of each month of the period starting from either the Date of Determination or the last calendar year-end when interest was computed and credited in accordance with subsection 5.02, whichever applies, and ending with the first of the month of payment."

4.      Paragraph 6.02 (ii) is replaced by the following:

"he has attained age 55 and he is not entitled to a refund under subsection 12.01 of the Plan."

5.      Paragraph 8.02(c) is amended by replacing the clause which reads

"The bridge benefit begins on the Pension Commencement Date of his retirement benefit and is payable in monthly instalments until the earlier of the following dates:  (i) his date of death and, (ii) the limit date and, is reduced by any bridge benefit or its equivalent payable from the Plan and from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b) of the Plan."

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by the following clause

"The bridge benefit begins on the Pension Commencement Date of his retirement benefit and is payable to him in monthly instalments until the limit date; or until his death if before the limit date and thereafter is payable to his Spouse or Beneficiary, as the case may be, in accordance with the retirement pension guarantee elected by the Member under section 9 and, is reduced by any bridge benefit or its equivalent payable from the Plan and from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b) of the Plan."

6.      Subsection 8.03 is amended by adding the following sentence "Such deferral shall cause the bridge benefit to which he may be entitled to commence only from his elected pension commencement date under the plan." and by adding the following paragraph:

"The eligibility to the bridge benefit of a Member electing early deferred retirement is determined at his Early Retirement Date and the amount of the bridge is determined in accordance with subsection 8.02(c)."

7.      The following subsection is added immediately following subsection 8.07:

"8.08         Adjustment for Early Retirement Pension from Another Company Source

The retirement benefit determined in this section after the application of any early retirement factor in respect of a Member, is reduced or increased as the case may be by the total of all amounts each of which is the amount, in respect of a pension payable from another company source deducted under subsection 7.01, determined by the formula

            A - B

            times

the amount of normal pension payable from the other company source deducted under subsection 7.01

where

"A"    equals the early retirement factor applied under this section,

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"B"    equals the early retirement factor applied to the normal pension from the other company source deducted under subsection 7.01."

8.      Subsection 9.02 is amended by adding immediately following the first paragraph the following paragraph:

"The right of the surviving Spouse of a Member to a joint and survivor pension shall terminate and the pension guarantee elected by the Member under paragraph 9.02(b.1), 9.02(b.2) and 9.02(b.3) or under an equivalent provision of the Supplemental Plan as it read prior to 1 January 2001 shall be null and void following modification effected pursuant to subsection 9.06."

9.      Clause (b) of subsection 9.02 is replaced by the following:

"(b.1)         the Spouse's pension payment guarantee (option 1)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him 50% of such retirement benefit as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.

Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void.

(b.2)          the Spouse's pension payment guarantee (option 2)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him, either 60% (not available to Provincial Employees of Manitoba) or 66 2/3% (only available to Provincial Employees of Manitoba), 75% or 100% of such retirement benefit as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.

Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit, a corresponding percentage of the bridge benefit will be payable after his death to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

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Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void.

(b.3)          the Spouse's pension payment guarantee (option 3)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him and his death occurs prior to having received 120 monthly payments, payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 payments in all have been made and thereafter 60% of the retirement benefit will be payable during the remaining lifetime of such Spouse.  If such Spouse predeceases the Member or dies before the 120 monthly payments have been made, payments will be continued to the Member's Beneficiary until 120 monthly payments in all have been made.

Furthermore under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began before he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c), (iii) the death of the Member occurs before having received 120 bridge benefit payments and (iv) his Spouse survives him, bridge benefit payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 bridge benefit payments in all have been made and thereafter 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived,  would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of the Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before 120 bridge benefit payments have been made, bridge benefit payments will be continued to the Member's Beneficiary until 120 bridge benefit payments in all have been made.  If under condition (iii) above the death of the Member occurs after having received 120 bridge benefit payments and all other conditions remain unchanged, 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

Alternatively under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began on or after he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c) and (iii) his Spouse survives him, payments will be continued to such Spouse nominated by the Member at the time of electing the guarantee until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c), payments will be continued to the Member's Beneficiary until the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c).

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Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void."

 

10.       Table A of clause (c) of subsection 9.02 is amended by inserting after the second row the following additional row:

            "60%/10yr. guar.          96 2/3%             -"

11.    The second paragraph of clause (d) of subsection 9.02 is replaced by the following:

"Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit and before having received 120 bridge benefit payments, payments of the bridge benefit will be continued to the Member's Beneficiary until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date at which 120 payments in all have been made.

If the Member elects such guarantee at his Early Retirement Date, Normal Retirement Date or Postponed Retirement Date, his retirement pension is multiplied by the greater of 95% and a factor, in percent, which will make the resulting benefit the Actuarial Equivalent of his retirement benefit in the five-year payment guarantee and his bridge benefit is multiplied by a factor which will make the resulting bridge benefit the Actuarial Equivalent of his bridge benefit that without this guarantee would normally have terminated at the earlier of his death or the limit date, as such term is defined in paragraph 8.02 (c)."

11.       The following subsections are added immediately following subsection 9.05:

"9.06         Retirement Benefit Redetermination after Payment

Commencement Date

This subsection applies only to a Member who at the relevant time is a Provincial Employee of Quebec.  If after Payment Commencement Date the right of a Spouse to a joint and survivor pension is terminated under the Plan and there exists no legal obligation or demand pending upon the Supplemental Plan to pay such joint and survivor pension upon the Member's death, the Administrator must upon application redetermine, as of the effective date of such termination or if the Spouse's right terminated prior to 1 January 2001, as of the date of application by the Member, the Member's retirement benefit that has been established based on the election by the Member of a Spouse's pension payment guarantee under paragraph 9.02(b.1), 9.02(b.2) or 9.02(b.3) or under an equivalent provision of the Supplemental Plan as it read prior to 1 January 2001. The redetermined retirement benefit shall be in the same amount and have the same characteristics as the retirement benefit according to the five-year guarantee.  The redetermination of a retirement pension under this subsection cannot alone operate to reduce the amount of the retirement pension paid to the Member.

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9.07          Pension Payment Guarantee (transition)

Where a Member whose Payment Commencement Date occurred during the period beginning 1 January 2001 and ending 30 September 2001 dies while still in receipt of a bridge benefit and is survived by the Spouse nominated by the Member at the time of electing the Spouse's pension payment guarantee (option 1) described in paragraph 9.02(b.1), 60% of the bridge benefit will be payable after the Member's death to that Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of that Spouse's death."

12.    Subsection 10.01 is amended by deleting the words "after the completion of two years of Continuous Service as a Member or two years of Credited Service and".

13.    The two paragraphs of subsection 10.06 are replaced by the following:

"The amount payable to a Member's Beneficiary of any retirement benefit under the five-year guarantee, the ten year guarantee or the spouse's pension payment guarantee (option 3) and of any bridge benefit under the spouse's pension guarantee (option 3) or the ten year guarantee may, if so requested by the Beneficiary, be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement benefit payments or bridge benefit payments under the guarantee.

The amount payable to a Member's estate of any retirement benefit under the five-year guarantee, the ten-year guarantee or the spouse's pension payment guarantee (option 3) and  of any bridge benefit under the spouse's pension payment guarantee (option 3) or the ten year guarantee shall be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement benefit payments or bridge benefit payments under the guarantee."

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14.    The sole paragraph of subsection 10.07 is replaced by the following:

"The Beneficiary designation made in accordance with subsection 10.04 shall apply to any retirement benefit payments payable upon the death during retirement of a Member who received a retirement benefit under the five-year guarantee, the 10-year pension payment guarantee or the spouse's pension payment guarantee (option 3), to any remaining retirement benefit payments payable upon the death of the Member's Spouse who received benefit payments under the spouse's pension payment guarantee (option 3), to any bridge benefit payments payable upon the death of a Member who received a retirement benefit under the spouse's pension payment guarantee (option 3) or under the ten year guarantee and to any remaining bridge benefit payments payable upon the death of the Member's Spouse who received benefit payments under the spouse's pension payment guarantee (option 3)."

15.   Subsection 11.02 is amended by deleting the words "after the completion of two years of Continuous Service while a Member or two years of Credited Service, (or for a Provincial Employee of Saskatchewan, a continuous period of one year if his age and the number of years of service or Credited Service when added equals at least 45)" and by inserting immediately after the words "under (a) unless" the words ", where he is otherwise entitled to a deferred retirement pension under the Plan,".

16.   The following subsection is added immediately following subsection 11.03:

"11.04       Ceasing to be a Canadian Resident

An application by a Member in accordance with subsection 12.07 of the Plan to receive a lump sum payment equal to the value, according to his entitlement, of his retirement benefit under the Plan shall be deemed to include an application to receive a lump sum payment equal to the value, according to his entitlement, of his retirement benefit under the Supplemental Plan.  However, payment in such lump sum is subject to approval by the Company."

The above amendments are effective from 1 January 2001.

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SCHEDULE OF AMENDMENTS 02-2

1.      The following subsection is added immediately following subsection 15.09:

15.10     Pension Augmentation at 1 October 2002

15.10.1    The retirement pension, the deferred retirement pension and the Disability Pension of a Member who has retired, terminated his employment or became disabled as the case may be, before 2 September 2002, including the pension payable under any attached elected pension payment guarantee, either contingent or in payment, and the pension, either deferred or in payment, to a surviving spouse, shall be augmented on 1 October 2002.

The monthly amount of the augmentation on any date of calculation on or after 1 October 2002 is equal to the product of the Adjusted Augmentation Factor and the Monthly Pension.

15.10.2  For the purposes of this subsection 15.10 only, the following expressions shall have the meanings set out below:

"Commencement Date" means the earliest of a Member's retirement date;  the date he became disabled;  the date of termination of service;  the date he became eligible to an unreduced early retirement pension, but not before 1 January 2001, if on 30 December 2000 he had been on the non-active payroll of a Participating Company and, in the case of a pre-retirement surviving spouse's pension, the first of the month following the Member's date of death.

"Consumer Price Index" for a month means the Consumer Price Index for the month as published by Statistics Canada under authority of the Statistics Act or the corresponding index of the country in whose currency the Monthly Pension is paid at a fixed rate of exchange.

"Monthly Pension" means the monthly equivalent of the pension referred to in subparagraph 15.10.1.

"Adjusted Monthly Pension" means the sum of adjusted monthly pension determined under paragraph 19.10.2 of the Plan and the Monthly Pension payable at 1 October 2002, excluding that portion which ceases to be paid at age 65, or payable at normal retirement date in the case of a deferred pension.

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"Augmentation Factor" means the factor determined by the following formula[1]:

the greater of

(i)         A + B - 1
and
(ii)        nil

where

"A" equals the lesser of

(i)         1.03^C/12
and
(ii)        CPI₁ / CPI₂,

"B" equals the greater of

(i)         0.5 x (CPI₁ / CPI₂ - 1.03^C/12)
and
(ii)        nil

"C" equals the lesser of

(i)         12
and
(ii)        the number of months that the Commencement Date precedes 1 October 2002,

"CPI₁" equals the average Consumer Price Index for the 12-month period ending 30 June 2002,

and

"CPI₂" equals the average Consumer Price Index for the 12-month period ending the later of

(i)         three calendar months prior to the month during which the Commencement Date occurred
and
(ii)               30 June 2001.

________________________________

[1] The formula may also be expressed as follows:

              Max. {nil;  [ Min. (1.03^C/12; CPI₁ /  CPI₂ ) + 0.5 x Max. (nil; CPI₁ /  CPI₂ - 1.03^C/12 ) ] - 1}

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"Adjusted Augmentation Factor" means the factor determined by the following formula:

                        Augmentation Factor x A
                   ---------------------------------
                     Adjusted Monthly Pension

where A equals the lesser of

(i)                 Adjusted Monthly Pension
and
(ii)        $25,000.00 or where the Monthly Pension is paid at a fixed rate of exchange in a currency other than Canadian dollars, the equivalent of $25,000.00 in that other currency converted at the rate of exchange of 30 June 2002.    

15.10.3  The retirement pension of a Member, who retires on or after 1 October 2002 and who immediately prior to such retirement was in receipt of an Approved Disability Benefit, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had his date of disability been his Commencement Date for the purpose of calculating such augmentation.

15.10.4  The retirement pension of a Member, who retires on or after 1 October 2002 and, who on 30 December 2000 and immediately prior to such retirement was on the non-active payroll of a Participating Company, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had the date of his eligibility to an unreduced early retirement pension, but not before 1 January 2001, been his Commencement Date for the purpose of calculating such augmentation.

15.10.5  Unless it is an integral number of hundreds of 1%, the sum, on a compounded basis, of the augmentation factors under this and all previous pension augmentations since Commencement Date shall be rounded to the next higher multiple of 0.01%.

The above amendment shall come into force on 1 October 2002.

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EX-10.18 5 ex1018.htm

EXHIBIT 10.18

CHANGE OF CONTROL AGREEMENT

A G R E E M E N T

Agreement made as of the 1^st day of August 2002, by and between Alcan Inc., a corporation incorporated under the laws of Canada with its registered office at 1188 Sherbrooke Street West, Montreal, Québec, Canada H3A 3G2 (the "Corporation") and Travis Engen (the "Executive").

WITNESSETH:

                        WHEREAS, the Corporation and the Executive have entered into an Employment Agreement, dated 23^rd February 2001 (the "Employment Agreement") whereby the Executive has agreed to become the President and Chief Executive Officer of the Corporation;

                        WHEREAS, the Corporation believes that the establishment and maintenance of a sound and vital management of the Corporation is essential to the protection and enhancement of the interests of the Corporation and its shareholders; and

                        WHEREAS, the Corporation also recognizes that the possibility of a Change of Control of the Corporation (as defined in Section 1 hereof), with the attendant uncertainties and risks, might result in the departure or distraction of key employees of the Corporation to the detriment of the Corporation and its shareholders; and

                        WHEREAS, the Corporation has determined that it is appropriate to take steps to induce key employees to remain with the Corporation, and to reinforce and encourage their continued attention and dedication, when faced with the possibility of a Change of Control of the Corporation.

                        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows:

1.         Change of Control shall mean any of the following:

1.1              the acquisition of direct or indirect beneficial ownership (as determined under Rule 13d-3 promulgated under the United States Securities Exchange Act of 1934), in the aggregate, of securities of the Corporation representing twenty percent (20%) or more of the total combined voting power of the Corporation's then issued and outstanding voting securities entitled to vote in the general election for directors, by any person or entity or group of associated persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934) acting jointly or in concert (other than its subsidiaries or any employee benefit plan of either) (a "Person"), provided that, if a buyback of shares by the Corporation causes the Person to attain such limit, such limit shall not be deemed attained unless and until such Person acquires any such voting securities of the Corporation after the buyback that caused the level to be attained;

1.2       the amalgamation, merger, arrangement, reorganization or consolidation of the Corporation with a Person (including for the purposes of this Agreement any transaction or series of transactions such as share exchange transaction with the same stated or effective objective) other than:

(a)        an amalgamation, merger, arrangement, reorganization or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) two-thirds or more of the combined voting power (based on normal issue voting) of the voting securities of the Corporation or such surviving or parent entity outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation in substantially the same proportion as immediately prior to such amalgamation, merger, arrangement, reorganization or consolidation, without there occurring as a result or in connection therewith any substantial change in the composition of the Corporation's Board; or

(b)        an amalgamation, merger, arrangement, reorganization or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly (as determined under Rule 13-d-3 promulgated under the United States Securities Exchange Act of 1934), of securities representing more than the amounts set forth in paragraph 1.1 above;

1.3              the approval by shareholders of the Corporation of any plan or proposal for the complete liquidation or dissolution of the Corporation;

1.4              the issuance by the Corporation of shares (of the same or equivalent class as the principal class of publicly listed voted equity shares of the Corporation) in connection with an exchange offer acquisition (including, for the purposes of this Agreement, a series of connected exchange offer acquisitions), if such issuance results in the holders of the Corporation's principal class of publicly listed voting shares (immediately prior to the issuance) holding less than two-thirds of the total number outstanding (immediately following the issuance) and there occurs in connection therewith any substantial change in the composition of the Corporation's Board.

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1.5       the sale or other disposition of all or substantially all of the assets of the Corporation other than the sale or other disposition of all or substantially all of the assets of the Corporation either

(a)        to a person or persons who beneficially own, directly or indirectly, at least fifty percent (50%) or more of the combined voting power (based on normal issue voting) of the voting securities of the Corporation at the time of the sale; or

(b)        in a manner such that after such sale or other disposition the ultimate parent entity of the acquirer is, directly or indirectly, owned (based on normal issue voting) at least fifty percent (50%) by shareholders who immediately prior to such transaction owned at least fifty percent (50%) of the voting power (based on normal issue voting) of the Corporation immediately prior to such transaction in materially the same proportion as owned by such shareholders immediately prior to such transaction;

provided that there does not occur in connection therewith any substantial change in the composition of the Corporation's Board.

1.6              the approval by the vote of the Corporation's holders voting shares of any amalgamation, merger, arrangement, reorganization or consolidation in which the Corporation will not survive as a publicly-owned corporation or should the Corporation for any reason become a subsidiary (as defined in the Canada Business Corporations Act) of any other corporation;

1.7              individuals who, as of the close of business on the effective date of this Agreement, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at  least two-thirds of the Board; provided that any person becoming a Director subsequent to the close of business on the effective date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the Management Proxy Circular of the Corporation in which such person is named a nominee for Director, without objection to such nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a Director of the Corporation initially as a result of an actual or threatened proxy or election contest with respect to Directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of or in connection with any amalgamation, merger, arrangement, reorganization, consolidation or share exchange acquisition transaction by the Corporation with any Person, shall be deemed to be an Incumbent Director;

Only the first Change of Control after the date hereof shall be deemed a Change of Control hereunder.

Notwithstanding the foregoing, should the Person referred to in paragraph 1.1 above include Mr. Martin Ebner or BZ Group Holding Limited, the reference to "twenty percent (20%)" in such paragraph shall be replaced with "thirty percent (30%)."

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2.     Term.  This agreement shall commence on the date hereof and shall expire, unless previously terminated as provided herein, on the earliest of

(i)         30 April 2005;

(ii)        the date of the Executive's death or termination as a result of Disability, as defined below;

(iii)       subject to Section 3 hereof, the date of the retirement or other termination of the Executive's employment (voluntarily or involuntarily) with the Corporation prior to a Change of Control; or

(iv)       if prior to a Change of Control, the entity for which the Executive is then working ceases to be a Subsidiary, as defined in Section 8 hereof, of Corporation. 

Notwithstanding anything in this Agreement to the contrary, if the Corporation becomes obligated to make any payment to the Executive pursuant to the terms hereof at or prior to the expiration of this Agreement, then this Agreement shall remain in effect for such purposes until all of the Corporation's obligations hereunder are fulfilled. Further, the provisions of paragraph 9.1 hereunder shall survive and remain in effect notwithstanding the termination of this Agreement, the termination of the Executive's employment or any breach or repudiation of alleged breach or repudiation by the Corporation of this Agreement or any one or more of his terms.

Disability shall have the meaning ascribed to such term in the Corporation's long term disability plan in which the Executive participates.  A termination for Disability shall be deemed to occur when the Executive is terminated by the Corporation by written notice after the disability is established and the Executive remains disabled.

3.         Termination Following Change of Control.

3.1       If, and only if, a Change of Control occurs and one of the following occurs : (i)  the Executive's employment with the Corporation is terminated by the Corporation without Cause other than for Disability, or (ii)  by the Executive for Good Reason, during the period running from the date of the Change of Control to twelve (12) months after the date of such Change of Control, then the Executive shall be entitled to the amounts provided in Section 4 upon such termination.

In addition, notwithstanding the foregoing, in the event the Executive is either terminated without Cause or terminates employment for Good Reason (based on an event occurring within three (3) months prior the occurrence of a Change of Control) within three (3) months prior the occurrence of a Change of Control, such termination shall, upon the occurrence of a Change of Control, be deemed to be covered under the Agreement and the Executive shall be entitled to the amounts provided under Section 4 hereof reduced by any amounts otherwise received in connection with his termination of employment.

3.2       As used in this Agreement, termination for Good Reason shall mean a termination by the Executive within ninety (90) days after the occurrence of the Good Reason event, failing which such event shall not constitute Good Reason under this Agreement. For purposes of this Agreement, "Good Reason" shall mean the occurrence or failure to cause the occurrence of any of the following events without the Executive's express written consent:

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(i)         any material diminution in the Executive's duties and responsibilities, authority (except in each case in connection with the termination of the Executive's employment for Cause or as a result of the Executive's death, or temporarily as a result of the Executive's illness or other absence,);

(ii)        a reduction in the Executive's annual base salary rate;

(iii)       a relocation of the Executive's principal business location to an area outside the country of the Executive's principal business location at the time of the Change of Control;

(iv)       a failure by the Corporation after a Change of Control to continue any annual Executive Performance Award Plan, program or arrangement in which the Executive is then entitled to participate (the "Bonus Plans"), provided that any such plan(s) may be modified at the Corporation's discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor ("Substitute Plans"), or a failure by the Corporation to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus and the achievability thereof as the Executive participated immediately prior to any change in such plans of awards, in accordance with the Bonus Plans and the Substitute Plans;

(v)        a failure to permit the Executive after the Change of Control to participate in cash or equity based incentive plans and programs (i.e. the Corporation's Executive Deferred Share Unit Plan, Non-Qualified Deferred Compensation Plan, Executive Share Option Plan) other than Bonus Plans on a basis providing the Executive in the aggregate with an annualized award value in each fiscal year after the Change of Control at least equal to the aggregate annualized award value being provided by the Corporation to the Executive under such incentive plans and programs immediately prior to the Change of Control (with any awards intended not to be repeated on an annual basis allocated over the years the awards are intended to cover);

(vi)       the failure by the Corporation to continue in effect any employee benefit program such as a saving, pension, excess pension, medical, dental, disability, accident, life insurance plan or a relocation plan or policy or any other material plan, program, perquisite or policy of the Corporation intended to benefit the Executive in which the Executive is participating at the time of a Change of Control (or programs providing the Executive with at least substantially similar benefits) other than as a result of the normal expiration of any such employee benefit program in accordance with its terms as in effect at the time of a Change of Control, or taking of any action, or the failure to act, by the Corporation which would adversely affect the executive's continued participation in any of such employee benefit programs on at least as favourable a basis to the Executive as is the case  on the date of a Change of Control; or which would materially reduce the Executive's benefits in the future under any of such employee benefit programs or deprive him of any material benefit enjoyed by the Executive at the time of a Change of Control;

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(vii)      a material breach by the Corporation of any other written agreement with the Executive that remains uncured for twenty-one (21) days after written notice of such breach is given to the Corporation;

(viii)      failure of any successor (as defined in Section 10 herein) to assume in a writing delivered to the Executive the obligations hereunder within twenty-one (21) days after written notice by the Executive, or

3.3       As used in this Agreement, the term "Cause" shall mean

(i)         the failure by the Executive to attempt to substantially perform his or her duties and responsibilities with regard to the Corporation or any affiliate (other than any such failure resulting from the Executive's incapacity due to physical or mental illness of any such actual or anticipated failure by the Executive for Good Reason, as defined in paragraph 3.2) after demand for substantial performance is delivered by the Corporation that specifically identifies the manner in which the Corporation believes the Executive has failed to attempt to substantially perform his or her duties and responsibilities and a reasonable time for the Executive to correct or remedy;

(ii)        the willful engaging by the Executive in misconduct in connection with the Corporation or its business which is materially injurious to the Corporation monetarily or otherwise (including but not limited to conduct which is prohibited by the provisions of Section 9.1 herein); or

(iii)       any misappropriation or fraud with regard to the Corporation or any of the assets of the Corporation (other than good faith expense account disputes).

For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interests of the Corporation. In the event that the Executive alleges that the failure to attempt to perform his or her duties and responsibilities is due to a physical or mental illness, and thus not "Cause" under paragraph 3.3, the Executive shall be required to furnish the Corporation with a written statement from a licensed physician who is reasonably acceptable to the Corporation which confirms the Executive's inability to attempt to perform due to such physical or mental illness. A termination for Cause after a Change of Control shall be based only on events occurring after such Change of Control; provided, however, the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Corporation prior to a Change of Control.

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4.         Compensation Upon Termination.

4.1       If the Executive's employment is terminated for Cause following a Change of Control or upon the occurrence of a Change of Control in a manner described in paragraph 3.1 the Corporation shall :

(a)        pay to the Date of Termination, the Executive's Base Salary, the prorated amount of the guideline award under the Corporation's Executive Performance Award Plan (EPA) and the cash value of any untaken and accrued vacations to the Date of Termination.  The aggregate amount will be paid within five (5) days of the Date of Termination;

(b)        accrue service under the Corporation's pension plans to the Date of Termination;

(c)        maintain all other benefits and perquisites in which the Executive participates to the Date of Termination, but limited to the coverage in force under those benefit plans on the Date of Notice of Termination; and

(d)       not grant any options to purchase shares under the Alcan Executive Share Option Plan to the Executive between the date of Notice of Termination and the actual Date of Termination.

4.2              In the event of Termination for Cause following a Change of Control, the Corporation's obligations to the Executive shall be limited to those under paragraph 4.1.

4.3       If the Executive's employment is terminated after the first occurrence of a Change of Control in a manner described in paragraph 3.1 then, the Executive shall be entitled without regard to any contrary provisions of any benefit plan, to a severance pay, subject to the following paragraph, as provided below :

(a)        an amount equal to 36 times the Executive's monthly base salary on the Date of Termination;

(b)        an amount equal to 36 times the monthly EPA guideline amount in force on the Date of Termination; and

(c)        an amount equal to 36 times the monthly Mid-Term Incentive Program (MTIP) guideline amount in force on the Executive's Date of Termination.

If the Date of Termination is before the Executive's declared retirement date, the severance pay shall be calculated using a number, in lieu of 36, equal to the number of months remaining to such retirement date, in each of sub-paragraphs (a), (b) and (c) above.

The Executive may, in writing, (in the Notice of Termination or otherwise) direct the Corporation that the severance pay pursuant to the paragraph 4.3 hereof shall be paid, either :

(i)         in a lump sum payable within five (5) days of the Date of Termination where in such case, all benefit plan coverage cease on such date, or

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(ii)        in 36 equal monthly installments, (or for a period consistent with the Corporation's practices as approved by the Personnel Committee of the Board) after having the Executive transferred to the non-active payroll of the Corporation where in such case all benefit plan coverage continue at the previous level for that same number of months except coverage under the Corporation's short-term and long-term disability plans, vacation program, eligibility in the Alcan Share Option Plan and perquisite benefit (car, financial and tax counseling, club membership) which shall cease on Date of Termination.

Monthly installments paid on the non-active payroll shall be excluded in the calculation of pensionable earnings while the duration on the non-active payroll shall be included as service for calculating years of service under the Corporation's pension plans.

4.4              Any loans owing by the Executive to the Corporation shall become due and payable as per the terms of the applicable loan agreement.

4.5       After the occurrence of a Change of Control, as defined in Section I, all options under the Corporation's Executive Share Option Plan shall become immediately exercisable and all waiting periods and holding periods, as defined in such plan, shall be waived.

5.     Notice of Termination.  After a Change of Control, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 13.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment. 

6.     Date of Termination.  "Date of termination", with respect to any purported termination of the Executive's employment after a Change of Control, shall mean the date specified in the Notice of Termination (which, in the case of a termination by the Corporation, shall not be less than thirty (30) days except in the case of a termination for Cause which shall be the date specified in the Notice of Termination and, in the case of a termination by the Executive for Good Reason, shall not be earlier than twelve (12) months after the Change of Control). In the event of Notice of Termination by the Corporation, the Executive may treat such notice as having a date of termination at any date between the date of the receipt of such notice and the date of termination indicated in the Notice of Termination by the Corporation; provided, that the Executive must give the Corporation written notice of the date of termination if he or she deems it to have occurred prior to the date of termination indicated in the notice.

7.    No Duty to Mitigate/Set-off.  The Corporation agrees that if the Executive's employment with the Corporation is terminated pursuant to this Agreement during the term of this Agreement, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Corporation pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive or benefit provided to the Executive as the result of employment by another employer or otherwise. Except as otherwise provided herein and apart from any disagreement between the Executive and the Corporation concerning interpretation of this Agreement or any term or provision hereof, the Corporation's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive.

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8.     Service with Subsidiaries or the Corporation.  For purposes of this Agreement, employment by the Corporation or a Subsidiary of the Corporation shall be deemed to be employment by the Corporation and references to the Corporation shall include all such entities, except that the payment obligation hereunder shall be solely that of the Corporation. A Change of Control, however, as used in this Agreement, shall refer only to a Change of Control of Alcan Inc.  For purposes of this Agreement a "Subsidiary" shall mean any entity in which the Corporation owns, directly or indirectly, at least fifty percent (50%) of the outstanding securities entitled to vote for the election of directors.

9.         Confidentiality - No Non-Competition - - No Resignation.

9.1       The Executive shall not at any time during the term of this Agreement, or thereafter, directly or indirectly, for any reason whatsoever, communicate or disclose to any unauthorized person, firm or corporation, or use for the Executive's own account, without the prior written consent of the Board, any proprietary processes, trade secrets or other confidential data or information of the Corporation and its related and affiliated companies concerning their businesses or affairs, accounts, products, services or customers, it being understood, however, that the obligations of this Section shall not apply to the extent that the aforesaid maters (i) are disclosed in circumstances in which the Executive is legally required to do so, or (ii) become known to and available for use by the public other than by the Executive's wrongful act or omission.

9.2       Upon the occurrence of a Change of Control, any non-competition agreement between the Corporation and the Executive shall be considered null and void.

10.   Successors - Binding Agreement.  In addition to any obligations imposed by law upon any successor to the Corporation, the Corporation will require any successor (whether direct or indirect, by purchase, amalgamation, merger, arrangement, reorganization, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors and heirs. If the Executive shall die after termination of his employment while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. This Agreement is personal to the Executive and neither this Agreement nor any rights hereunder may be assigned by the Executive.

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11.   Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement and the Employment Agreement constitute the entire agreement between the parties hereto pertaining to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement or the Employment Agreement. All references to any law shall be deemed also to refer to any successor provisions to such laws.

12.   Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.   Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, or sent by registered mail, postage prepaid as follows:

            (i)         If to the Corporation, to:

                        Alcan Inc.
                        1188 Sherbrooke Street West
                        Montreal, Quebec
                        H3A 3G2

                        Attention:  Corporate Secretary

            (ii)        If to the Executive, to his last shown address
                        on the books of the Corporation.

Any such notice shall be deemed given when so delivered personally, or, if mailed, five days after the date of deposit in the Canadian mail. Any party may by notice given in accordance with this Section to the other parties, designate another address or person for receipt of notices hereunder.

14.   Severability.  If any provisions of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

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15.   Legal Fees.  In the event the Corporation does not make the payments due hereunder on a timely basis and the Executive collects any part or all of the payments provided for hereunder or otherwise successfully enforces the terms of this Agreement by or through a lawyer or lawyers, the Corporation shall pay all costs of such collection or enforcement, including reasonable legal fees and other reasonable fees and expenses which the Executive may incur. The Corporation shall pay to the Executive interest at the prime lending rate as announced from time to time by Royal Bank of Canada on all or any part of any amount to be paid to Executive hereunder that is not paid when due. The prime rate for each calendar quarter shall be the prime rate in effect on the first day of the calendar quarter.

16.    Non-Exclusivity of rights.  Except as otherwise specifically provided therein, (i) nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive, equity or other plan or program provided by the Corporation and for which the Executive may qualify, nor (ii) shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other currently existing plan, agreement as to employment or severance from employment with the Corporation or statutory entitlements, provided, that to the extent such amounts are paid under paragraph 4.2(a) hereof or otherwise, such amounts shall be offset against any amounts that the Executive is entitled to under any other program, plan, agreement or statute, including without limitation the Employment Agreement. Amounts that are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation, at or subsequent to the date of termination shall be payable in accordance with such plan or program, except as otherwise specifically provided herein or in the Employment Agreement.

17.    Not an Agreement of Employment.  This is not an agreement assuring employment and the Corporation reserves the right to terminate the Executive's employment at any time with or without cause, subject to the Employment Agreement and the payment provisions hereof if such termination is after, or within three (3) months prior to, a Change of Control, as defined herein. The Executive acknowledges that he is aware that he shall have no claim against the Corporation hereunder or for deprivation of the right to receive the amounts hereunder as a result of any termination that does not specifically satisfy the requirements hereof or as a result of any other action taken by the Corporation. The foregoing shall not affect the Executive's rights under any other agreement with the Corporation.

18.   Governing Law.  This Agreement shall be construed, interpreted, and governed in accordance with the laws of the Province of Quebec.

19.   English Language.  The parties hereto declare that they require that this Agreement and any related documents be drawn up and executed in English.

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            Les parties déclarent qu'elles requièrent que cette convention ainsi que tous documents relatifs à cette convention soient rédigés et exécutés en anglais.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed and the Executive has hereunto set his hand as of the date first set forth above.

ALCAN INC.

By:       _______________________

_______________________

Travis Engen

EX-10.19 6 ex1019.htm

EXHIBIT 10.19

CHANGE OF CONTROL AGREEMENT

A G R E E M E N T

Agreement made as of the 1^st day of August 2002, by and between Alcan Inc., a corporation incorporated under the laws of Canada with its registered office at 1188 Sherbrooke Street West, Montreal, Québec, Canada H3A 3G2 (the "Corporation") and Richard B. Evans, residing at 3033 de Breslay, Montreal, Quebec, Canada, H3Y 2G8,  (the "Executive").

WITNESSETH:

                        WHEREAS, the Executive is the Executive Vice President of Alcan Inc.

                        WHEREAS, the Corporation believes that the establishment and maintenance of a sound and vital senior management team is essential to the protection and enhancement of the interests of the Corporation and its shareholders; and

                        WHEREAS, the Corporation also recognizes that the possibility of a Change of Control of the Corporation (as defined in Section 1 hereof), with the attendant uncertainties and risks, might result in the departure or distraction of key employees of the Corporation to the detriment of the Corporation and its shareholders; and

                        WHEREAS, the Corporation has determined that it is appropriate to take steps to induce key employees to remain with the Corporation, and to reinforce and encourage their continued attention and dedication, when faced with the possibility of a Change of Control of the Corporation.

                        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows:

1.         Change of Control shall mean any of the following:

1.1              the acquisition of direct or indirect beneficial ownership (as determined under Rule 13d-3 promulgated under the United States Securities Exchange Act of 1934), in the aggregate, of securities of the Corporation representing twenty percent (20%) or more of the combined voting power of the Corporation's then issued and outstanding voting securities by any person or entity or group of associated persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934) acting jointly or in concert (other than its subsidiaries or any employee benefit plan of either) (a "Person"), provided that, if a buyback of shares by the Corporation causes the Person to attain such limit, such limit shall be deemed not to have been attained without such Person having acquired further voting securities of the Corporation;

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1.2       any amalgamation, merger, arrangement, reorganization or consolidation in respect of the Corporation (the foregoing shall include, for the purposes of this Agreement any transaction or series of transactions, such as share exchange transaction with the same stated or effective objective) other than:

(a)        an amalgamation, merger, arrangement, reorganization or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) two-thirds or more of the combined voting power of the voting securities of the Corporation or such surviving, combined or parent entity outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation, without there occurring as a result or in connection therewith any substantial change in the composition of the Corporation's Board of Directors; or

(b)        an amalgamation, merger, arrangement, reorganization or consolidation  initiated by the Corporation for the purpose of implementing a recapitalization of the Corporation (or similar transaction) provided that pursuant thereto no Person is or becomes the beneficial owner, directly or indirectly (as determined under Rule 13-d-3 promulgated under the United States Securities Exchange Act of 1934), of securities representing twenty per cent (20%) or more of the contained voting power of the voting securities of the Corporation outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation;

1.3              the approval by shareholders of the Corporation of any plan or proposal for the complete or effective liquidation or dissolution of the Corporation;

1.4              the issuance by the Corporation of shares in connection with an exchange offer acquisition (including, for the purposes of this Agreement, a series of connected exchange offer acquisitions), if such issuance results in the holders of the Corporation's principal class of publicly listed voting shares (immediately prior to the issuance) holding less than two-thirds of the combined voting power of the voting securities of the Corporation which are outstanding immediately following such issuance and if there occurs in connection therewith any substantial change in the composition of the Corporation's Board of Directors.

1.5       the sale or other disposition of all or substantially all of the assets of the Corporation other than the sale or other disposition of all or substantially all of the assets of the Corporation:

(a)        to a person or persons who beneficially own, directly or indirectly, at least two-thirds of the then outstanding common equity of the Corporation to which are attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer; or

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(b)               in a manner such that after such sale or other disposition the acquirer is, directly or indirectly, owned or controlled as to at least two-thirds of its then outstanding common equity to which are attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer  by shareholders of the Corporation who owned or controlled, immediately prior to such transaction, at least two-thirds of the Corporation's then outstanding common equity to which were attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer;

provided that there does not occur in connection therewith any substantial change in the composition of the Corporation's Board of Directors.

1.6              the completion of the corporate approvals necessary on the part of the Corporation to give effect to any amalgamation, merger, arrangement, reorganization, continuance or consolidation in respect of the Corporation (including any transaction or series of transactions with the same stated or effective objective) pursuant to which the Corporation will not survive as a stand-alone publicly-traded corporation (in this regard, but without limitation, the Corporation shall be deemed not to have survived as a publicly traded corporation should (i) there cease to be a liquid market for the Corporation's common shares on an internationally recognized exchange,  (ii) more than fifty percent (50%) of the corporation's outstanding common shares to which are attached more than fifty percent (50%) of the then outstanding combined voting power of the outstanding securities of the Corporation be held by a single shareholder or group of shareholders acting jointly or in concert, or (iii) the Corporation become a subsidiary, as defined in the Canada Business Corporations Act, of another Corporation);

1.7              any occurrence pursuant to which individuals who, as of the close of business on the effective date of this Agreement, constitute the Board of Directors (the "Incumbent Directors") cease for any reason to constitute at  least two-thirds of the Board; provided that any person becoming a Director subsequent to the close of business on the effective date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board of Directors (either by a specific vote or by approval of the Management Proxy Circular of the Corporation in which such person is named a nominee for Director, without objection to such nomination) shall be an Incumbent Director; but further provided, that no individual elected or nominated as a Director of the Corporation initially as a result of an actual or threatened proxy or election contest with respect to Directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors or as a result of or in connection with any amalgamation, merger, arrangement, reorganization, consolidation or share exchange acquisition transaction by the Corporation with any Person, shall be deemed to be an Incumbent Director;

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For the purposes of this Agreement : (i) only the first Change of Control after the date hereof shall be deemed a Change of Control hereunder; (ii) voting power of securities shall be determined by reference to the right to vote in respect of the general election of Directors: (iii) a substantial change in the composition of the Board of Directors of the Corporation shall be any change involving the immediate confirmed departure of at least three Directors or any other change pursuant to which the Directors in office immediately prior thereto cease to constitute at least two-thirds of the members of the Board of Directors; and (iv) no event of Change of Control shall have occurred if immediately prior thereto the Corporation was in a state of insolvency or in a position of being protected from its creditors by virtue of any applicable legislation or court order.

2.     Term.  This agreement shall commence on the date hereof and shall expire, unless previously terminated as provided herein, on the earliest of

(i)                  30 April 2005;

(ii)                the date of the Executive's death or termination as a result of Disability, as defined below;

(iii)       subject to Section 3 hereof, the date of the retirement or other termination of the Executive's employment (voluntarily or involuntarily) with the Corporation prior to a Change of Control; or

(iv)              if, prior to and without causing a Change of Control, the entity for which the Executive is then working ceases to be a subsidiary, (as defined in the Canada Business Corporations Act) of the Corporation. 

Notwithstanding anything in this Agreement to the contrary, if the Corporation becomes obligated to make any payment to the Executive pursuant to the terms hereof at or prior to the expiration of this Agreement, then this Agreement shall remain in effect for such purposes until all of the Corporation's obligations hereunder are fulfilled. Further, the provisions of paragraph 9.1 hereunder shall survive and remain in effect notwithstanding the termination of this Agreement, the termination of the Executive's employment or any breach or repudiation of alleged breach or repudiation by the Corporation of this Agreement or any one or more of its terms.

Disability shall have the meaning ascribed to such term in the Corporation's long-term disability plan in which the Executive participates.  A termination for Disability shall be deemed to occur when the Executive is terminated by the Corporation by written notice after the disability is established and the Executive remains disabled.

3.     Termination Following Change of Control.

3.1       If, and only if, a Change of Control occurs and one of the following occurs : (i)  the Executive's employment with the Corporation is terminated by the Corporation without Cause other than for Disability, or (ii)  by the Executive for Good Reason, during the period running from the date of the Change of Control to twelve (12) months after the date of such Change of Control, then the Executive shall be entitled to the amounts provided in Section 4 upon such termination.

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In addition, notwithstanding the foregoing, in the event the Executive is either terminated without Cause or terminates employment for Good Reason within three (3) months prior the occurrence of a Change of Control, such termination shall, upon the occurrence of a Change of Control, be deemed to be covered under the Agreement and the Executive shall be entitled to the amounts provided under Section 4 hereof reduced by any amounts otherwise received in connection with his termination of employment.

3.2       As used in this Agreement, termination for Good Reason shall mean a termination by the Executive within ninety (90) days after the occurrence of the Good Reason event, failing which such event shall not constitute Good Reason under this Agreement. For purposes of this Agreement, "Good Reason" shall mean the occurrence or failure to cause the occurrence of any of the following events without the Executive's express written consent:

(i)         any material diminution in the Executive's duties and responsibilities, authority (except in each case in connection with the termination of the Executive's employment for Cause or as a result of the Executive's death, or temporarily as a result of the Executive's illness or other absence,);

(ii)        a reduction in the Executive's annual base salary rate;

(iii)       a relocation of the Executive's principal business location to an area outside the country of the Executive's principal business location at the time of the Change of Control;

(iv)       a failure by the Corporation after a Change of Control to continue any annual Executive Performance Award Plan, program or arrangement in which the Executive is then entitled to participate (the "Bonus Plans"), provided that any such plan(s) may be modified at the Corporation's discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor ("Substitute Plans"), or a failure by the Corporation to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus and the achievability thereof as the Executive participated immediately prior to any change in such plans of awards, in accordance with the Bonus Plans and the Substitute Plans;

(v)        a failure to permit the Executive after the Change of Control to participate in cash or equity based long-term incentive plans and programs other than Bonus Plans on a basis providing the Executive in the aggregate with an annualized award value in each fiscal year after the Change of Control at least equal to the aggregate annualized award value being provided by the Corporation to the Executive under such incentive plans and programs immediately prior to the Change of Control (with any awards intended not to be repeated on an annual basis allocated over the years the awards are intended to cover);

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(vi)       the failure by the Corporation to continue in effect any employee benefit program such as a saving, pension, excess pension, medical, dental, disability, accident, life insurance plan or a relocation plan or policy or any other material plan, program, perquisite or policy of the Corporation intended to benefit the Executive in which the Executive is participating at the time of a Change of Control (or programs providing the Executive with at least substantially similar benefits) other than as a result of the normal expiration of any such employee benefit program in accordance with its terms as in effect at the time of a Change of Control, or taking of any action, or the failure to act, by the Corporation which would adversely affect the executive's continued participation in any of such employee benefit programs on at least as favourable a basis to the Executive as is the case  on the date of a Change of Control; or which would materially reduce the Executive's benefits in the future under any of such employee benefit programs or deprive him of any material benefit enjoyed by the Executive at the time of a Change of Control;

(vii)      a material breach by the Corporation of any other written agreement with the Executive that remains uncured for twenty-one (21) days after written notice of such breach is given to the Corporation;

(viii)           failure of any successor (as defined in Section 10 herein) to assume in a writing delivered to the Executive the obligations hereunder within twenty-one (21) days after written notice by the Executive, or

For the purposes of the foregoing, there shall be deemed to have occurred a material diminution in the duties and responsibilities of an Executive occupying the position of or performing the functions normally assigned to any of the Chief Executive Officer or other member of the Office of the President, the Chief Financial Officer or the Chief Legal Officer in the event of any Change of Control referred to in any of paragraphs 1.2 to 1.6 (inclusive) above.

3.3       As used in this Agreement, the term "Cause" shall mean:

(i)         the failure by the Executive to attempt to substantially perform his or her duties and responsibilities with regard to the Corporation or any affiliate (other than any such failure resulting from the Executive's incapacity due to physical or mental illness of any such actual or anticipated failure by the Executive for Good Reason, as defined in paragraph 3.2) after demand for substantial performance is delivered by the Corporation that specifically identifies the manner in which the Corporation believes the Executive has failed to attempt to substantially perform his or her duties and responsibilities and a reasonable time for the Executive to correct or remedy;

(ii)        the willful engaging by the Executive in misconduct in connection with the Corporation or its business which is materially injurious to the Corporation monetarily or otherwise (including but not limited to conduct which is prohibited by the provisions of Section 9.1 herein); or

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(iii)       any misappropriation or fraud with regard to the Corporation or any of the assets of the Corporation (other than good faith expense account disputes).

For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interests of the Corporation. In the event that the Executive alleges that the failure to attempt to perform his or her duties and responsibilities is due to a physical or mental illness, and thus not "Cause" under paragraph 3.3, the Executive shall be required to furnish the Corporation with a written statement from a licensed physician who is reasonably acceptable to the Corporation which confirms the Executive's inability to attempt to perform due to such physical or mental illness. A termination for Cause after a Change of Control shall be based only on events occurring after such Change of Control; provided, however, the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Corporation prior to a Change of Control.

4.     Compensation Upon Termination.

4.1       If the Executive's employment is terminated for Cause following a Change of Control or upon the occurrence of a Change of Control in a manner described in paragraph 3.1 the Corporation shall :

(a)        pay to the Date of Termination, the Executive's Base Salary, the prorated amount of the guideline award under the Corporation's Executive Performance Award Plan (EPA) and the cash value of any untaken and accrued vacations to the Date of Termination.  The aggregate amount will be paid within five (5) days of the Date of Termination;

(b)        accrue service under the Corporation's pension plans to the Date of Termination;

(c)        maintain all other benefits and perquisites in which the Executive participates to the Date of Termination, but limited to the coverage in force under those benefit plans on the Date of Notice of Termination; and

(d)               not grant any options to purchase shares under the Alcan Executive Share Option Plan, nor any other long-term incentive plans adopted by the Corporation, to the Executive between the date of Notice of Termination and the actual Date of Termination.

4.2        In the event of Termination for Cause following a Change of Control, the Corporation's obligations to the Executive under this Agreement shall be limited to those under paragraph 4.1.  In all other cases, the Executive shall have each of the following additional rights and entitlements, to the extent applicable;

(a)                If the Executive's employment is terminated after the first occurrence of a Change of Control in a manner described in paragraph 3.1 then, the Executive shall be entitled, without regard to any contrary provisions of any benefit plan and subject to any express limitations hereinafter set forth, to  severance pay as follows :

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(i)         an amount equal to 36 times the Executive's monthly base salary as of the Date of Termination;

(ii)        an amount equal to 36 times the monthly EPA guideline amount in force as regards the Executive Performance Award Plan as of the Date of Termination;

(b)               the amount payable under the provisions of the TSR Performance Plan (or its equivalent) in the event of a Change of Control, provided that the amount payable shall never be less than the amount payable to the Executive thereunder had he retired on the Date of Termination.

Notwithstanding the foregoing, if the Date of Termination is before the Executive's declared retirement date and the number of months remaining to such retirement date is less than the number specified in paragraphs a(i) and a(ii) above, the number specified in each of sub-paragraphs (a)(i) and (a)(ii) above shall be replaced by the number of months remaining to such retirement date.

4.3       The Executive may, in writing, (in the Notice of Termination or otherwise) direct the Corporation that the severance pay pursuant to the paragraph 4.2 hereof shall be paid, either :

(i)         in a lump sum payable within five (5) days of the Date of Termination where in such case, all benefit plan coverage cease on such date, or

(ii)                in 36 equal monthly installments, (or for a period consistent with the Corporation's practices as approved by the Personnel Committee of the Board) after having the Executive transferred to the non-active payroll of the Corporation in which case all benefit plan coverage continue at the previous level for that same number of months except for coverage under the Corporation's short-term and long-term disability plans, vacation program, eligibility in the Alcan Executive Share Option Plan or any other long-term incentive plans adopted by the Corporation and perquisite benefit (car, financial and tax counseling, club membership) all of which shall cease on Date of Termination.

            Monthly installments paid on the non-active payroll shall be excluded in the calculation of pensionable earnings while the duration on the non-active payroll shall be included as service for calculating years of service under the Corporation's pension plans.

4.4        Any loans owing by the Executive to the Corporation shall become due and payable as per the terms of the applicable loan agreement.

4.5       After the occurrence of a Change of Control, as defined in Section 1, all options under the Corporation's Executive Share Option Plan shall become immediately exercisable and all waiting periods and holding periods, as defined in such plan, shall be waived.

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5.     Notice of Termination.  After a Change of Control, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 13.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment.  The "Date of Notice of Termination" is the date, determined in accordance with Section 13 below, when the Notice of Termination is deemed to have been given. 

6.    Date of Termination.  "Date of Termination", with respect to any purported termination of the Executive's employment after a Change of Control, shall mean the date specified in the Notice of Termination.  In the case of a termination by the Corporation, the Date of Termination shall not be less than thirty (30) days after the Change of Control except in the case of a termination for Cause which shall be the date specified in the Notice of Termination.  In the case of a termination by the Executive for Good Reason, the Date of Termination shall not be earlier than 90 days after the Change of Control. In the event of Notice of Termination by the Corporation, the Executive may treat such notice as having a date of termination at any date between the date of the receipt of such notice and the date of termination indicated in the Notice of Termination by the Corporation; provided, that the Executive must give the Corporation written notice of the Date of Termination if he or she deems it to have occurred prior to the Date of Termination indicated in the notice.

7.    No Duty to Mitigate/Set-off.  The Corporation agrees that if the Executive's employment with the Corporation is terminated pursuant to this Agreement during the term of this Agreement, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Corporation pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive or benefit provided to the Executive as the result of employment by another employer or otherwise. Except as otherwise provided herein and apart from any disagreement between the Executive and the Corporation concerning interpretation of this Agreement or any term or provision hereof, the Corporation's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive.

8.    Service with Subsidiaries or the Corporation.  For purposes of this Agreement, employment by the Corporation or subsidiary (as defined in the Canada Business Corporations Act) of the Corporation shall be deemed to be employment by the Corporation and references to the Corporation shall include all such entities, except that the payment obligation hereunder shall be solely that of the Corporation. A Change of Control, however, as used in this Agreement, shall refer only to a Change of Control of Alcan Inc.

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9.         Confidentiality and Non-Competition Undertakings.

9.1       Without prejudice to any other confidentiality undertakings or obligations by which the Executive may be bound in favor of the Corporation, the Executive shall not at any time during the term of this Agreement, or thereafter, directly or indirectly, for any reason whatsoever, communicate or disclose to any unauthorized person, firm or corporation, or use for the Executive's own account, without the prior written consent of the Board of Directors, any proprietary processes, trade secrets or other confidential data or information of the Corporation and its related and affiliated companies concerning their businesses or affairs, accounts, products, services or customers, it being understood, however, that the obligations set forth in this Section shall not apply to the extent that the aforesaid matters (i) are disclosed in circumstances in which the Executive is legally required to do so, or (ii) become known to and available for use by the public other than by the Executive's wrongful act or omission.

9.2       Upon the occurrence of a Change of Control, any non-competition agreement between the Corporation and the Executive shall be considered null and void.  For the purposes of this Agreement, a non-competition agreement shall include, without limitation, any provision restricting the Executive's freedom to seek or obtain employment or invest in or advise any corporation or business.

10.   Successors - Binding Agreement.  In addition to any obligations imposed by law upon any successor to the Corporation, the Corporation will require any successor (whether direct or indirect, by purchase, amalgamation, merger, arrangement, reorganization, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors and heirs. If the Executive shall die after termination of his employment while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. This Agreement is personal to the Executive and neither this Agreement nor any rights hereunder may be assigned by the Executive.

11.   Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board of Directors. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement and the Employment Agreement constitute the entire agreement between the parties hereto pertaining to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement or the Employment Agreement. All references to any law shall be deemed also to refer to any successor provisions to such laws.

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12.    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.    Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, or sent by registered mail, postage prepaid as follows:

            (i)         If to the Corporation, to:

                        Alcan  Inc.
                        1188 Sherbrooke Street West
                        Montreal, Quebec
                        H3A 3G2

                        Attention:  Corporate Secretary

            (ii)        If to the Executive, to his last shown address
                        on the books of the Corporation.

Any such notice shall be deemed given when so delivered personally, or, if mailed, five days after the date of deposit in the Canadian mail. Any party may by notice given in accordance with this Section to the other parties, designate another address or person for receipt of notices hereunder.

14.   Severability.  If any provisions of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

15.   Legal Fees.  In the event the Corporation does not make the payments due hereunder on a timely basis and the Executive collects any part or all of the payments provided for hereunder or otherwise successfully enforces the terms of this Agreement by or through -legal counsel, the Corporation shall pay all costs of such collection or enforcement, including reasonable legal fees and other reasonable fees and expenses which the Executive may incur. The Corporation shall pay to the Executive interest at the prime lending rate as announced from time to time by Royal Bank of Canada on all or any part of any amount to be paid to Executive hereunder that is not paid when due. The prime rate for each calendar quarter shall be the prime rate in effect on the first day of the calendar quarter.

11

16.    Non-Exclusivity of rights.  Except as otherwise specifically provided therein, (i) nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive, equity or other plan or program provided by the Corporation and for which the Executive may qualify, nor (ii) shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other currently existing plan, agreement as to employment or severance from employment with the Corporation or statutory entitlements, provided, that to the extent such amounts are paid under paragraph 4.2(a) hereof or otherwise, such amounts shall be offset against any amounts that the Executive is entitled to under any other program, plan, agreement or statute, including without limitation the Employment Agreement. Amounts that are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation, at or subsequent to the date of termination shall be payable in accordance with such plan or program, except as otherwise specifically provided herein or in the Employment Agreement.

17.    Not an Agreement of Employment.  This is not an agreement assuring employment and the Corporation reserves the right to terminate the Executive's employment at any time with or without cause, subject to the Employment Agreement and the payment provisions hereof if such termination is after, or within three (3) months prior to, a Change of Control, as defined herein. The Executive acknowledges that he is aware that he shall have no claim against the Corporation hereunder or for deprivation of the right to receive the amounts hereunder as a result of any termination that does not satisfy the requirements hereof or as a result of any other action taken by the Corporation. The foregoing shall not affect the Executive's rights under any other agreement with the Corporation.

18.   Governing Law.  This Agreement shall be construed, interpreted, and governed in accordance with the laws of the Province of Quebec.

19.   English Language.  The parties hereto declare that they require that this Agreement and any related documents be drawn up and executed in English.

            Les parties déclarent qu'elles requièrent que cette convention ainsi que tous documents relatifs à cette convention soient rédigés et exécutés en anglais.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed and the Executive has hereunto set his hand as of the date first set forth above.

ALCAN INC.

By:       _______________________

                    Gaston Ouellet

EXECUTIVE

____________________________

                     Richard B. Evans

12

EX-13 7 ex13.htm

Management's Discussion and Analysis

Alcan's improved earnings demonstrate its ability to deliver results despite soft economic conditions.

23 Market Overview
24 Merger with algroup
25 Results of Operations
28 Cash Flows and Liquidity
29 Environment, Health and Safety (EHS)
29 Operating Segment Review
38 Risks and Uncertainties
40 Responsibility for the Annual Report
40 Auditors' Report
41 Consolidated Financial Statements
44 Notes to Consolidated Financial Statements
78 Quarterly Financial Data
80 Eleven-Year Summary

Market Overview
Western World* Primary Aluminum Balance

Demand
Total Western World consumption grew by an estimated 2.8% to about 28.5 million tonnes (Mt) in 2002, a weak recovery following last year's sharp decline of 5.3%. Of this, 19.5 Mt was primary metal, up 3.2% from 2001, with the balance comprising secondary/recycled metal. Demand was up in all regions except Latin America and Africa, but remained below levels reached in 2000. North American consumption showed the strongest improvement at 4.6%, rebounding from a steep decline of 11.3% in 2001. Asian demand rose 4.0% driven by a recovery in exports to China and North America. A slow economy in Europe generated growth of only 1.0% while the biggest disappointment was in Latin America, where uncertainty in Brazil and turmoil in Argentina and Venezuela led to a decline of 2.5%.

Supply
Total Western World primary aluminum supply (production plus imports) increased 3.1% to 20.0 Mt in 2002. Of this, primary aluminum production represented 17.2 Mt, up 3.4% from the previous year but still below the 17.3 Mt reached in 2000, with the balance comprising 2.8 Mt of net imports from China and the former Eastern Bloc (C.I.S. and Eastern Europe). The increase in Western World primary production was due to restarts of idled capacity in Brazil and the U.S. Pacific Northwest and a full year of production from the new Alma and Mozal smelters in Canada and Mozambique. Net imports from China and the former Eastern Bloc remained essentially flat, with Chinese increases largely offset by reductions from the C.I.S.

 ((Graph))

Western World Primary Aluminum Supply and Demand
Mt/y

Supply

98:	19115	19016	19111	19289
99:	19386	19478	19639	19901
00:	19744	19688	19559	19805
01:	19666	19467	19108	19237
02:	19780	20050	19780	20300
Demand (seasonally adjusted)
98:	19454	19010	19201	18610
99:	19560	19201	19385	19825
00:	20132	20646	20062	19862
01:	18908	18897	19072	19072
02:	19480	18880	20050	19900

Balance
With primary aluminum supply and demand increasing at almost the same rate, the surplus remained unchanged from 2001 at about 450 thousand tonnes (kt). This registered as a 407 kt increase in reported stocks with the remainder in unreported stocks. By the end of the year, inventories held by the London Metal Exchange (LME), COMEX and aluminum producers had increased to approximately 4.3 Mt, or the equivalent of about 11.0 weeks of consumption. Average LME prices declined 6% during the year to $1,365 /t from $1,454 /t in 2001.

 ((Graph))

Total Aluminum Inventories and Ingot Prices

Total inventories (IAI*, LME and COMEX**)
MT

98:	3923	3762	3816	3997
99:	3931	3833	3967	4001
00:	3919	3612	3552	3488
01:	3734	3784	3872	3872
02:	4084	4226	4250	4230
LME three-month price
US$/t
98:	1484	1392	1344	1300
99:	1212	1332	1471	1535
00:	1652	1502	1587	1527
01:	1562	1511	1404	1337
02:	1395	1377	1329	1358

 *International Aluminum Institute
** Inventories held by the New York Mercantile Exchange

* Defined as the world excluding the Commonwealth of Independant States (C.I.S.), Eastern Europe and China.

Outlook
Demand is expected to rise at a slightly slower pace than supply in 2003, resulting in a forecast surplus of approximately 495 kt compared to 450 kt in 2002. Most of the increase in supply is expected to come from expansions of existing capacity in Norway, India, Mozambique and Brazil, although there is some risk that drought conditions could idle capacity in various areas of the globe.

Western World Consumption
Western World demand was up in all end-use markets except beverage cans. Transportation remained the largest end-use market for aluminum and the fastest growing in 2002, up 5.5% to 8.6 Mt. Global light vehicle production rose an estimated 3% in 2002, including a 35% increase in China. Aluminum use continued to increase in automobiles. The heavy truck and aerospace markets remained weak. Alcan's revenues from the transportation market increased by 10% to $0.9 billion.

((Graph))

2002 Western World Consumption by End-Use Market

Containers and Packaging	17%
Building and Construction	18%
Electrical	9%
Transportation	30%
Other	26%

Consumption in the containers and packaging market was up a slight 0.7% at 5.0 Mt. Can stock demand declined by 0.2% in 2002, mirroring the U.S. decline in beverage can shipments. Other packaging, principally foil, rose by almost 3%. Alcan's revenues from the packaging and beverage can markets, which represented the largest share of the Company's revenues increased by 2% to $5.3 billion.

Demand from the building and construction sector rose a modest 1.7% to 5.1 Mt. While housing starts reached a 16-year high of 1.7 million in the U.S., the building and construction market was very weak in Asia and Europe. Alcan's revenues from building and construction increased by 2% to $1 billion.

After declining more than 7% in 2001, the electrical market saw a 1.4% gain last year to 2.4 Mt. Much of the increase took place in Brazil (up 21%) in response to the power crisis of 2001. There was little change in other regions. Alcan's revenues from the electrical market declined by 10% to $0.6 billion.

Demand from all other markets increased by 2.3% in 2002 to 7.4 Mt. This includes 2.4 Mt from the machinery and equipment market, and 1.7 Mt from the consumer durables market. Alcan's revenues from these other markets, including aluminum ingot, decreased by 5% to $4.7 billion.

Merger with algroup
Alcan completed its merger with algroup in October 2000. The merger was recorded under the purchase method of accounting, in a transaction that valued algroup at $5.7 billion. This included the issue by the Company of 116.1 million shares, having a market value of $3.6 billion, and the assumption of algroup's debt totaling $2.1 billion.

As of the fourth quarter of 2000, results from the operations of algroup have been included in the financial results of Alcan.

((Graph))

Western World Consumption by Geographic Market

North America	33%
South America	7%
Western Europe	31%
Asia/Pacific/Africa	29%

Alcan's 2002 Revenues by Geographic Market

North America	42%
South America	3%
Western Europe	40%
Asia/Pacific/Africa	15%

Merger integration synergies in excess of $200 million before tax have been achieved, with benefits of $157 million recorded in 2002 earnings. In 2001, Alcan benefited from about $70 million of synergies. Total one-time disbursements necessary to obtain these synergies will amount to $89 million, of which $19 million was incurred in 2002, with $55 million having been spent up to 2001.

Merger synergies delivered $157 million in savings.

((Graph))

Results of Operations

Net Income

	2002	2001	2000
Net Income (US$M)	374	2	610
Non-recurring* (US$M)	158	482	37
LME (US$/t)	1,365	1,454	1,567
Exchange rate on balance sheet translation

 *Non-recurring items include both non-recurring charges (gains) and the effects of foreign currency balance sheet translation.

Benefits from the Company's cost-saving initiatives, diversified portfolio and continued financial discipline helped offset lower LME prices in 2002.

Net income was $374 million in 2002 compared to $2 million in 2001 and $610 million in 2000. The improvement in 2002 reflected the success of the Company's cost-saving initiatives together with higher overall volumes, a higher-value product mix, lower interest expense and the absence of goodwill amortization. These factors combined to offset lower LME prices and higher pension costs.

Net income in 2002 included non-recurring charges of $117 million after-tax. The largest of these were provisions of $68 million for a ruling on a contract dispute with Powerex (a subsidiary of BC Hydro) and $22 million for the impairment of certain businesses in Italy. In addition, charges of $21 million were taken for the closures of the Burntisland Specialty Chemicals plant and the Banbury R&D facility in the U.K., $17 million relating to other merger synergies and restructuring as well as $15 million in other special charges. These items were partially offset by an after-tax gain of $26 million on the sale of more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd.

Foreign currency balance sheet translation losses in 2002 were $41 million after-tax, and originated from the revaluation of deferred income taxes and other net monetary liabilities mostly in Canada and in Australia. In 2001, there were gains amounting to $51 million after-tax and in 2000 gains of $40 million after-tax.

Anticipating challenging economic conditions, Alcan moved to safeguard its competitiveness in 2001 by launching a restructuring program aimed at achieving annual savings of pre-tax $200 million. In 2002, the Company realized $178 million in cost reductions under the program and reached an annual run rate in excess of the $200 million by year-end. Costs to implement the program were $270 million compared to an estimate of $276 million, half of which involved cash expenditures for redundancy with the balance comprising non-cash items such as asset write-downs.

Results in 2001 were adversely affected by large restructuring, impairment and other special charges. Excluding these items, operating income declined from 2000 as a result of lower average metal prices, partially offset by merger synergies and the inclusion of algroup results for a full year.

Non-recurring after-tax charges for 2001 consisted mainly of the loss on the disposal of operations in Jamaica of $90 million, charges related to the restructuring program of $166 million, charges for the synergy program of $37 million, asset impairment provisions of $88 million and increases to environmental reserves of $167 million. These charges were slightly offset by a favourable prior year's tax adjustment of $12 million.

Non-recurring after-tax charges for 2000 included non-cash merger related costs of $25 million, rationalization charges of $30 million for the closure of Rogerstone Foil operations in the U.K. and of the village of Kemano, B.C. in Canada, offset by favourable prior years' tax adjustments of $57 million in Canada and in Germany.

Economic Value Added (EVA®)
EVA® amounted to negative $674 million in 2002 as compared to reported amounts of negative $468 million in 2001 and positive $15 million in 2000. The decrease in 2002 reflects a change in assumptions, lower metal prices, the negative effects of foreign currency balance sheet translation in the operating segments, and a full year of commercial production at Alma. The decrease in 2001 was due in large part to the impact of lower metal prices and difficult economic conditions, in addition to purchase accounting adjustments related to the algroup merger.

In 2002, the Company changed its cost of capital assumption to 10% from 9.5% for the purpose of calculating EVA® only, and started to include construction work-in-progress in the capital base. Had these same assumptions been used, EVA® would have been a negative $612 million in 2001 and negative $187 million in 2000.

Restructuring benefits reached $178 million.

((Graph))

Revenues and Aluminum Volumes

	2002	2001	2000
Sales and operating revenues (US$M)	12,540	12,626	9,148
Total aluminum volume * (kt)	4,437	4,253	3,509

 *Includes ingot products and rolled products shipments, conversion of customer-owned metal (tolling) as well as aluminum used in engineered products and packaging.

Increased volumes helped offset a 6% reduction in the average 3-month LME price.

((Graph))

Sales Price Realizations

	2002	2001	2000
Ingot products (US$/t)	1,507	1,581	1,667
Rolled products (US$/t)	2,295	2,385	2,455
LME (US$/t)	1,365	1,454	1,567

Realizations for both ingot products and rolled products declined in line with lower LME prices.

Sales and Operating Revenues
Sales and operating revenues remained flat as increased volumes in primary metal and rolled product businesses, and the benefits of a stronger euro, offset a 6% reduction in the average three-month LME price.

Costs and Expenses
Despite a 6% drop in average LME prices, cost of sales and operating expenses as a percentage of sales and operating revenues remained flat at 79% compared to 2001 (78% in 2000). The relative improvement was primarily due to the benefits from cost initiative programs, including merger integration synergies and the 2001 restructuring program, as well as the reduction in start-up and pre-operating expenses related to the new smelter in Alma, Quebec.

Depreciation expense was $859 million as compared to $820 million in the previous year and $545 million in 2000. This increase reflected depreciation on the Alma smelter, which reached its full capacity at the end of September 2001, and the Company's 40% share of the Alouette smelter in Quebec that was acquired in two tranches of 20% each in 2002. These increases were offset in part by the sale of operations in Jamaica in May 2001.

Selling, administrative and general expenses, at $577 million, increased by 5% from $547 million in 2001, and from $405 million in 2000. The increase in 2002 was due principally to higher pension expenses, and increased consultant fees related to performance improvement initiatives. Expressed as a percentage of sales and operating revenues, these expenses increased to 4.6%, representing a slight deterioration relative to the 2001 and 2000 rates of 4.3% and 4.4%, respectively.

((Graph))

Alcan's 2002 Revenues by Market

Packaging	26%
Beverage cans	16%
Aluminum ingot	17%
Building and construction	8%
Electrical	5%
Transportation	7%
Other	21%

Alcan's research and development (R&D) activities are closely aligned with the needs of its core businesses, principally bauxite and alumina, smelting, fabrication, and packaging. The Company maintains a strong effort in developing sheet applications and technology for the automotive industry and is working closely with a number of automotive companies in this regard. In 2002, the Company decided to focus its fabrication R&D in two locations, Kingston, Canada and Neuhausen, Switzerland, and is therefore closing its laboratories in Banbury, U.K. R&D expenses were $115 million for 2002 compared to $135 million in 2001 and $81 million in 2000. Most of the increase from 2000 was due to the integration of algroup and its dedicated research and development in the engineered products and packaging sectors.

((Graph))

Total Aluminum Volume and Purchases

	2002	2001	2000
Total aluminum volume *(kt)	4,437	4,253	3,509
Total purchases (kt)	1,804	1,822	1,670

*Includes ingot products and rolled products shipments, conversion of customer-owned metal (tolling) as well as aluminum used in engineered products and packaging.

Increased primary production covered higher rolled product shipments and reduced the need for purchased metal.

((Graph))

Interest

	2002	2001	2000
Capitalized interest	1	30	81
Interest expense	203	254	78
Effective average interest rate	5.0	6.1	7.1

Interest expense fell as rates declined and debt decreased.

Both the effective average interest rate and debt levels decreased in 2002 reflecting lower short-term interest rates and the Company's strong free cash flows. Total interest costs rose in 2001 due to the inclusion of algroup debt for a full year and to the debt incurred to finance capital expenditures.

Interest capitalized in the previous years related mainly to the construction of the new smelter in Alma, Quebec. The Company does not expect to capitalize interest in 2003.

The interest coverage ratio, excluding non-recurring charges and the effects of foreign currency balance sheet translation, improved to 4.7 times in 2002 as compared to 3.5 times in 2001, and was 5.9 times in 2000.

Other pre-tax expenses (net of other income) of $116 million, compared to $113 million in 2001 and $51 million in 2000, comprised mainly a $100 million provision for a ruling on a contract dispute with Powerex (a subsidiary of BC Hydro), partially offset by a gain on the sale of more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd. of $36 million. In 2001, other expenses included a $123-million loss on the disposal of the Jamaican operations. The 2000 figure included rationalization costs of $45 million as well as a non-recurring environmental provision of $14 million.

Income Taxes
The Company's effective tax rate, excluding non-recurring charges and foreign currency balance sheet translation effects, was 36% in 2002 and 2001 compared to 38% in 2000. The effective Generally Accepted Accounting Principles (GAAP) tax rate was 44% (42% in 2001 and 29% in 2000). The differences between the effective tax rate on operating earnings and the effective tax rate on a GAAP basis were the effects of foreign currency balance sheet translation and the income tax provided on non-recurring charges of $36 million ($236 million in 2001; $89 million in 2000).

The foreign currency balance sheet translation included two portions. The first was the loss of $32 million ($33-million gain in 2001 and $18-million gain in 2000) on the translation of deferred income taxes denominated in foreign currencies, as well as other currency translation items, that is charged directly to income taxes. The second relates to the translation of net monetary liabilities in operating segments that resulted in losses of $9 million ($18-million gain in 2001; $22-million gain in 2000) for which no related tax provisions are required.

The reported effective tax rate of 44% in 2002 (42% in 2001 and 29% in 2000) compares to a composite statutory tax rate of 39% in Canada (40% in 2001 and 2000). The difference represents principally the impact of the foreign currency items referred to above, net of unrecorded tax benefits on losses, investment and other allowances and lower foreign tax rates. A full reconciliation between these two rates is presented in note 9 to the financial statements.

Goodwill
In 2002, the Company adopted new accounting standards on goodwill. As a result of this change, goodwill is no longer being amortized. Goodwill amortization was $73 million and $16 million in 2001 and 2000, respectively. Also under these standards, the Company completed a review of goodwill and recorded an impairment charge of $748 million as a reduction in opening retained earnings as of January 1, 2002. The adjustment reflected the decline in end-market conditions in the period from the algroup merger in October 2000 to January 1, 2002. This adjustment has no impact on the future growth of the Company, nor did it affect its cash flows.

Debt decreased as a result of strong free cash flow.

Cash Flows and Liquidity

Operating Activities

((Graph))

Cash from Operations and Free Cash Flow

	2002	2001	2000	1999	1998
Free Cash Flow (US$M)	683	75	-582	-135	-214
Cash from Operations (US$M)	1,614	1,387	1,066	1,182	739

Free Cash Flow (US$M)
Cash from Operations (US$M)

Cash from operations reached record levels in 2002.

The Company achieved an all-time record cash from operations in 2002, despite lower LME prices, as a result of continued financial discipline. The improvement in 2001 was attained despite lower net income, and resulted mainly from improved operating working capital.

The substantial increase in free cash flow (calculated by subtracting dividends and capital expenditures from cash from operating activities) reflected higher cash from operations as well as lower capital expenditures.

Continued focus on working capital management resulted in a decline in net operating working capital of $155 million in 2002, in addition to the decrease of $139 million in 2001. Net operating working capital increased in 2000 by $223 million. The improvement in 2001 and 2002 was due to reductions in trade receivables and inventories (30 kt over the two years), offset in part by a decrease in payables. The increase in 2000 was due mainly to a refinancing of trade payables by short-term borrowings in Korea and the reduction in payables related to the Alma smelter in Quebec.

Investment Activities
Alcan adopted Maximizing Value as its governing objective in 2001 and as such uses a value-based approach to identify investment opportunities. A number of resulting value-maximizing initiatives were implemented in 2002.

Financial discipline resulted in capital expenditures that were well below depreciation in 2002. Capital expenditures included amounts related to the Alma smelter project of $250 million in 2001 and $850 million in 2000. The Company expects to incur $800 to $850 million of capital expenditures in 2003.

During 2002, the Company acquired a 40% joint venture interest in the Aluminerie Alouette consortium. The first tranche of 20% was purchased from the Sociétégénérale de financement (SGF) and the second tranche of 20% from the Corus Group plc at costs of $172 million and $171 million, respectively, subject to certain post-closing adjustments.

Asset disposals in 2002 were mainly comprised of the molded glass operations in the U.S. and China and the rolled products circles operations in Italy, as well as three company-owned ships and more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd.

((Graph))

Capital Expenditures and Depreciation

	2002	2001	2000	1999	1998
Capital Expenditures (US$M)	728	1,110	1,491	1,169	805
Depreciation (US$M)	859	820	545	477	462

Capital expenditures were well below depreciation.

Financing Activities
In January 2002, the Company redeemed all of its $150-million 8 7/8% debentures originally due on January 15, 2022, for 104.15% of their face value. A loss of $6 million was recognized in the first quarter of 2002. The redemption was financed by commercial paper borrowings at a significantly lower rate of interest. In September 2002, the Company issued $500-million of 4 7/8% global notes due September 15, 2012. Net proceeds were used to repay existing long-term debt and commercial paper borrowings.

The quarterly common share dividend remained at 15 cents per share in 2002. Total dividends paid (common and preference) to shareholders were $197 million in 2002 compared to $200 million in 2001 and $155 million in 2000.

((Graph))

Total Borrowings and Equity

	2002	2001	2000	1999	1998
Borrowings (US$M)	3,867	4,091	4,608	1,489	1,789
Equity* (US$M)	8,775	8,902	9,253	5,738	5,629
Debt as a percent of invested capital (%)	31	32	33	21	24

* Includes minority interests and preference shares.

Total borrowings declined during 2002, resulting in an improved debt/equity ratio.

Cash and time deposits totaled $110 million at the end of 2002, which is slightly lower than the $119 million at the end of 2001. Alcan has committed credit facilities totaling $2 billion. The Company expects that cash from operations, combined with the $2 billion still available under its credit facilities, will be more than sufficient to meet the cash requirements of operations, planned capital expenditures and dividends. In addition, the Company believes that its ability to access global capital markets, considering its investment grade rating, should provide any additional liquidity that may be required to meet unforeseen events.

Environment, Health and Safety (EHS)
Continuous improvement in performance while increasing value for stakeholders is the core feature of Alcan's EHS approach. In 2002, the Company began to implement its revised EHS Policy. An initiative entitled "A Call to Action" was cascaded throughout the organization to capture employee feedback on improving Alcan's safety record at an even faster rate. Other developments during 2002 included better integration of EHS into business systems and the development of improved performance metrics.

Alcan produced its first sustainability report, entitled Alcan's Journey Towards Sustainability, that charts the Company's progress in measuring and managing its economic, environmental and social impacts and also draws a definitive link between Alcan's business success and its EHS activities. Furthermore, Alcan was selected for the Dow Jones Sustainability World Index and for the Gobal Reporters Survey conducted by the United Nations Environment Program (UNEP) and SustainAbility in recognition of its on-going efforts to implement sustainability within its businesses.

Finally, the Company won a UNEP award for excellence in sustainable development, a result of promoting the benefits of recycling and fostering an entrepreneurial spirit among school children around the world.

Alcan believes that existing and planned EHS measures allow it to exceed statutory and regulatory demands while improving its competitive position and efficiency. Alcan's capital expenditures to protect the environment and improve working conditions were $67 million in 2002. Similar expenditures for 2003 and 2004 are projected to be $106 million and $147 million, respectively. In addition, expenditures charged against income for environmental protection were $140 million in 2002, and are expected to be $137 million both in 2003 and 2004.

Operating Segment Review
At the beginning of 2002, the Company re-aligned its management structure from four to six business groups in order to improve its performance, move closer to its markets and increase responsiveness. The six business groups or segments are Bauxite, Alumina and Specialty Chemicals; Primary Metal; Rolled Products Americas and Asia; Rolled Products Europe; Engineered Products; and Packaging. In addition to EVA®, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) continues to be a key financial performance measure for the operating segments. Additional operating segment information is presented in note 28 to the financial statements.

((Graph))

Alcan's 2002 Revenues by Business Group

Bauxite, Alumina and Specialty Chemicals	3%
Primary Metal	20%
Rolled Products Americas and Asia	27%
Rolled Products Europe	15%
Engineered Products	13%
Packaging	22%

The information that follows is reported by operating segment on a stand-alone basis. Transactions between groups are conducted at arm's-length and reflect market prices. Accordingly, earnings from Bauxite, Alumina and Specialty Chemicals as well as from Primary Metal operations include profit on alumina or metal produced by the Company, whether sold to third parties or used in the Company's fabricating and packaging operations. Earnings from the downstream operations represent only the value-added portion of the profit from rolled products, engineered products and packaging products.

Bauxite, Alumina and Specialty Chemicals
The Bauxite, Alumina and Specialty Chemicals (BASC) group operates five refineries and two specialty chemicals plants and has seven wholly or partially owned bauxite mines/deposits. The alumina produced is generally used to supply the Company's own smelting requirements. BASC spent much of the last few years repositioning its business portfolio around low-cost bauxite and alumina assets in Australia and has moved from the fourth to the second cash-cost quartile in the industry.

In 2002, record production levels at the Gove refinery in Australia and Vaudreuil in Canada refineries helped offset the decrease in production due to the sale of the Jamaican operations in the second quarter of 2001.

In the first quarter of 2001, the Company acquired the remaining 30% of the Gove alumina refinery and related bauxite mine at a cost of $379 million (subject to certain post-closing adjustments) bringing its interest in these assets to 100%. This low-cost refinery has total annual capacity of 1.9 Mt and set production records in 2001 and 2002. This investment has helped the Company to further reduce its average alumina cost, while giving it access to Gove's significant low-cost expansion potential in the future.

On May 31, 2001, the Company completed the sale of its operations in Jamaica, which had an annual capacity of some 1.1 Mt of alumina.

As a result of a value-based review of its activities in specialty chemicals, Alcan announced in January 2002 that it would exit this business in Europe due to the unprofitable nature of this market, and because of its disadvantaged cost position. A significant effort was made to sell the Burntisland Specialty Chemicals plant in the U.K., but a successful transaction could not be structured. Consequently, Alcan ceased operations in November 2002, following a consultation process with employees and union representatives.

The decrease in production and lower alumina prices, partially offset by improved production costs, contributed to lower EBITDA in 2002. Higher production and substantial cost reductions, partially offset by lower alumina prices, contributed to higher EBITDA in 2001 compared to 2000.

Average realized prices for alumina decreased both in 2002 and 2001 in line with LME prices. The Company continues to pursue lower costs in the face of ongoing pricing pressure.

((Graph))

Sales and Production - BASC

	2002	2001	2000
Intersegment sales (US$M)	757	771	536
Third-party sales (US$M)	435	477	470
Alumina production (kt)	4,271	4,625	3,941

Lower production in 2002 reflected the earlier sale of Jamaican operations partly offset by record production at Gove and Vaudreuil.

((Graph))

EBITDA - BASC

	2002	2001	2000
EBITDA (US$M)	249	301	265
LME (US$/t)	1,365	1,454	1,567

Lower alumina prices and production contributed to lower EBITDA in 2002.

Production costs hit record lows for second consecutive year.

Production costs were 6% better in 2002, setting a new record for a second consecutive year, due to the divestment of high-cost operations in Jamaica, lower raw material prices and to ongoing cost reduction efforts. Production costs decreased by 3% in 2001 compared to 2000, as a result of divestment activities, ongoing cost reduction efforts, including synergies from the algroup merger, and improved productivity.

In the second quarter of 2002, a production optimization project at Gove was initiated. This $40-million project will increase the refinery's capacity by 100 kt/y and is expected to further reduce costs on a per tonne basis. Construction work should be completed in the first quarter of 2003.

((Graph))

Sales and Production - Primary Metal

	2002	2001	2000
Intersegment sales (US$M)	2,205	2,117	1,674
Third-party sales (US$M)	2,447	2,546	1,655
Aluminum production (kt)	2,238	2,042	1,562

Alma and Alouette were major contributors to a 10% increase in production.

Specialty Chemicals
Operating results for 2002 were 24% lower than in 2001 mainly due to an operating loss of $10 million attributable to the European business from which the Company exited in November 2002.

Operating results for 2001 were 35% lower than in 2000. While the European business underwent a major restructuring that streamlined the organization and improved process efficiencies, worldwide operations were adversely impacted by the economic slowdown resulting in lower shipments and prices.

Primary Metal
Alcan is the second largest aluminum producer in the Western World. Its Primary Metal group operates or has interests in sixteen smelters worldwide, 62% of which are supplied by company-owned power (compared to the industry average of 28%) - a major competitive advantage. With its focus on continuous improvement in technology and cost, the Company has an excellent low-cost primary metal position with 50% of its smelting capacity in the top tier of industry cash cost. In addition to LME-grade ingot, Primary Metal produces value-added aluminum in the form of sheet ingot, extrusion billet, cable rods and foundry ingot for other Alcan plants or third-party customers serving the transportation, building and construction, consumer goods and machinery markets.

A full year of production at Alma, the 40% acquisition of Alouette and capacity restarts contributed to the 10% increase in production.

Eleven of the thirteen smelters operating without any water restrictions set all-time production records in 2002. The Alma smelter reached full production of 405 kt in 2002, after all pots became operational on September 30, 2001, as compared to the 272 kt produced in 2001.

As part of its maximizing value initiatives, Alcan acquired a 20% interest in the Aluminerie Alouette consortium from Sociétégénérale de financement (SGF) in April 2002. Later, in September 2002, the Company purchased an additional 20% interest in Alouette from Corus Group plc, bringing its total participation to 40%. Alouette is a world-class aluminum smelter located in Sept-Îles, Quebec, with an annual capacity of 243 kt/y; the acquisition will help the Company leverage value maximizing synergies within its Quebec smelter system.

In 2002, production at the Kitimat smelter in British Columbia was lower due to production cut-backs that occurred in 2001 as a result of water shortages. However, because water levels improved in the Nechako Reservoir in B.C. during 2002, 60 kt/y of idled capacity was gradually restarted beginning in the third quarter.

Most of Alcan's smelter production is in the form of value-added ingot. Sales of these products increased by 12% in 2002 and in fact were at all-time record levels for each of the three major products: sheet ingot, foundry ingot and extrusion billet.

Record production was also achieved at the partially owned anode plant, Aluchemie, in the Netherlands and calcined coke plant in Strathcona, Alberta, as well as at the Company's power facilities in Quebec.

Additional sales volumes and lower operating costs (including the reduction in Alma start-up expenses) and benefits from merger synergies and the restructuring program more than offset a 6% reduction in LME prices and the unfavourable effects of foreign currency balance sheet translation of $10 million in 2002.

The main factors contributing to the increase in EBITDA in 2001 were additional production volumes, lower operating costs and initial merger synergy savings as well as a gain on foreign currency balance sheet translation of $18 million, partially offset by lower ingot realizations and increased start-up costs for the new Alma smelter.

((Graph))

EBITDA - Primary Metal

	2002	2001	2000
EBITDA (US$M)	858	818	729
Average third party realized price (US$/t)	1,533	1,614	1,747
LME (US$/t)	1,365	1,454	1,567

Higher volumes and improved costs more than offset a 6% reduction in LME prices.

The decrease of $78 /t in total metal production costs in 2002 was attributable to a decrease in Alma start-up expenses, lower raw material costs and the benefits from the merger synergy and restructuring programs.

The largest of the special charges in 2002 was related to Kitimat's idled capacity. The charges also included Alma pre-operating and start-up expenses of $10 million ($140 million in 2001 and $73 million in 2000).

((Graph))

Cost of Production - Primary Metal

	2002	2001	2000
Special charges (US$/t)	43	111	97
Cost of production (US$/t)	1,204	1,214	1,233

Total metal production costs for the year declined by $78/t.

In September 2002, the five co-venturers of Alouette announced their approval of the phase II expansion project, which will increase production capacity to 550 kt/y. While the project commenced in late 2002, Alcan's $350-million contribution to the cost will not begin until 2004. The new pots will gradually come on line starting in February 2005 with completion expected in the fall of 2005. The expansion project was predicated on a 500 MW block of power that was awarded to Alouette by the provincial power authority.

A $66-million, 44 kt/y expansion project in Soeral, Norway, in which Alcan has a 50% interest, is on budget and expected to be completed in the first quarter of 2003.

The high amperage/low energy project at the Lynemouth and Lochaber smelters in the U.K. was approved in June 2002 for $38 million. By increasing the amperage in existing pots, this project will result in additional production of 16 kt/y, improved current and power efficiencies and reduced CO2 emissions.

Construction of a pot-relining centre at the Alma smelter was approved in January 2003 for $39 million. The centre will include processes for pot demolition, relining, cathode rodding, as well as minimum storage and shipping facilities for spent potlining.

A project to build the Candonga hydropower plant on the Doce River in Brazil, with a total installed capacity of 140 MW, was approved in 2001. Alcan is participating equally in this project with CVRD (Companhia Vale do Rio Doce). Construction began in July 2001 with the first turbine expected to be in operation by November 2003. Alcan's share of the cost is estimated at $48 million. The project is 75% complete, on budget and ahead of schedule.

Other value-maximizing options were developed in 2002. For example, on June 6, 2002, the Company announced an agreement in principle to form a joint venture with Qingtongxia Aluminum Company (QTX), a leading aluminum company in China. The proposed joint venture provides an opportunity for Alcan to acquire a 50% share in a 130 kt/y aluminum smelter that utilizes modern, pre-bake technology. In addition, Alcan would have an option for a 50% share in the planned and approved 150 kt/y expansion of the smelter. Due diligence and the development of an implementation plan were the main focuses in the latter part of 2002, in preparation for formal negotiations with QTX and Chinese officials in 2003.

Our 40% stake in Alouette exemplifies value-maximizing investment.

Rolled Products Americas and Asia
Alcan Rolled Products Americas and Asia (RPAA), with sixteen production facilities in six countries, is focused on meeting the ever-changing needs of its global and regional fabrication customers through the rapid transfer and adoption of best technology and management practices. The RPAA group manufactures and sells high-quality sheet and light gauge rolled products serving numerous markets including beverage, automotive, construction, and other durable goods.

((Graph))

Sales and Realized Prices - RPAA

	2002	2001	2000
Sales (US$M)	3,327	3,316	3,391
Average realized price *(US$/t)	2,218	2,359	2,401

* Excluding conversion of customer-owned metal

Revenues increased despite lower price.

The sales increase was driven by higher volumes despite lower average realized prices. Highlights for 2002 included record shipments in North America and Asia despite difficult economic and market conditions. Volumes increased by 4% in North America and 23% in Asia, offsetting market declines in South America caused largely by currency volatility. Growth in can demand resulted in higher sales volumes through the Company's Asian assets, as can company qualifications were completed during the year. Alcan also made further inroads into the North American beverage can and industrial products markets, as well as in the South American can market. Increased demand for can stock in North America was attributable to new brand introductions and packaging innovations by the major soft drink companies.

Rolled Products Americas and Asia revenues can be broken down by end-use market as follows:

((Graph))

Can and Closures	54%
Distribution	8%
Foil and Foilstock	17%
Industry	10%
Automotive	7%
Other	4%

The financial results for RPAA in 2002 reflected a significant increase in EBITDA compared to 2001. This was attributable to volume increases along with particularly successful cost reduction efforts in North America and the favourable impact of metal price movements. These factors more than offset the negative impact of a stronger Korean won and a volatile Brazilian economic situation and currency.

The improvement in 2001 EBITDA was mainly due to higher can sheet volume in South America and the benefits from cost reduction initiatives, partially offset by higher energy prices.

In the past decade, Alcan has made important investments in the expansion, upgrade and acquisition of rolled products facilities in North and South America and Asia with a commitment to innovation, cost reduction, manufacturing excellence and maximizing value for the shareholder.

RPAA Business Units
In North America, record shipments were achieved in 2002 within the industrial products, container, industrial fin stock and converter foil markets. In addition to the increase in overall volumes, RPAA's shipments of higher value-added can stock grew by 12% as a result of the focus on value-based management. Over the past few years, industry over-capacity in the common alloys market was rationalized through the closing of two competitors' plants, which helped stabilize the market and improve margins. In response to global over-capacity in the light gauge sheet and foil markets and heightened competition from imports, Alcan announced that it would reduce production at its Fairmont, West Virginia, plant effective in the first quarter of 2003.

((Graph))

EBITDA and Shipments - RPAA

	2002	2001	2000
EBITDA (US$M)	367	296	261
Shipments * (kt)	1,613	1,522	1,487

* Includes shipments of rolled products and conversion of customer-owned metal.

Higher volumes and lower costs led to improved EBITDA.

In 2002, the automotive sector continued to be a growth market for Alcan. Automotive sheet sales were up over 2001 as North American automobile demand increased in response to financing incentives offered by the automakers. New Alcan automotive sheet programs for the year included innovations in sport utility vehicle (SUV) lift-gate and hood technologies resulting from continued close co-operation with customers.

South American economies were severely impacted in 2002 by political uncertainty in Brazil, Argentina and Venezuela. The Brazilian real fell 53% during the year, which reduced demand for U.S.$-based aluminum products and led to an 8% drop in sheet shipments. Alcan is turning to new export markets and new product introductions, as well as focusing on higher value-added products, to help mitigate the decline in local demand. As the only company capable of producing can sheet in South America, Alcan is well positioned to benefit from the improving economic trend that began in late 2002.

In Asia, Alcan Taihan Aluminum Limited (ATA) in Korea achieved a major milestone when, after two and a half years of dedicated efforts, it qualified its can-body stock with 28 customer can manufacturing plants in Australia, China, Korea, Malaysia, Singapore, Taiwan, Thailand and Vietnam. Alcan became the number two supplier to the Chinese rolled products market, which continues to benefit from double-digit growth in demand.

Recycling
During 2002, Alcan remained the world's leader in recycling used aluminum beverage cans (UBCs). Alcan's U.S. operations recycled 24 billion UBCs, representing an estimated 45% of all aluminum cans recycled in the United States. RPAA operates three aluminum can recycling plants located in Oswego, New York; Berea, Kentucky; and Greensboro, Georgia. At Alcan's Berea recycling facility, the largest UBC recycling facility in the world, production increased by nearly 22% as a result of improved manufacturing efficiencies.

In South America, Brazil with its 85% recycling rate was recognized as the world-wide leader among countries where UBC recycling is not legally mandated. At its state-of-the-art recycling operation in Pinda, Alcan recycled 36% of these cans in addition to metal received from a third-party metal recycler and utilized 59% of the recycled material to produce can stock.

In Korea, ATA's Ulsan plant commissioned a new aluminum recycling furnace that is being used to process scrap from its own operations and from customers. The 30-tonne capacity furnace uses technology that was developed by Alcan, which enhances the scrap recovery rate.

Rolled Products Europe
Rolled Products Europe (RPE) produces a variety of flat rolled products through its eleven plants, with Alunorf in Germany as its hub. RPE is focused on fully capturing the integration synergies from the merger with algroup, and continues to optimize its product portfolio and its production system to better serve its customers and reduce costs. RPE supplies a number of European markets including beverage can, industrial sheet and plate, foilstock, lithographic and automotive.

Higher realized prices and a 10% increase in shipments resulted in increased sales. RPE's realized prices improved relative to LME prices as a result of portfolio changes towards higher value-added products in more economically attractive markets.

The European beverage can market grew 5% in 2002, mainly driven by the growing demand in Eastern Europe. RPE can volumes increased at a faster pace than growth in demand. The distribution market was slow at the beginning of the year, but recovered significantly after the summer period, ending 1.5% above 2001 levels.

Most end-user markets remained weak all year. The industrial plate sector suffered from difficulties in the aerospace market, while the recovery in the construction market by-passed Germany. The trend toward substitution of aluminum for steel in these markets continued, exemplified by the demand for aluminum automotive sheet which remained strong, with volumes up 16% over 2001.

((Graph))

Sales and Realized Prices - RPE

	2002	2001	2000
Sales (US$M)	1,814	1,735	1,666
Average realized price * (US$/t)	2,467	2,448	2,571

* Excluding conversion of customer-owned metal.

Higher prices and shipments resulted in increased sales.

Significant volume increases drive Rolled Products' EBITDA performance.

Rolled Products Europe third-party revenues can be broken down by end-use market as follows:

((Graph))

Can and Closures	23%
Distribution	17%
Foil and Foilstock	7%
Industry	16%
Lithographic	10%
Automotive	9%
Other	18%

((Graph))

EBITDA and Shipments - RPE

	2002	2001	2000
EBITDA (US$M)	132	83	144
Shipments * (kt)	836	759	696

* Includes shipments of rolled products and conversion of customer-owned metal.

Increased volumes and lower costs resulted in higher EBITDA.

Increased volumes, at a sustained higher-value mix, as well as benefits from merger synergy and restructuring programs resulted in higher EBITDA. The strengthening of the euro and Swiss franc against the U.S. dollar contributed approximately $7 million to EBITDA in 2002.

Despite increased volumes with the inclusion of algroup's operations for a full year, lower EBITDA in 2001 was mainly due to the economic downturn in the second half of the year and lower price realizations.

After a value-based review of alternatives, Alcan announced in late 2001 the restructuring of its rolled products businesses in the U.K. and Italy. The aim of these measures was twofold: to make the businesses more competitive in the face of economic difficulties; and to put them in the best possible position to meet future industry needs.

Virtually all of these measures were completed on plan by the fourth quarter of 2002. Alcan sold its circles business in Pieve, Italy. In addition, the restructuring and downsizing of the rolling mill at Rogerstone in the U.K. have been completed, helping to optimize the product portfolio and align production capacity across Alcan's European rolling system.

During 2002, the Banbury R&D facility was closed and the main resources and programs were reallocated to Neuhausen, Switzerland and Kingston, Canada.

Recycling
In the U.K., Alcan has an infrastructure of over 300 independent recyclers. In addition to UBCs, post-consumer and can process scrap support a dedicated recycling facility at Latchford in the U.K. with a total annual capacity of 148 kt.

This facility significantly increased its scrap intake and produced over 10% more sheet ingot than in 2001.

Engineered Products
Engineered Products manufactures extruded and cast aluminum products, including cable, wire and rod, as well as composite materials such as aluminum-plastic, fibre-reinforced plastic and foam-plastic. The group provides value-added solutions for weight reduction in the automotive and mass transportation markets, as well as for the building façade and display markets. Engineered Products also has the largest aluminum cable position in North America. Its focus is to capitalize on profitable growth opportunities by leveraging its superior technology on a global basis.

((Graph))

Sales and EBITDA - Engineered Products

	2002	2001	2000
EBITDA (US$M)	96	103	55
Sales and operating revenues (US$M)	1,645	1,661	724

Difficult business conditions contributed to slightly lower EBITDA.

EBITDA was slightly below 2001 due to the difficult business conditions in light of the strengthening euro, particularly in extrusions and distribution markets in Europe.

The increase in both revenues and EBITDA in 2001 was mainly due to the inclusion of algroup for the full year, as well as good volume growth in the first half of the year.

Alcan's engineered products revenues can be broken down by business as follows:

((Graph))

Extrusions	24%
Composites	19%
Automotive	12%
Cable	26%
Service Centres	13%
Mass Transportation	6%

Engineered Products Business Units
EBITDA for Alcan's North American cable business is comparable to 2001. A softening trend in the latter part of the year followed a strong market in the first quarter. Total shipments were flat with increasing rod sales offset by lower building wire and cable sales. Prices remained under pressure throughout the year, reflecting difficult conditions in customer markets.

The overall volume for Alcan's extrusions was slightly below that of 2001. Market share in the soft alloys and large profiles industry was largely maintained, while slight increases in hard alloys and supplies to the mass transportation market were achieved. However, specialized industry volumes were lower due to depressed end-use markets, principally machinery and capital goods.

The use of composites in transport and industrial applications continued to grow, particularly in the wind-power generation market, where the Company is a leading supplier. While display volumes and prices remained under pressure throughout the year, architectural applications in Europe and North America had another year of strong performance. Geographic coverage was improved in 2002 with the opening of a new plant for the production of Alucobond in Bahia, Brazil.

Overall car production in Europe decreased by 1.5% compared to the previous year. New car sales dropped by 3.1% in Western Europe and 1.9% in the U.S. Although the market success of each new model is different, Alcan was able to maintain sales and further increase order backlogs for structural parts, including bumper systems, extrusions and high-pressure die-cast structural parts. For example, sales of cockpit carriers showed strong growth in 2002.

Alcan's mass transportation systems again achieved record sales in 2002. This trend reflects the continuing growth in public-sector projects, mainly involving new high-speed trains, metro trams and light-rail systems. The "Transrapid" magnetic levitation train project in Shanghai, China, received much market and media attention for example.

Packaging
With 2002 revenues of $2.8 billion, Alcan Packaging has leading positions in the end-use markets of food, pharmaceutical, cosmetic and personal care, and tobacco packaging markets. It offers a variety of packaging solutions using plastics, paper and paperboard as well as aluminum and other materials. Alcan Packaging is capitalizing on profitable growth opportunities, both internally and externally, created by enhanced product ranges, broader distribution systems and new customer relationships formed by the algroup merger. The group is also focused on reorganizing its European foil rolling and container businesses.

Benefits from cost initiatives, largely related to merger synergy and restructuring programs, compensated for the weak economic environment resulting in comparable EBITDA performance relative to 2001.

Margin pressures associated with customer consolidation and over-capacity in a weakened economic environment characterized packaging markets in 2002. Demand for food, pharmaceutical and technical applications softened in the first quarter of 2002 reflecting general economic uncertainty, then gradually recovered as the year progressed. The divestiture of the molded glass operations in the third quarter also had an unfavourable impact on sales and operating revenues compared to 2001.

Both revenues and EBITDA increased in 2001 largely due to the inclusion of algroup businesses for the full year.

((Graph))

Sales and EBITDA - Packaging

	2002	2001	2000
EBITDA (US$M)	347	352	73
Sales and operating revenues (US$M)	2,812	2,861	1,216

Significant cost improvements helped offset a weak economic environment.

Alcan's packaging revenues can be broken down as follows:

((Graph))

By Market

Food	43%
Pharmaceutical	18%
Tobacco	15%
Cosmetics	7%
Other	17%
By Type of Input
Plastic and Paper	41%
Aluminum	38%
Paperboard	12%
Glass	7%
Steel	2%
By Region
Europe	56%
North America	37%
South America	3%
Asia	4%

Acquisition of VAW Packaging
At the close of 2002, an agreement was finalized to acquire VAW Flexible Packaging (FlexPac) from Norsk Hydro for approximately $370 million. The proposed acquisition represents an excellent platform for profitable growth and is a good example of Alcan's focus on maximizing value. It would significantly enhance Alcan's global position in packaging, expanding its footprint technologically and regionally, particularly in the developing markets of Asia. On completion, Alcan would have world-class flexible packaging operations in Europe, Asia and the Americas. FlexPac includes 14 plants in 8 countries and 5,400 employees and posted consolidated sales of $680 million in 2001 at today's exchange rates. Based upon projected earnings for 2002, the purchase price represents a multiple of approximately 6.9 times EBITDA.

Packaging Business Units
Foil and technical products continued to implement major restructuring programs in the U.K., Germany and Switzerland, which are key to maximizing shareholder value. To maintain profitability, these aggressive cost reduction programs were needed to offset declines in major markets, particularly in the construction industry.

Flexible food packaging, particularly in Europe, was the most significantly impacted by price pressure. European volumes weakened in the early months of the year, although North American volumes remained strong. EBITDA was nonetheless sustained, and in the case of North America significantly improved, both through leveraging Alcan's strong service offering to key accounts and by successes in restructuring and other cost initiatives.

Operations began in late 2001 at a new contract packaging and specialty carton facility in Pennsylvania, building on Alcan's success in another similar plant in Canada. New investments were also made to relocate one facility and include it with the construction of a dedicated plant for a major customer in Spain.

Alcan's food container business counterbalanced the general economic slowdown in Europe with its cost initiatives and, despite lower sales, recorded improved profits.

Following volume declines in pharmaceutical and cosmetics packaging in the last quarter of 2001, the recovery in 2002 has been mixed. Although flexible pharma packaging has rebounded well, product introductions by customers in plastics as well as in specialty cartons and contract packaging have been subject to delays. Aerosol can volumes did recover during the year, but pricing pressure continued due to European overcapacity. The Company's molded glass operations were sold at the end of the third quarter in 2002, as they were disadvantaged from a competitive standpoint. Included in the year were revenues of $88 million and operating losses of $6 million from these operations.

Alcan's tobacco packaging business reached a new milestone in 2002, with U.S. carton sales growing by 50% over the prior year as a result of commissioning a new plant in Richmond, Virginia during 2001. The second year of the new venture in Kazakhstan saw the achievement of additional new customer volume, establishing a strong foothold in the markets of western Asia. Inner-liner volumes also remained very buoyant throughout the year in line with the projections underpinning Alcan's new metallizing and laminating plant in Berlin, Germany, which was at an advanced stage of construction by the end of 2002.

Proposed acquisition of VAW Packaging an example of profitable growth.

Risks and Uncertainties
For further details, refer to notes 22, 23 and 24 of the financial statements.

Risk Management
As a multinational company, which is to a large degree engaged in a commodity-related business, Alcan's financial performance is heavily influenced by fluctuations in metal prices and exchange rates. In order to reduce the associated risks, the Company uses a variety of financial instruments and commodity contracts. Clearly defined policies and management controls govern all risk management activities. Transactions in financial instruments for which there is no underlying exposure to the Company are prohibited, except for a small metal trading portfolio not exceeding 10,000 tonnes.

The decision whether and when to commence a hedge, along with the duration of the hedge, can vary from period to period depending on market conditions and the relative costs of various hedging instruments. The duration of a hedge is always linked to the timing of the underlying transaction, with the connection between the two being constantly monitored to ensure effectiveness.

Sensitivities
Estimated after-tax effect on Alcan's net income of:

	Change in full	US$M	US$
	year average*		per share
Exchange rate on long-term profitability
Canadian dollar	+1 US cent	$(11)	$ (0.03)
Euro	+1 US cent	$4	$ 0.01
Exchange rate on balance sheet translation
Canadian dollar	+1 US cent	$(17)	$ (0.05)
Australian dollar	+1 US cent	$(6)	$ (0.02)
Metal price on long-term profitability
Aluminum	+US$100/t	$146	$ 0.45

* Except for balance sheet translation which is point-in-time.

Foreign Currency Exchange
Exchange rate movements, particularly between the Canadian dollar and the U.S. dollar, have an impact on Alcan's costs and therefore its net results. Because the Company has significant operating costs denominated in Canadian dollars while its reporting currency is the U.S. dollar, it benefits long-term from a weakening in the Canadian dollar, but conversely, is disadvantaged if it strengthens.

Following the algroup merger, exchange movements have a greater impact on the Company's net income as a result of translating the euro earnings into U.S. dollars. Alcan benefits from a strengthening of the euro, but conversely, is disadvantaged if it weakens.

The Company's deferred income tax liabilities and net monetary liabilities for operations in Canada and Australia are translated into U.S. dollars at current rates. The resultant exchange gains or losses are included in income and fluctuate from quarter to quarter depending on the changes in exchange rates. A decrease in the Canadian and Australian dollars results in a favourable effect, whereas an increase results in an unfavourable impact.

Aluminum Prices
Depending on market conditions and logistical considerations, Alcan may sell primary aluminum to third parties and may purchase primary aluminum and secondary aluminum, including scrap, on the open market to meet the requirements of its fabricating businesses. In addition, depending on pricing arrangements with fabricated products customers, Alcan may hedge some of its purchased metal supply in support of those sales.

Through the use of forward purchase and sale contracts and options, Alcan seeks to limit the impact of lower metal prices.

Critical Accounting Policies
The Company's significant accounting policies are presented in note 2 to the financial statements. The critical accounting policies described below are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Post-retirement Benefits
The costs of pension and other post-retirement benefits are calculated based on assumptions determined by management, with the assistance of independent actuarial firms and consultants. These assumptions include the long-term rate of return on pension assets, discount rates for pension and other post-retirement benefits obligations, expected service period, salary increases, retirement ages of employees and health care cost trend rates. If actual experience differs from the assumptions made by management, the pension and other post-retirement benefits expenses will increase or decrease in future years as a result. See note 26 - Post-retirement Benefits for additional information, including a sensitivity analysis for assumed health care cost trend rates.

Environmental Liabilities and Contingencies
Environmental expenses and contingencies are accrued on an undiscounted basis when it is probable that a liability for past events exists and the liabilities can be reasonably estimated. In determining whether a liability exists, the Company is required to make judgments as to the probability of a future event occurring. If the Company's judgments differ from those of legal or statutory authorities, the provisions for environmental expenses and contingencies could increase or decrease in future periods.

Property, Plant and Equipment
Due to changing economic and other circumstances, the Company regularly reviews and evaluates its property, plant and equipment for impairment in order to record the assets at the lower of cost or net recoverable amount. In determining whether the assets are impaired, the Company makes assumptions and estimates as to future cash flows and profitability. Actual results could differ from those estimates.

Goodwill
As reported in note 3, Accounting Changes, effective January 2002, goodwill is no longer amortized but is tested annually for impairment at the reporting unit level. Impairment is determined by comparing the fair value of the reporting unit to its carrying value. The fair value of a reporting unit and assets and liabilities within a reporting unit may be determined using alternative methods for market valuation, including quoted market prices, discounted cash flows and net realizable values.

In estimating the fair value of a reporting unit, the Company chose a valuation method developed by outside consultants and made assumptions and estimates in a number of areas, including future cash flows and discount rates. The Company regularly uses independent appraisers and consultants to perform valuations of the assets and liabilities. The use of different judgments and estimates in the test for goodwill impairment may result in significantly different results.

Income Taxes
The provision for income taxes is calculated based on the expected tax treatment of transactions recorded in the Company's consolidated financial statements. Income tax assets and liabilities, both current and deferred, are measured according to the income tax legislation that is expected to apply when the asset is realized or the liability settled. The Company regularly reviews the recognized and unrecognized deferred income tax assets to determine whether a valuation allowance is required or needs to be adjusted. In forming a conclusion about whether it is appropriate to recognize a tax asset, the Company must use judgment in assessing the potential for future recoverability while at the same time considering past experience. All available evidence is considered in determining the amount of a valuation allowance. If the Company's interpretations differ from those of tax authorities or judgments with respect to tax losses change, the income tax provision could increase or decrease in future periods.

Cautionary Statement
Statements made in this report that describe the Company's or management's objectives, projections, estimates, expectations or predictions of the future may be "forward-looking statements" within the meaning of securities laws, which can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "should", "estimates", "anticipates" or the negative thereof or other variations thereon. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and that the Company's actual actions or results could differ materially from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized. Important factors that could cause such differences include global supply and demand conditions for aluminum and other products, aluminum ingot prices and changes in raw materials' costs and availability, changes in the relative value of various currencies, cyclical demand and pricing within the principal markets for the Company's products, changes in government regulations, particularly those affecting environmental, health or safety compliance, economic developments, relationships with and financial and operating conditions of customers and suppliers, the effects of integrating acquired businesses and the ability to attain expected benefits and other factors within the countries in which the Company operates or sells its products and other factors relating to the Company's ongoing operations including, but not limited to, litigation, labour negotiations and fiscal regimes. The aluminum market overview contained in this report is based on research that includes information from sources believed to be reliable, but Alcan does not make any representation that it is accurate in every detail. The aluminum market overview represents the Company's views as of February 9, 2003.

        Responsibility for the Annual Report
Alcan's management is responsible for the preparation, integrity and fair presentation of the financial statements and other information in the Annual Report. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include, where appropriate, estimates based on the best judgment of management. A reconciliation with generally accepted accounting principles in the United States is also presented. Financial and operating data elsewhere in the Annual Report are consistent with that contained in the accompanying financial statements.

Alcan's policy is to maintain systems of internal accounting, administrative and disclosure controls of high quality consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is accurate and reliable and that Company assets are adequately accounted for and safeguarded. The Board of Directors oversees the Company's systems of internal accounting, administrative and disclosure controls through its Audit Committee, which is comprised of directors who are not employees. The Audit Committee meets regularly with representatives of the shareholders' independent auditors and management, including internal audit staff, to satisfy themselves that Alcan's policy is being followed. In addition, a Disclosure Committee of management has been established to manage disclosure of corporate information and oversee the functioning of the Company's disclosure controls and procedures.

The Audit Committee has recommended the appointment of PricewaterhouseCoopers LLP as the independent auditors, subject to approval by the shareholders.

The financial statements have been reviewed by the Audit Committee and, together with the other required information in this Annual Report, approved by the Board of Directors. In addition, the financial statements have been audited by PricewaterhouseCoopers LLP, whose report is provided on this page.

((Signature))
Travis Engen, President and Chief Executive Officer

((Signature))
Geoffery E. Merszei, Executive Vice-President and Chief Financial Officer
February 9, 2003

        OECD Guidelines
The Organization for Economic Cooperation and Development (OECD), which consists of 30 industrialized countries including Canada, has established guidelines setting out an acceptable framework of reciprocal rights and responsibilities between multinational enterprises and host governments. Alcan supports and complies with the OECD guidelines and has a Worldwide Code of Employee and Business Conduct, which is consistent with them.

        Auditors' Report
        To the Shareholders of Alcan Inc.
We have audited the consolidated balance sheets of Alcan Inc. as at December 31, 2002, 2001 and 2000 and the consolidated statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in Canada and the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002, 2001 and 2000 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting principles.

((Signature))
PricewaterhouseCoopers LLP, Chartered Accountants      Montreal, Canada, February 9, 2003

        Comments by Auditors on Canada-United States Reporting Difference
United States reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by a change in accounting principle, such as those changes described in note 3 to the consolidated financial statements. Although we conducted our audits in accordance with both Canadian and United States generally accepted auditing standards, our report to the shareholders dated February 9, 2003 is expressed in accordance with Canadian reporting standards which do not permit a reference to such changes in accounting principles in the auditors' report when the changes are properly accounted for and adequately disclosed in the financial statements.

((Signature))
PricewaterhouseCoopers LLP, Chartered Accountants      Montreal, Canada, February 9, 2003

Consolidated Financial Statements

Consolidated Statement of Income (in millions of US$, except per share amounts)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
Sales and operating revenues	12,540	12,626	9,148
Costs and expenses
Cost of sales and operating expenses	9,934	9,999	7,113
Depreciation and amortization (notes 2 and 6)	859	820	545
Selling, administrative and general expenses	577	547	405
Research and development expenses	115	135	81
Interest	203	254	78
Restructuring, impairment and other special charges(note 8)	69	657	-
Other expenses (income) - net (note 12)	116	113	51
	11,873	12,525	8,273
Income before income taxes and other items	667	101	875
Income taxes (note 9)	293	42	254
Income before other items	374	59	621
Equity income	3	3	4
Minority interests	(3)	13	1
Net income before amortization of goodwill	374	75	626
Amortization of goodwill (notes 2 and 6)	-	73	16
Net income	374	2	610
Dividends on preference shares	5	8	10
Net income (Loss) attributable to common shareholders	369	(6)	600
Net income per common share before
amortization of goodwill  - basic	1.15	0.21	2.47
Amortization of goodwill per common share	-	0.23	0.05
Net income (Loss) per common share - basic(note 4)	1.15	(0.02)	2.42
Net income (Loss) per common share - diluted(note 4)	1.14	(0.02)	2.42
Dividends per common share	0.60	0.60	0.60

Consolidated Statement of Retained Earnings (in millions of US$)

Year ended December 31	2002	2001	2000
Retained earnings - beginning of year
As previously reported	4,095	4,290	4,227
Accounting change - Unamortized exchange loss (note 3)	(21)	(18)	(10)
As restated	4,074	4,272	4,217
Accounting change - Impairment of goodwill
as at January 1, 2002 (note 3)	(748)	-	-
Net income	374	2	610
Amount related to common shares purchased
for cancellation	-	-	(400)
Dividends
- Common	(192)	(192)	(145)
- Preference	(5)	(8)	(10)
Retained earnings - end of year(note 21)	3,503	4,074	4,272

The accompanying notes are an integral part of the financial statements.

Consolidated Balance Sheet (in millions of US$)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
ASSETS
Current assets
Cash and time deposits	110	119	261
Trade receivables (net of allowances of $59 in 2002,
$52 in 2001 and $55 in 2000)(notes 2 and 11)	1,300	1,216	1,721
Other receivables	553	532	559
Inventories
- Aluminum operating segments
- Aluminum	905	875	1,034
- Raw materials	390	413	414
- Other supplies	296	269	268
	1,591	1,557	1,716
- Packaging operating segment	396	393	399
	1,987	1,950	2,115
	3,950	3,817	4,656
Deferred charges and other assets (note 13)	667	716	701
Property, plant and equipment(note 14)
Cost (excluding Construction work in progress)	17,798	16,225	14,807
Construction work in progress	573	613	1,979
Accumulated depreciation	(8,138)	(7,136)	(6,753)
	10,233	9,702	10,033
Intangible assets, net of accumulated amortization
of $56 in 2002, $27 in 2001 and $5 in 2000(note 6)	332	298	330
Goodwill (note 6)	2,356	2,925	2,669
Total assets	17,538	17,458	18,389
Liabilities and shareholders' Equity
Current liabilities
Payables and accrued liabilities	2,337	2,328	2,427
Short-term borrowings	385	555	1,080
Debt maturing within one year (note 17)	295	652	333
	3,017	3,535	3,840
Debt not maturing within one year (notes 17 and 24)	3,187	2,884	3,195
Deferred credits and other liabilities (note 16)	1,419	1,131	874
Deferred income taxes (note 9)	1,140	1,006	1,227
Minority interests	150	132	244
Shareholders' equity
Redeemable non-retractable preference shares (note 18)	160	160	160
Common shareholders' equity
Common shares(note 19)	4,703	4,687	4,597
Retained earnings (note 21)	3,503	4,074	4,272
Deferred translation adjustments (note 23)	259	(151)	(20)
	8,465	8,610	8,849
	8,625	8,770	9,009
Commitments and contingencies (note 22)
Total liabilities and shareholders' equity	17,538	17,458	18,389

The accompanying notes are an integral part of the financial statements.

Approved by the Board:

((Signature))
Travis Engen, Director
((Signature))
Guy Saint-Pierre, Director

Consolidated Statement of Cash Flows (In millions of US$)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
Operating activities
Net income	374	2	610
Adjustments to determine cash from operating activities:
Depreciation and amortization	859	820	545
Amortization of goodwill	-	73	16
Deferred income taxes	68	(152)	52
Asset impairment provisions	33	232	-
Loss (Gain) on sales of businesses and investment - net	(27)	123	(9)
Change in operating working capital
Change in receivables	143	122	(25)
Change in inventories	93	75	(117)
Change in payables	(81)	(58)	(81)
Total change in operating working capital	155	139	(223)
Change in deferred charges, other assets,
deferred credits and other liabilities - net	149	134	36
Other - net	3	16	39
Cash from operating activities	1,614	1,387	1,066
Financing activities
New debt	848	1,852	1,586
Debt repayments	(1,138)	(1,779)	(419)
	(290)	73	1,167
Short-term borrowings - net	(207)	(479)	280
Sale of receivables	-	300	-
Common shares purchased for cancellation	-	-	(530)
Common shares issued	16	61	21
Dividends
- Alcan shareholders (including preference)	(197)	(200)	(155)
- Minority interests	(6)	(2)	(2)
Cash from (used for) financing activities	(684)	(247)	781
Investment activities
Property, plant and equipment	(728)	(1,110)	(1,491)
Business acquisitions (note 15)	(345)	(404)	(244)
	(1,073)	(1,514)	(1,735)
Net proceeds from disposal of businesses, investments
and other assets	121	239	184
Preacquisition loan to algroup to finance special payment
to algroup shareholders	-	-	(532)
Cash used for investment activities	(952)	(1,275)	(2,083)
Effect of exchange rate changes on cash and time deposits	13	(7)	2
Decrease in cash and time deposits	(9)	(142)	(234)
Cash of subsidiaries consolidated (deconsolidated) - net	-	-	180
Cash and time deposits - beginning of year	119	261	315
Cash and time deposits - end of year	110	119	261

The accompanying notes are an integral part of the financial statements.

        Notes to Consolidated Financial Statements
        (in millions of US$, except where indicated)

        Note 1. Nature of Operations
Alcan is engaged, together with subsidiaries, joint ventures and related companies, in a variety of aspects of the aluminum and packaging businesses on an international scale. Its operations include the mining and processing of bauxite, the basic aluminum ore; the refining of bauxite into alumina; the generation of electric power for use in smelting aluminum; the smelting of aluminum from alumina; the recycling of used and scrap aluminum; the fabrication of aluminum, aluminum alloys and non-aluminum materials into semi-fabricated and finished products; the producing and converting of specialty packaging and packaging products for many industries including the food, pharmaceutical, cosmetic and health sectors; the distribution and marketing of aluminum, non-aluminum and packaging products; and, in connection with its aluminum operations, the production and sale of industrial chemicals. Alcan, together with its subsidiaries, joint ventures and related companies, has bauxite holdings in five countries, produces alumina in three countries, smelts primary aluminum in seven countries, operates rolled products plants in ten countries, has engineered products plants in seventeen countries, has packaging facilities in fourteen countries and has sales outlets and maintains warehouse inventories in the larger markets of the world. Alcan also operates a global transportation network that includes the operation of bulk cargo vessels, port facilities and freight trains.

        Note 2. Summary of Significant Accounting Policies
        Generally Accepted Accounting Principles
These financial statements conform with Canadian generally accepted accounting principles (GAAP). Note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP), provides an explanation and reconciliation of differences between Canadian and U.S. GAAP.

        Use of Estimates
The preparation of financial statements in conformity with GAAP in Canada and the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        Principles of Consolidation
These consolidated financial statements include the accounts of subsidiaries that are controlled by Alcan, all of which are majority owned. Joint ventures, irrespective of percentage of ownership, are proportionately consolidated to the extent of Alcan's participation. Companies subject to significant influence are accounted for using the equity method. Under the equity method, Alcan's investment is increased or decreased by Alcan's share of the undistributed net income or loss and deferred translation adjustments since acquisition. Investments in companies in which Alcan does not have significant influence are accounted for using the cost method. Under the cost method, dividends received are recorded as income.

        Intercompany balances and transactions, including profits in inventories, are eliminated in the
        consolidated financial statements.
        All business combinations are accounted for under the purchase method.

        Foreign Currency
The financial statements of self-sustaining foreign operations (located principally in Europe and Asia) are translated into U.S. dollars at prevailing exchange rates. Revenues and expenses are translated at average exchange rates for the year while assets and liabilities are translated at exchange rates in effect at year-end. Differences arising from exchange rate changes are included in the Deferred translation adjustments (DTA) component of Common shareholders' equity. If there is a reduction in the Company's ownership in a foreign operation, the relevant portion of DTA is recognized in Other expenses (income) - net or Restructuring, impairment and other special charges at that time. All other operations, including those in Canada, are considered to be integrated foreign operations having the U.S. dollar as the functional currency. Under this method, monetary items are translated at current rates and translation gains and losses are included in income. (See note 3 - Accounting Changes; Deferred Foreign Exchange Translation Gains and Losses). Non-monetary items are translated at historical rates.

The Company has entered into foreign currency contracts and options that are designated as hedges of certain future identifiable foreign currency revenue and operating cost exposures. The exchange gains or losses are not recorded in the financial statements until the contract is settled or the designated transaction is recognized. They are then included, together with related hedging costs, in Sales and operating revenues, Cost of sales and operating expenses, Depreciation and amortization or Property, plant and equipment, as applicable, concurrently with recognition of the underlying items being hedged.

Foreign currency forward contracts and swaps are also used to hedge certain foreign currency denominated debt and intercompany foreign currency denominated loans. Unrealized currency gains or losses on these contracts are recorded in earnings concurrently with the unrealized gains or losses on the foreign currency denominated debt and intercompany foreign currency denominated loans being hedged.

Other gains and losses from foreign currency denominated items are included in Other expenses (income) - net.

        Revenue Recognition
The Company recognizes revenue when significant risks and benefits of ownership are transferred, which coincides with when the goods are shipped or services rendered.

        Commodity Contracts and Options
Virtually all of the forward metal contracts and options serve to hedge certain future identifiable aluminum price exposures. Gains or losses on these hedges are not recorded in the financial statements until early settlement or recognition of the hedged transaction. They are then included, together with related hedging costs, in Sales and operating revenues or Cost of sales and operating expenses, as applicable, concurrently with recognition of the underlying items being hedged.

Unrealized gains and losses on oil and natural gas futures contracts, swaps and options are generally not recorded in the financial statements until recognition of the hedged transactions. In circumstances where a hedging relationship cannot be demonstrated, the derivatives are recorded at fair value and the unrealized gains and losses recorded in earnings.

 In circumstances where the Company's purchase or sales contracts for a commodity contain derivative characteristics, these contracts are generally not recorded at fair value as they involve quantities that are expected to be used or sold in the normal course of business over a reasonable period of time.

        Interest Rate Swaps
Amounts receivable or payable under interest rate swaps are recorded in Interest concurrently with the interest expense on the underlying debt. Unrealized gains and losses are not recorded in the financial statements as these contracts hedge interest costs on certain debt.

        Inventories
Aluminum, raw materials, packaging products and other supplies are stated at cost (determined for the most part on the monthly average cost method) or net realizable value, whichever is lower.

        Capitalization of Interest Costs
The Company capitalizes interest costs associated with the financing of major capital expenditures up to the time the asset is ready for its intended use.

        Sale of Receivables
When the Company sells certain receivables, it retains servicing rights and provides limited recourse, which constitute retained interests in the sold receivables. No servicing asset or liability is recognized in the financial statements as the fees received by the Company reflect the fair value of the cost of servicing these receivables. The related purchase discount is included in Other expenses (income) - net.

        Property, Plant and Equipment
Property, plant and equipment is recorded at the lower of cost and net recoverable amount. Depreciation is calculated on the straight-line method using rates based on the estimated useful lives of the respective assets. The principal rates range from 2% to 10% for buildings and structures, 1% to 4% for power assets and 3% to 20% for chemical, smelter and fabricating assets.

        Goodwill
As of January 2002, goodwill is no longer amortized and is carried at the lower of carrying value and fair value. Goodwill is tested for impairment on an annual basis at the reporting unit level. Fair value is determined using discounted cash flows.

Under accounting standards in effect until December 31, 2001, goodwill was recorded at cost less accumulated amortization and was amortized over a period of 40 years using the straight-line method of amortization. Periodic assessments were made to determine whether there was permanent impairment in the remaining unamortized goodwill balance based on the undiscounted cash flows of the underlying operations. (See note 3 - Accounting Changes; Goodwill and Other Intangible Assets).

        Intangible Assets
Intangible assets are primarily trademarks and patented and non-patented technology, all of which have finite lives. Intangible assets are recorded at cost less accumulated amortization and are generally amortized over 15 years using the straight-line method of amortization.

        Environmental Costs and Liabilities
Environmental expenses are accrued on an undiscounted basis when it is probable that a liability for past events exists. Such liabilities are reviewed and adjusted as required on a regular basis to reflect current conditions. For future removal and site restoration costs, provision is made in a systematic manner by periodic charges to income, except for assets that are no longer in use, in which case full provision is charged immediately to income. Environmental expenses are normally included in Cost of sales and operating expenses except for large, unusual amounts which are included in Other expenses (income) - net. For 2001, the environmental provisions for treatment costs relating to spent potlining (SPL) in Quebec and British Columbia, Canada, and for remediation costs relating to red mud disposal at other sites in Canada and the United Kingdom were included in Restructuring, impairment and other special charges. Accruals related to environmental costs are included in Payables and accrued liabilities and Deferred credits and other liabilities.

Environmental expenditures of a capital nature that extend the life, increase the capacity or improve the safety of an asset or that mitigate or prevent environmental contamination that has yet to occur are included in Property, plant and equipment and are depreciated generally over the remaining useful life of the underlying asset.

        Post-retirement Benefits
The costs of pension benefits and post-retirement benefits other than pensions are recognized on an accrual basis over the working lives of employees. Post-retirement benefit obligations are actuarially calculated using management's best estimates and based on expected service period, salary increases and retirement ages of employees. Post-retirement benefit expense includes the actuarially computed cost of benefits earned during the current service period, the interest cost on accrued obligations, the expected return on plan assets based on fair market value and the straight line amortization of net actuarial gains and losses and adjustments due to plan amendments. All net actuarial gains and losses are amortized over the expected average remaining service life of the employees.

        Stock Options and Other Stock-based Compensation
The Company does not recognize compensation expense in earnings for options granted under the share option plan for employees as stock options are granted at an exercise price equal to the market price of the underlying stock on the grant date. The pro forma effect, if the Company had elected to recognize compensation expense for stock options using the fair value method, is disclosed in note 20 - Stock Options and Other Stock-Based Compensation. Stock compensation arrangements that can be settled in cash result in the recognition of compensation expense.

        Income Taxes
The Company uses the liability method for income taxes, under which deferred income tax assets and liabilities are recorded based on the temporary differences between the accounting basis and the tax basis of assets and liabilities. Deferred income tax assets and liabilities are revalued for all changes in tax rates and exchange rates. The future recoverability of recognized deferred income tax assets is assessed on a regular basis to determine whether a valuation allowance is required.

        Cash and Time Deposits
All time deposits have original maturities of 90 days or less and qualify as cash equivalents.

        Recently Issued Accounting Standards
        Hedging Relationships
The Canadian Institute of Chartered Accountants (CICA) issued an accounting guideline which establishes certain conditions regarding when hedge accounting may be applied and which is effective for the Company's fiscal year beginning January 1, 2004, with earlier application encouraged. The Company is studying the new guideline and is preparing for implementation of the hedging provisions. Each hedging relationship will be subject to an effectiveness test on a regular basis for reasonable assurance that it is and will continue to be effective. Under these rules, any derivative instrument that does not qualify for hedge accounting will be reported on a mark-to-market basis in earnings.

        Impairment of Long-lived Assets
The CICA issued Section 3063, Impairment of Long-lived Assets, which will be effective for the Company's fiscal year beginning on January 1, 2003. Under this standard, an impairment loss should be recognized when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The policies of this standard are the same as the policies contained in the recently adopted Financial Accounting Standards Board (FASB) Statement No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. (See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)).

        Disposal of Long-lived Assets and Discontinued Operations
The CICA issued Section 3475, Disposal of Long-lived Assets and Discontinued Operations, which will be effective for disposal activities initiated by the Company's commitment to a plan on or after May 1, 2003, with earlier application encouraged. Under this standard, a long-lived asset to be disposed of by sale should be measured at the lower of its carrying amount or fair value less cost to sell and should not be amortized while classified as held for sale. For a long-lived asset to be disposed of other than by sale, such as by abandonment, before the end of its previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over its shortened useful life. Also, the standard requires that the results of operations of a component of an enterprise that has been disposed of either by sale or abandonment should be reported in discontinued operations. A component of an enterprise comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the enterprise. The policies of this standard are the same as those policies contained in the recently adopted FASB Statement No.144, Accounting for the Impairment or Disposal of Long-lived Assets. (See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)).

        Note 3. Accounting Changes
        Goodwill and Other Intangible Assets
On January 1, 2002, the Company adopted the new standard of the CICA concerning goodwill and other intangible assets. Under this standard, goodwill and other intangible assets with an indefinite life are no longer amortized but are carried at the lower of carrying value and fair value. Goodwill and other intangible assets with an indefinite life are tested for impairment on an annual basis.

Goodwill is tested for impairment using a two-step test. Under the first step, the fair value of a reporting unit, based upon discounted cash flows, is compared to its net carrying amount. If the fair value is greater than the carrying amount, no impairment is deemed to exist. However, if the fair value is less than the carrying amount, a second test must be performed whereby the fair value of the reporting unit's goodwill must be estimated to determine if it is less than its carrying amount. Fair value of goodwill is estimated in the same way as goodwill is determined at the date of acquisition in a business combination, that is, the excess of the fair value of the reporting unit over the fair value of the identifiable net assets of the reporting unit.

An impairment of $748 was identified in the goodwill balance as at January 1, 2002, and was charged to opening retained earnings in 2002 upon adoption of the new accounting standard. Any further impairment arising subsequent to January 1, 2002, will be taken as a charge against income. As a result of the new standard, the Company no longer amortizes goodwill. The amount of goodwill amortization was $73 in 2001 and $16 in 2000.

        Deferred Foreign Exchange Translation Gains and Losses
As of January 1, 2002, the Company no longer amortizes the exchange gains and losses arising on the translation of long-term foreign currency denominated monetary assets and liabilities that have a fixed or ascertainable life extending beyond the end of the following fiscal year. These exchange gains and losses are now recognized in income immediately.

This standard has been applied retroactively and, consequently, prior years' financial statements have been restated. At December 31, 2001, Retained earnings have been decreased by $21 (2000: $18) and Deferred charges and other assets have been reduced by $21 (2000: $18) to reflect the recognition of the unamortized exchange losses that existed at each year-end.

Related to this accounting change, in 2002, an exchange loss of $7 (2001: $3; 2000: $8), on the translation of long-term foreign currency denominated monetary assets and liabilities, has been included in Other expenses (income) - net.

        Stock Options and Other Stock-based Compensation
On January 1, 2002, the Company adopted the new standard of the CICA relating to the measurement of stock options and other stock-based compensation. This standard is being applied to both options granted after January 1, 2002, and options granted before that date. This standard encourages but does not require that the fair value method be used for transactions with employees. In note 20 - Stock Options and Other Stock-based Compensation, pro forma net income and net income per common share - basic and diluted are presented as if the fair value based method had been applied to all stock option awards.

        Business Combinations
All business combinations initiated on or after July 1, 2001, are now required to be accounted for under the purchase method.

        Note 4. Net Income per Common Share - Basic and Diluted
Basic and diluted net income per common share are based on the weighted average number of shares outstanding during the year. The treasury stock method for calculating the dilutive impact of stock options is used. The following table outlines the calculation of basic and diluted net income per common share.

	2002	2001	2000
Numerator for basic and diluted net income per common share:
Net income (Loss) attributable to common shareholders	369	(6)	600
Denominator (number of common shares in millions):
Denominator for basic net income per common share -
weighted average of outstanding shares	321	320	248
Effect of dilutive stock options	1	1	-
Denominator for diluted net income per common share -
adjusted weighted average of outstanding shares	322	321	248
Net income (Loss) per common share - basic	1.15	(0.02)	2.42
Net income (Loss) per common share - diluted	1.14	(0.02)	2.42

Options to purchase 1,146,500 common shares (2001: 579,000; 2000: nil) at a weighted average price of CAN$60.16 per share (2001: CAN$59.35) were outstanding during the year but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average price of the common shares.

As at December 31, 2002, there are 321,470,298 common shares outstanding (2001: 320,901,748; 2000: 317,921,113).

        Note 5. Combination with Alusuisse Group Ltd
On October 17, 2000, the Company entered into a combination agreement with Alusuisse Group Ltd (algroup). At that date, the shareholders of algroup, in response to the Company's share exchange offer, tendered 6,747,707 shares, representing 99.37% of the outstanding registered algroup shares, in exchange for 115,385,790 shares of the Company valued at $30.11 per share. The Company also assumed from algroup total debt of $2,171. The combination was completed and algroup became a subsidiary of the Company on October 17, 2000. During 2001, the Company acquired the remaining shares of algroup in accordance with the provisions of Swiss law.The combination was accounted for using the purchase method of accounting and the results of operations of algroup are included in the consolidated financial statements since acquisition. At the date of acquisition, the purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

Fair value of net assets acquired at date of acquisition
Cash and time deposits	175
Other current assets	1,641
Deferred charges and other assets	162
Capital assets	2,822
Total assets	4,800
Current liabilities	2,002
Long-term debt*	1,292
Deferred credits and other liabilities	330
Deferred income taxes	401
Fair value of net assets acquired at date of acquisition	775

Determination of fair values was based on valuations performed by independent appraisers and consultants. Allocation of the purchase price involved estimates and information gathering during the months following the date of the combination. This estimation process was finalized in 2001.

Net restructuring and other costs for plant closures of $54 were recognized in the purchase price allocation. Of the total restructuring and other costs of $54, an amount of $1 was paid out in 2002 (2001: $16) relating primarily to employee severance costs.

In 2001, the fair values of certain assets and liabilities were adjusted from the amounts originally assigned at the date of combination. As a result, additional goodwill of $123 was recorded.

The difference between the total purchase price and the net fair value of all identifiable assets and liabilities acquired as at December 31, 2001, was $2,780 (2000: $2,620) and is accounted for as goodwill. Goodwill was amortized over a period of 40 years using the straight-line method of amortization until December 31, 2001. As of January 1, 2002, goodwill is no longer amortized but is carried at the lower of carrying value and fair value. Goodwill is tested for impairment on an annual basis. (See note 3 - Accounting Changes; Goodwill and Other Intangible Assets).

Consideration
Issuance of common shares on October 17, 2000 (115,385,790 common shares
without nominal or par value; average market value of $30.11 per share)	3,474
Issuance of common shares in 2001 (687,882 common shares without nominal or par value;
average market value of $44 per share)	30
Other consideration	51
Total consideration	3,555

        Supplemental pro forma information (in millions of US$, except per share amounts)
The following unaudited pro forma information for 2000 presents a summary of consolidated results of operations of the Company and algroup as if the combination had occurred on January 1, 1999. These pro forma results have been prepared for comparative purposes only.

	2000
	(unaudited)
Sales and operating revenues	13,146
Net income before amortization of goodwill	737
Net income	672
Net income per common share before amortization of goodwill	2.22
Net income per common share - basic and diluted	2.02

        Note 6. Goodwill and Intangible Assets
        Goodwill

The changes in the carrying amount of goodwill for the year ended December 31, 2002, are as follows:
	Balance				Deferred	Balance
	as at	Impairment			translation	as at
	January 1, 2002	losses	Additions	Adjustments	adjustments	December 31, 2002
Bauxite, Alumina and Specialty Chemicals	543	-	-	3	-	546
Primary Metal	426	-	33	3	49	511
Rolled Products Europe	163	(163)	-	-	-	-
Engineered Products	466	(321)	2	(5)	19	161
Packaging	1,306	(264)	-	(7)	103	1,138
Other	21	-	-	(21)	-	-
Total	2,925	(748)	35	(27)	171	2,356

Using the newly adopted accounting standard of the CICA concerning goodwill and other intangible assets (see note 3 - Accounting Changes), the Company completed a review to determine whether, at January 1, 2002, there was impairment in the goodwill balance. As a result of this review, an impairment loss of $748 was recognized as a charge to opening retained earnings in 2002. The adjustment reflects the decline in end-market conditions in the period from the algroup merger in October 2000 to January 1, 2002. The fair value of all reporting units was determined using discounted future cash flows. The annual test was completed for the year 2002 and no further impairment was identified.

A reduction in goodwill of $27 was recorded in 2002 principally relating to a decrease in the valuation allowance related to future income tax assets acquired in the combination with algroup, but which were not recognized at the date of the business combination.

Changes in the carrying amount of goodwill for the year ended December 31 were as follows:

	2001	2000
Goodwill - beginning of year	2,669	-
Issuance of common shares to complete algroup acquisition30	2,620
Adjustments to fair values of algroup assets and liabilities	123	-
Other consideration to complete algroup acquisition	7	-
Acquisition of the remaining 30% of the Gove alumina refinery	234	-
Deferred translation adjustments	(62)	65
Amortization	(73)	(16)
Amount related to disposal of a business	(3)	-
Goodwill - end of year	2,925	2,669

Amortizable intangible assets	Gross Carrying	Accumulated	Net Book
	Amount	Amortization	Value
		December 31, 2002
Trademarks	144	22	122
Patented and non-patented technology	224	33	191
Other	20	1	19
	388	56	332
		December 31, 2001
Trademarks	127	11	116
Patented and non-patented technology	198	16	182
	325	27	298
		December 31, 2000
Trademarks	131	2	129
Patented and non-patented technology	204	3	201
	335	5	330

The aggregate amortization expense for the year ended December 31, 2002, was $24. The estimated amortization expense for the five succeeding fiscal years is approximately $24 per year.

The acquisition of intangible assets amounted to $20 in the year ended December 31, 2002.

Pro forma net income and net income per common share - basic and diluted, before goodwill amortization, are presented below.

Year ended December 31	2001	2000
Reported net income	2	610
Goodwill amortization	73	16
Adjusted net income	75	626
Net income (Loss) per common share - basic and diluted
Reported net income (loss)	(0.02)	2.42
Goodwill amortization	0.23	0.05
Adjusted net income per common share - basic and diluted	0.21	2.47

        Note 7. Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)
Significant differences between Canadian and United States GAAP are described below.

        Derivatives
Beginning in 2001, the Company was required to adopt, for U.S. GAAP reporting purposes, the FASB Statement Nos. 133 and 138, Accounting for Derivative Instruments and Hedging Activities. These standards require that all derivatives be recorded in the financial statements at fair value. However, the Company elected not to adopt the FASB's optional hedge accounting provisions. Accordingly, for U.S. GAAP reporting purposes only, beginning in 2001, unrealized gains and losses resulting from the valuation of derivatives at fair value are recognized in net income as the gains and losses arise and not concurrently with the recognition of the transactions being hedged. In its primary Canadian GAAP financial statements, the Company continues to recognize the gains and losses on derivative contracts in income concurrently with the recognition of the transactions being hedged, except for certain currency forward contracts and oil put options which are recorded at fair value.

Upon initial adoption of the FASB Statement Nos. 133 and 138 in 2001, the cumulative effect of the accounting change resulted in a decrease in net income of $12.

        Currency Translation
The difference between Deferred translation adjustments under Canadian GAAP and U.S. GAAP arises from the different treatment of exchange on long-term debt at January 1, 1983, resulting from the adoption of accounting standards on foreign currency translation.

        Comprehensive Income
U.S. GAAP requires the disclosure of Comprehensive income which, for the Company, comprises Net income under U.S. GAAP, the movement in Deferred translation adjustments under U.S. GAAP, unrealized gains or losses for the period less gains or losses realized during the period on "available-for-sale" securities and the movement in the minimum pension liability. The concept of Comprehensive income does not exist under Canadian GAAP.

        Investments
Under U.S. GAAP, certain portfolio investments, which are considered to be "available-for-sale" securities, are measured at market value, with the unrealized gains or losses included in Comprehensive income. Under Canadian GAAP, these investments are measured at cost.

        Minimum Pension Liability
Under U.S. GAAP, if the accumulated benefit obligation exceeds the market value of plan assets, a minimum pension liability for the excess is recognized to the extent that the liability recorded in the balance sheet is less than the minimum liability. Any portion of this additional liability that relates to unrecognized past service cost is recognized as an intangible asset while the remainder is charged to Comprehensive income. Canadian GAAP has no such requirement to record a minimum liability.

        Joint Ventures
Under Canadian GAAP, joint ventures are accounted for using the proportionate consolidation method, while under U.S. GAAP, joint ventures are accounted for under the equity method. Under an accommodation of the U.S. Securities and Exchange Commission, accounting for joint ventures need not be reconciled from Canadian to U.S. GAAP. The different accounting treatment affects only the display and classification of financial statement items and not net income or shareholders' equity. (See note 10 - Joint Ventures for summarized financial information about joint ventures).

        Consolidated Statement of Income
Under U.S. GAAP, separate subtotals for net income before amortization of goodwill and net income per common share before amortization of goodwill - basic would not be presented.

        Statement of Cash Flows
Under U.S. GAAP, separate subtotals within operating, financing and investment activities would not be presented.

        Recently Adopted Accounting Standards for u.s. GAAP Presentation
In 2002, the Company adopted the FASB Statement No. 141, Business Combinations, and the FASB Statement No. 142, Goodwill and Other Intangible Assets. Both statements are the same as the recently issued Canadian accounting standards except that under U.S. GAAP, goodwill impairment identified as at January 1, 2002, is charged to income as the cumulative effect of an accounting change. Under Canadian GAAP, an impairment loss of $748 was recognized as a charge to opening retained earnings in 2002. (See note 3 - Accounting Changes, for a description of the impact on the Company and see note 6 - Goodwill and Intangible Assets).

In 2002, the Company adopted the FASB Statement No. 144, Accounting for Impairment or Disposal of Long-lived Assets. This statement amends previous accounting and disclosure requirements for impairments and disposals of long-lived assets and discontinued operations.

The FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation addresses disclosure and initial recognition and initial measurement requirements for a guarantor that issues a guarantee. In 2002, the Company adopted the disclosure requirements of the Interpretation, which elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees that it has issued.

In 2002, the Company adopted the FASB Statement No. 148, Accounting for Stock-based Compensation. This statement amends transition and disclosure provisions provided in the FASB Statement No. 123, Accounting for Stock-based Compensation. (See note 2 - Summary of Significant Accounting Policies; Stock Options and Other Stock-based Compensation).

        Recently Issued Accounting Standards
The FASB has issued Statement No. 143, Accounting for Asset Retirement Obligations, which will be effective for the Company's fiscal year beginning on January 1, 2003. This statement establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The Company is studying these requirements and has not yet determined its impact.

The FASB has recently issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which will be effective for the Company's fiscal year beginning on January 1, 2003. This standard requires that a liability associated with an exit or disposal activity be recognized when the liability is incurred rather than at the date of the Company's commitment to an exit plan. The provisions of this new standard are generally to be applied prospectively.

Under the recently issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, the initial recognition and measurement provisions are to be applied on a prospective basis to guarantees issued or modified after December 31, 2002. The Company is studying the accounting requirements of this interpretation and is preparing for its implementation.

In January 2003 the FASB issued Interpretation No. 46, Consideration of Variable Interest Entities, which applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which the Company holds a variable interest that it acquired before February 1, 2003. This Interpretation requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. An entity that holds a significant variable interest but is not the primary beneficiary is subject to specific disclosure requirements. The Company is studying this Interpretation and has not yet determined its impact.

Reconciliation of Canadian and U.S. GAAP
	2002	2001	2000
Net income - as reported(restated for 2001 and 2000 - note 3)	374	2	610
Differences due to:
- Valuation of derivatives	60	(72)	-
- Other	(2)	5	(4)
- Deferred tax effect on the above	(20)	23	-
Net income (Loss) from continuing operations before cumulative effect of accounting changes
- U.S. GAAP	412	(42)	606
Cumulative effect of accounting changes
- Valuation of derivatives	-	(12)	-
- Impairment of goodwill	(748)	-	-
Net income (Loss) - U.S. GAAP	(336)	(54)	606
Dividends on preference shares	(5)	(8)	(10)
Net income (Loss) attributable to common shareholders - U.S. GAAP	(341)	(62)	596
Net income (Loss) per common share - basic and diluted - U.S. GAAP	(1.06)	(0.19)	2.40
Net income (Loss) attributable to common shareholders from continuing
operations before cumulative effect of accounting changes - U.S. GAAP	407	(50)	596
Net income (Loss) per common share - basic and diluted- U.S. GAAP	1.26	(0.16)	2.40

December 31	2002	2001		2000
	As	U.S.	As	U.S.	As	U.S.
	Reported	GAAP	Reported	GAAP	Reported	GAAP
			(Restated		(Restated
			- note 3)		- note 3)
Deferred charges and other assets	667	664	716	717	701	716
Intangible assets, net of
accumulated amortization	332	475	298	316	330	330
Payables and accrued liabilities	2,337	2,354	2,328	2,401	2,427	2,427
Deferred credits and other liabilities	1,419	2,029	1,131	1,364	874	874
Deferred income taxes	1,140	983	1,006	909	1,227	1,231
Retained earnings	3,503	3,537	4,074	4,070	4,272	4,324
Deferred translation adjustments (DTA)	259	205	(151)	(207)	(20)	(76)

Year ended December 31	2002	2001	2000
Comprehensive income (loss)
Net income (Loss)	(336)	(54)	606
Net change in deferred translation adjustments	412	(131)	56
Net change in excess of market value over book value of "available-for-sale" securities	8	(7)	(4)
Reclassification to net income on disposal of "available-for-sale" securities	(10)	-	-
Net change in minimum pension liability - net of taxes of $81 (2001: $67)	(172)	(148)	-
Comprehensive income (loss)	(98)	(340)	658
December 31	2002	2001	2000
Accumulated other comprehensive loss
Deferred translation adjustments	205	(207)	(76)
Minimum pension liability	(320)	(148)	-
Unrealized gain on "available-for-sale" securities	6	8	15
Accumulated other comprehensive loss	(109)	(347)	(61)

        Note 8. Restructuring, Impairment and Other Special Charges
Restructuring, impairment and other special charges of $657 pre-tax, which were recorded in 2001, included restructuring and asset impairment charges of $411 and other special charges of $246.

        Restructuring and Asset Impairment Charges
The provision balances and related cash payments for the restructuring and asset impairment charges consisted of:

	Asset
	Severance	Impairment
	Costs	Provisions	Other	Total
2001:
Charges	112	269	30	411
Cash payments - net	(7)	-	(7)	(14)
Non-cash charges	-	(269)	-	(269)
Provision balance as at December 31	105	-	23	128
2002:
Charges	36	26	27	89
Cash payments - net	(64)	-	(1)	(65)
Non-cash charges	(6)	(26)	(7)	(39)
Provision balance as at December 31	71	-	42	113

In 2001, the Company recorded charges of $411 pre-tax in Restructuring, impairment and other special charges as a result of a restructuring program aimed at safeguarding its competitiveness. The aim of the restructuring program was twofold: to make the businesses more competitive in the face of the current economic difficulties; and to put them in the best position to meet future industry needs. These aims are being achieved through cost reduction measures, exiting from non-core products and the consolidation of certain operations and are resulting in a series of plant sales, closures and divestments throughout the organization. The charges associated with this program consisted of severance costs of $112 related to workforce reductions of approximately 2,200 employees, impairment of long-lived assets of $269 and other exit costs related to the shutdown of facilities of $30.

The workforce reductions of 2,200 employees, which consist principally of manufacturing employees from all segments of the Company's worldwide operations, are comprised of:

• 500 employees - Primary Metal (principally Canada)
• 200 employees - Rolled Products Americas and Asia
• 400 employees - Rolled Products Europe (U.K. and Italy)
• 800 employees - Packaging (U.K., Canada, U.S. and other areas)
• 300 employees - Other operating segments

In 2002, the Company recorded charges of $69 pre-tax in Restructuring, impairment and other special charges, including restructuring and asset impairment charges of $89 and a reduction in other special charges of $20. Charges of $89 relating to the restructuring program consisted of severance costs of $36 relating to workforce reductions of approximately 960 employees, impairment of long-lived assets of $26 and other exit costs related to the shutdown of facilities of $27.

Severance charges of $36 relate primarily to the closure of the Burntisland facility, U.K. (Bauxite, Alumina and Specialty Chemicals), certain cable operations in North America (Engineered Products) and extrusion operations in Malaysia and light-gauge operations in Fairmont, West Virginia (Rolled Products Americas and Asia).

Asset impairment charges of $26 relate primarily to the extrusion operations in Pieve, Italy (Engineered Products) and the Borgofranco plant in Italy (Rolled Products Europe).

Other exit costs of $27 consist principally of closure costs of $19 for the Burntisland facility, U.K., a loss of $5 on the sale of the extrusion operations in Thailand arising from the realization of deferred translation losses (Rolled Products Americas and Asia), a loss of $4 on the sale of the rolled products circles production unit at Pieve, Italy (Rolled Products Europe), other costs of $3 and offset in part by income of $4 from the write-back of excess contract loss provisions upon settlement with a customer (Engineered Products).

The workforce reductions in 2002 of approximately 960 employees were comprised of 380 employees in Bauxite, Alumina and Specialty Chemicals, 250 employees in Rolled Products Americas and Asia, 200 employees in Engineered Products and 130 employees in Packaging.

In 2002, the Company completed the sale of certain glass packaging operations located in Park Hills, Missouri, and Mays Landing, Williamstown and Millville, New Jersey for proceeds of $15, equal to book value. As well, the Company sold its rolled product circles production unit at its Pieve plant in Italy for proceeds of $14 and its two Pharmatech rubber stopper and aluminum seals operations located in Salisbury, Maryland, U.S. for proceeds of $9 equal to book value.

As at December 31, 2002, approximately 2,900 of a total of 3,160 employees (2,200 employees in 2001 and 960 employees in 2002) had been terminated, consisting of approximately 400 employees in 2001 and 2,500 employees in 2002.

Total impairment charges of $295 consisted of a charge of $269 in 2001 ($227 for assets to be held and used and $42 for assets held for disposal) and charges of $26 in 2002 ($17 for assets to be held and used and $9 for assets to be held for disposal). These charges related principally to buildings, machinery and equipment and some previously capitalized project costs.

In the context of the Company's objective of value maximization, a detailed business portfolio review was undertaken in 2001 to identify high cost operations, excess capacity and non-core products.

The cumulative impairment charge of $244 for assets to be held and used consisted of $45 for Bauxite, Alumina and Specialty Chemicals; $22 for Primary Metal; $17 for Rolled Products Americas and Asia; $79 for Rolled Products Europe; $16 for Engineered Products; $44 for Packaging; and $21 for Other. The impairment charge arose as a result of negative projected cash flows and recurring losses. The charges principally related to the cold mill at the Rogerstone plant in the U.K. (Rolled Products Europe); the foil facilities at Glasgow, U.K. (Packaging); the specialty chemicals plant at Burntisland, U.K. (Bauxite, Alumina and Specialty Chemicals) and the engineered cast products plant in Quebec, Canada (Primary Metal). An impairment provision was recorded to the extent that the net recoverable amount, which approximates fair value based on discounted cash flows, was below the net book value.

The cumulative impairment charge of $51 for assets held for disposal consisted of $8 for Rolled Products Americas and Asia; $31 for Rolled Products Europe; and $12 for Packaging. The charges principally related to the extrusion operations in Malaysia and Thailand (Rolled Products Americas and Asia); certain rolled products and recycling operations at the Pieve and Borgofranco plants in Italy (Rolled Products Europe); and the Pharmatech rubber stopper and aluminum seals operations in the U.S. (Packaging). An impairment provision was recorded to bring the net book value to net realizable value. These assets were disposed of in 2002, except for the extrusion operations in Malaysia and the recycling operations at the Borgofranco plant in Italy. The assets held for disposal had:

• sales and operating revenues of $250 in 2001 (Rolled Products Americas and Asia - $30; Rolled Products Europe - $90; Packaging - $130) and $190 in 2002, (Rolled Products Americas and Asia - $16; Rolled Products Europe - $84; and Packaging - $90).
• net operating losses of $(10) in 2001 (Rolled Products Americas and Asia - nil; Rolled Products Europe - nil; Packaging - $(10)) and losses of $(9) in 2002 (Rolled Products Americas and Asia - $(2); Rolled Products Europe - $(1); and Packaging - $(6)).
• assets of $200 at December 2001 (Rolled Products Americas and Asia - $20; Rolled Products Europe - $100; Packaging - $80) and $15 at December 2002 (Rolled Products Americas and Asia - $10; Rolled Products Europe - $5 and Packaging - nil).
• liabilities of $110 at December 2001 (Rolled Products Americas and Asia - $10; Rolled Products Europe - $30; Packaging - $70) and $40 at December 2002 (Rolled Products Americas and Asia - $5; Rolled Products Europe - $35 and Packaging - nil).

The restructuring program was completed in 2002, with the exception of the closure of facilities at Glasgow, U.K., which is expected to be completed in mid-2003, the shut-down of one of the two cold mills at the Fairmont, West Virginia, plant in the first quarter for 2003, and the sales of the extrusion operations in Malaysia and the recycling operations at the Borgofranco plant in Italy, which are expected to be completed in 2003, as scheduled per the Company's plans. The closure plans include the orderly shutdown of facilities after existing customer requirements have been satisfied and in some situations, the transfer of production operations to other facilities. The provision balance of $113 at December 31, 2002, is expected to be largely paid out in 2003.

        Other Special Charges
In 2001, the Company increased its environmental provisions by $246 pre-tax to cover treatment costs of $150 for stored spent potlining (SPL) in Quebec and British Columbia, Canada, as well as to cover remediation costs of $96 relating to red mud disposal at other sites in Canada and the U.K. The charges were recorded in the income statement in Restructuring, impairment and other special charges and on the balance sheet in Deferred credits and other liabilities $(235) and in Payables and accrued liabilities $(11).

SPL, which is a waste material generated by the smelting process, needs to be treated in a safe and environmentally sound manner. The Company's objectives have been to find the best alternative to stockpiling SPL and various technical studies were carried out to identify treatment alternatives that are economically viable. Following these studies, which were completed in 2001, and in accordance with local laws and regulations, the Company has initiated a project to identify the best treatment technology to treat the stored SPL. The liability of $150 reflected the Company's best estimate of the cost to treat the stored SPL in Quebec and to have the SPL in British Columbia treated by a third party. The liability recorded in 2001 is being paid over a period of approximately twenty years.

The liability of $96 relating to red mud disposal reflected the Company's best estimate of the cost of rehabilitation. Red mud is the normal residue associated with extracting alumina from bauxite. The charge represents the cost to fill and seal the sites.

In 2002, the environmental provision of $150 for SPL was reduced by $4 for the recovery from a third party of a portion of the environmental provision. In addition, the environmental provision of $96 for red mud disposal was reduced by $18 due to lower remediation costs at the Burntisland facility in the U.K. The reductions in the provisions were recorded in the income statement in Restructuring, impairment and other special charges and on the balance sheet as an increase in Other receivables and a reduction in Deferred credits and other liabilities.

        Note 9. Income Taxes

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Income before income taxes and other items
Canada	(65)	(303)	431
Other countries	732	404	444
	667	101	875
Current income taxes
Canada	(9)	(48)	19
Other countries	234	242	183
	225	194	202
Deferred income taxes
Canada	56	(69)	25
Other countries	12	(83)	27
	68	(152)	52
Income tax provision	293	42	254

The composite of the applicable statutory corporate income tax rates in Canada is 39.0% (2001: 40.0%; 2000: 40.2%). The following is a reconciliation of income taxes calculated at the above composite statutory rates with the income tax provision:

                                                                                                                                                                       ; 

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Income taxes at the composite statutory rate	261	41	352
Differences attributable to:
Exchange translation items	35	3	10
Exchange revaluation of deferred income taxes	16	(26)	(18)
Effect of tax rate changes on deferred income taxes	-	(8)	(20)
Unrecorded tax benefits on losses - net	23	26	(19)
Investment and other allowances	(18)	8	(38)
Large corporations tax	7	8	6
Withholding taxes	5	8	9
Reduced rate or tax exempt items	(18)	(2)	(12)
Foreign tax rate differences	(25)	(6)	7
Prior years' tax adjustments	(3)	(14)	(40)
Other - net	10	4	17
Income tax provision	293	42	254

At December 31, the principal items included in Deferred income taxes are:

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Liabilities:
Property, plant, equipment and intangibles	1,361	1,178	1,291
Undistributed earnings (note 21)	17	24	34
Inventory valuation	66	78	80
Other - net	175	193	166
	1,619	1,473	1,571
Assets:
Tax benefit carryovers	361	297	326
Accounting provisions not currently deductible for tax	363	382	220
	724	679	546
Valuation allowance (amount not likely to be recovered)	245	212	202
	479	467	344
Net deferred income tax liability	1,140	1,006	1,227

The valuation allowance relates principally to loss carryforward benefits and tax credits where realization is not likely due to time and other limitations in the tax legislation giving rise to the potential benefits, as well as uncertain economic conditions in certain countries, principally Brazil and Korea. In 2002, $11 (2001: $4; 2000: $4) of the valuation allowance was reversed when it became more likely than not that benefits would be realized. Of that amount, $5 reduced goodwill since it related to a future income tax asset acquired in the combination with algroup in 2000, but which was not recognized at the date of the business combination.

Based on rates of exchange at December 31, 2002, tax benefits of approximately $145 relating to prior and current years' operating losses and $49 of benefits related to capital losses and tax credits carried forward will be recognized in income when it is more likely than not that such benefits will be realized. These amounts are included in the valuation allowance above. Approximately $17 of these potential tax benefits expire in 2003.

In 1997, income taxes on Canadian operations for the years 1988 to 1991 were reassessed by the Canadian tax authorities. Most of the additional taxes and interest related to transfer pricing issues and are recoverable in other countries. The process to obtain recoveries from other countries is underway. During 1999, the Canadian tax authorities indicated their intention not to proceed with the reassessments made in 1997 in respect of the years 1988 and 1989. In 2000, certain provinces decided not to proceed with the reassessments pertaining to 1988 and 1989. As a result of this and other adjustments, in 2000 the Company recorded $32 of tax recoveries. During 2002, the Canadian and U.S. tax authorities settled the majority of the transfer pricing issues related to the 1997 reassessments. As a result of this and other adjustments, in 2002 the Company recorded $4 of tax recoveries. (See note 27 - Information by Geographic Areas).

        Note 10. Joint Ventures
The activities of the Company's major joint ventures are the procurement and processing of bauxite in Australia, Brazil and Guinea, smelting operations in Norway and Canada, as well as aluminum rolling operations in Germany and the United States. In 2002, the Company acquired a 40% interest in the Aluminerie Alouette consortium in Quebec, Canada. In 2001, the Company sold its bauxite and alumina operations in Jamaica. (See note 15 - Sales and Acquisitions of Businesses and Investments).

Alcan's proportionate interest in all joint ventures is included in the consolidated financial statements. Summarized financial information relating to Alcan's share of these joint ventures is provided on the next page. Except for the Company's interest in the Aluminerie Alouette consortium, most of the activities of the Company's joint ventures result in the supplying of materials to other operations of the Company.

	2002	2001	2000
Statement of income information for the year ended December 31
Revenues	72	11	9
Expenses	60	8	6
Net income	12	3	3
Financial position at December 31
Inventories	99	72	113
Property, plant and equipment - net	945	551	768
Other assets	130	54	103
Total assets	1,174	677	984
Short-term debt	50	45	28
Debt not maturing within one year	67	82	106
Other liabilities	253	167	208
Total liabilities	370	294	342
Cash flow information for the year ended December 31
Cash from operating activities	14	3	4
Cash used for financing activities	(13)	(7)	(17)
Cash used for investment activities	(85)	(73)	(57)

        Note 11. Sales of Receivables
Under an agreement effective December 18, 2001, the Company sold to a third party an undivided interest in certain trade receivables of $330, with limited recourse. Net cash proceeds from this ongoing agreement were $300 with $30, which represents the maximum credit exposure to the Company, held in reserve by the third party. This amount has been recorded in Deferred charges and other assets. Net proceeds were used to repay commercial paper borrowings in 2001. The Company acts as a service agent and administers the collection of the receivables sold.

        Note 12. Other Expenses (Income) - Net
Other expenses (income) - net comprise the following elements:

	2002	2001	2000
Rationalization expenses	3	(1)	45
Loss (Gain) on disposal of businesses and investment - net(note 15)	(36)	123	(9)
Legal provisions	113	-	14
Interest revenue	(13)	(26)	(22)
Exchange (gains) losses	37	(8)	(5)
Other	12	25	28
	116	113	51

        Note 13. Deferred Charges and Other Assets
Deferred charges and other assets comprise the following elements:

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Prepaid pension costs	314	344	284
Income taxes recoverable	-	51	52
Marketable securities	37	40	44
Prepaid mining expenses	56	57	60
Investments*	46	52	50
Reserve for receivables sold (note 11)	30	30	-
Net assets held for disposal	-	-	70
Premiums on currency and metal options	-	2	1
Amount receivable on currency swap of debt	-	(12)	16
Long-term notes and other receivables	106	85	60
Other	78	67	64
	667	716	701
* Investments
Companies accounted for under the equity method	18	21	19
Portfolio investments - at cost	28	31	31
	46	52	50

        Note 14. Property, Plant and Equipment

	2002	2001	2000
Cost (excluding Construction work in progress)
Land and property rights	373	301	293
Buildings	3,180	2,887	2,631
Machinery and equipment	14,245	13,037	11,883
	17,798	16,225	14,807

Accumulated depreciation relates primarily to Buildings and Machinery and equipment.

Capital expenditures are expected to be approximately $800 to $850 in 2003 of which $42 is subject to firm commitments with suppliers.

        Note 15. Sales and Acquisitions of Businesses and Investments
        2002
        Canada
In April 2002, the Company acquired the Société générale de financement (SGF) 20% joint venture interest in the Aluminerie Alouette consortium at a cost of $172 and in September 2002, the Company acquired the Corus Group plc's 20% joint venture interest at a cost of $171 giving the Company a 40% ownership in Alouette. These business combinations are accounted for using the purchase method of accounting and the results of operations are included in the consolidated financial statements since acquisition.

Determination of fair values of property, plant and equipment was based on valuations performed by independent appraisers and consultants. Allocation of the purchase price involves estimates and information gathering during the months following the date of the combination. This estimation process will be finalized in 2003. Accordingly, there may be some changes to the assigned values presented below. The total purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

	2002
Current assets	31
Deferred charges and other assets	3
Property, plant and equipment	300
Intangible assets	20
	354
Current liabilities	9
Deferred credits and other liabilities	15
Deferred income taxes	20
Fair value of net assets	310

The difference between the total purchase price of $343 and the net fair value of all identifiable assets and liabilities was $33 and is accounted for as goodwill. (See note 6 - Goodwill and Intangible Assets).

In September 2002, the five co-venturers of the Aluminerie Alouette consortium announced their final approval of the plant expansion in Sept-Îles, Quebec. Alcan's share of the cost will be approximately $350. Construction will begin in the spring of 2003.

        Japan
In 2002, the Company sold a portion of its investment in Nippon Light Metal Company, Ltd (NLM), included in the geographic area Asia and Other Pacific, for net cash proceeds of $22, reducing its holdings to an effective ownership of 2.2%. Included in Other expenses (income) - net is a gain of $36. The after-tax gain included a previously deferred gain of $8 related to the sale in 1996 of Toyo Aluminium K.K. to NLM.

        Germany, Other Europe and Asia and Other Pacific
In December 2002, the Company announced that it signed a definitive agreement with Norsk Hydro to purchase VAW Packaging (FlexPac) for approximately €345 million (approximately $370). FlexPac includes 14 plants in 8 countries and has 5,400 employees. FlexPac comprises a set of custom manufacturing businesses producing high-quality flexible packaging products for a wide variety of end-use customers and manufacturers of consumer goods, including those in the food, dairy and pharmaceutical industries. The transaction is expected to be completed in the first half of 2003 subject to the necessary regulatory approvals.

        2001
        Australia
In 2001, the Company acquired the remaining 30% of the Gove alumina refinery and related bauxite mine for a cash consideration of $379 subject to certain post-closing adjustments. As a result of this transaction, the Company owns 100% of these assets. The acquisition was accounted for using the purchase method of accounting. The purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

Fair value of net assets acquired	2001
Working capital	15
Property, plant and equipment	172
	187
Other liabilities - net	41
Long-term debt	1
	42
Fair value of net assets	145

The difference between the total purchase price and the net fair value of all identifiable assets and liabilities acquired was $234 and is accounted for as goodwill, which, until December 31, 2001, was being amortized over a period of 40 years using the straight-line method of amortization. (See note 3 - Accounting Changes).

        Jamaica
In 2001, the Company completed the sale of its Jamaican operations, included in the geographic area All other. Proceeds from the sale were $153. The total pre-tax loss on the sale was $123, which was recorded in Other expenses (income) - net.

        United Kingdom, Germany and Other Europe
The following transactions were completed in 2001 as part of the divestment requirements imposed by the European Commission as a condition to its approval of the merger between Alcan and algroup in October 2000.

• The Company sold its alumina specialties production plant, Martinswerk, located in Bergheim, Germany.
• The Company sold a number of foil container manufacturing assets in Spain and Germany.
• The Company sold certain assets at its lithographic sheet production plant, Star Litho, located in Bridgnorth, U.K.

        The Company received proceeds of approximately $54 from these sales.

        Korea
In 2001, the Company's subsidiary Alcan Taihan Aluminum Limited (ATA) acquired the remaining 5% of Aluminium of Korea Limited (Koralu), included in the geographic area Asia and Other Pacific, for $21. As a result of the transaction, the Company's ownership of ATA was reduced to 66% from 68%.

        2000
        Korea
In 2000, ATA acquired a 95% interest in Koralu for $200 in cash and the assumption of $114 of debt.

Included in the Company's balance sheet at the date of acquisition in 2000 were the following assets and liabilities:

Fair value of net assets acquired	2000
Working capital	(2)
Property, plant and equipment	347
	345
Other liabilities - net	4
Long-term debt	77
Minority interest	64
Fair value of net assets	200

        India
In 2000, the Company sold its 54.6% interest in Indian Aluminium Company, Limited, included in the geographic area Asia and Other Pacific, to Hindalco Industries Limited. Net proceeds from the sale were $162 resulting in a gain of $3, included in Other expenses (income) - net.

        Note 16. Deferred Credits and Other Liabilities
Deferred credits and other liabilities comprise the following elements:

	2002	2001	2000
Post-retirement and post-employment benefits	640	562	539
Environmental liabilities	327	327	91
Rationalization costs	27	41	23
Claims	206	37	43
Fair value of foreign currency forward contracts	25	(12)	41
Long-term payables	77	70	35
Other	117	106	102
	1,419	1,131	874

        Note 17. Debt Not Maturing Within One Year

	2002	2001	2000
Alcan Inc.
Commercial paper - CAN$ (a)	390	585	897
Commercial paper - US$ (a)	246	166	578
Long-term credit facilities (a)	-	-	250
Bank loans, due 2003/2005 (€87 million) (b)	91	105	142
5.375% Swiss franc bonds, due 2003 (c)	129	105	109
5.5% Euro note, due 2006 (€600 million)	629	528	-
4.875% Global notes, due 2012	500	-	-
CARIFA loan (d)	-	-	60
6.25% Debentures, due 2008	200	200	200
6.45% Debentures, due 2011	400	400	-
7.25% Debentures, due 2031	400	400	-
8.875% Debentures, due 2022 (e)	-	150	150
7.25% Debentures, due 2028	100	100	100
Other debt	-	7	7
Alcan Deutschland GmbH and subsidiary companies
5.65% Bank loans	-	-	7
5.06% Bank loans	-	-	12
Bank loans, due 2008/2013 (€7 million) (b)	7	7	8
Queensland Alumina Limited
Bank loans, due 2003/2006 (b)	52	84	77
Alcan Holdings Switzerland AG
6.75% Swiss franc bond	-	-	92
4.5% Bank loan (CHF 100 million)	-	59	61
Alcan Finance Jersey Limited
Euro Medium Term Note Program (EMTN)
EMTN, (€400 million) (f)	-	352	372
EMTN, due 2008 (€13 million) (f)	14	11	12
EMTN, due 2008 (€8 million) (f)	8	7	8
ALA (Nevada) Inc.
Bank loan, due 2005 (b)	60	60	60
EMTN	-	-	33
Alcan Packaging Canada Limited
5.69% Bank loan, due 2003	35	35	35
6.24% Bank loan, due 2004	30	30	30
Swiss Aluminium Australia Limited
Bank loans (b)	-	-	62
Other
Bank loans, due 2003/2011 (b)	138	84	86
4% Eurodollar, due 2003 (g)	14	14	14
Other debt, due 2003/2024	39	47	66
	3,482	3,536	3,528
Debt maturing within one year included in current liabilities	(295)	(652)	(333)
	3,187	2,884	3,195

(a)   The Company has two long-term, global, multi-year and multi-currency facilities with a syndicate of major international banks each amounting to $1,000 (2001: $1,000 and $1,000; 2000: $1,000 and $1,750). One of the facilities expires in tranches in 2005 and 2006 while the other facility is renewed annually. These facilities are also available as back-up for commercial paper issued by the Company in Canada and the U.S. At December 31, 2000, the $250 borrowed under these facilities was classified as Debt not maturing within one year since the Company had both the intent and ability to refinance the borrowings on a long-term basis.

At December 31, 2002, 2001 and 2000, the entire amount of commercial paper borrowings has been classified as Debt not maturing within one year since the Company had both the intent and ability, through its long term credit facilities, to refinance the borrowings on a long-term basis.

In 2002, 2001 and 2000, commercial paper borrowings of principal amounts of CAN$616 million, CAN$940 million and CAN$1,368 million, respectively, were swapped for $391, $599 and $894, respectively, through the use of forward exchange contracts. In 2001 and 2000, commercial paper borrowings of principal amounts of $307 and $518, respectively, with a rate tied to U.S. LIBOR had been swapped for CHF505 million and CHF920 million, respectively, with a rate tied to CHF LIBOR for the period to May 2002.

(b)     Interest rates fluctuate principally with the lender's prime commercial rate, the commercial bank bill rate, or are tied to LIBOR rates.

(c)     The Swiss franc bonds were issued as CHF178 million and were swapped for $105 at an effective interest rate of 8.98%.

(d)     The Caribbean Basin Projects Financing Authority (CARIFA) loan was repaid at par.

(e)   The 8.875% debentures were redeemed in January 2002 at a price of 104.15%. The loss on redemption of $6 pre-tax is included in Other expenses (income) - net.

                In 2000, $18 of the 9.625% debentures were redeemed at face value. The 9.5% debentures were redeemed in January 2000 at a price of 104.64%. The loss on redemption of $3 pre-tax was included in Other expenses (income) - net in 2000.

(f)    The Euro Medium Term Note Program (EMTN) notes of principal amounts of €13 million and €8 million with rates tied to EURIBOR or LIBOR were swapped for £9 million and £5 million, respectively.

(g)   Debenture holders are entitled to receive at their option 1,772 common shares held by the Company in NLM, a portfolio investment, in exchange for each ten thousand dollar principal amount of debentures. The Company can redeem the debentures at 100% of the principal.

The Company has swapped, to 2003, the interest payments on $3 (2001: $59; 2000: $61) of its floating rate debt in exchange for fixed interest payments. Also, the interest payments on $9 of its fixed rate debt have been swapped to 2004 in exchange for floating rate payments.

Based on rates of exchange at year-end, debt repayment requirements over the next five years amount to $295 in 2003, $135 in 2004, $98 in 2005, $658 in 2006 and $8 in 2007.

        Note 18. Preference Shares
        Authorized
An unlimited number of preference shares issuable in series. All shares are without nominal or par value.

        Authorized and Outstanding
In each of the years 2002, 2001 and 2000, there were authorized and outstanding 5,700,000 series C and 3,000,000 series E redeemable non-retractable preference shares with stated values of $106 and $54, respectively.

Preference shares, series C and E are eligible for quarterly dividends based on an amount related to the average of the Canadian prime interest rates quoted by two major Canadian banks for stated periods. The dividends on series C and E preference shares are cumulative.

Preference shares, series C and E may be called for redemption at the option of the Company on 30 days' notice at CAN$25.00 per share.

Any partial redemption of preference shares must be made on a pro rata basis or by lot.

        Note 19. Common Shares
The authorized common share capital is an unlimited number of common shares without nominal or par value. Changes in outstanding common shares are summarized below:

	Number (in thousands)			Stated Value
	2002	2001	2000	2002	2001	2000
Outstanding - beginning of year	320,902	317,921	218,315	4,687	4,597	1,230
Issued for cash:
Executive share option plan	292	2,158	521	7	55	13
Dividend reinvestment and share
purchase plans	276	135	237	9	5	8
Issued in exchange for tendered
algroup shares	-	688)*	115,446)**	-	30	3,476
Purchased for cancellation	-	-	(16,598)	-	-	(130)
Outstanding - end of year	321,470	320,902	317,921	4,703	4,687	4,597

* The 688 common shares were issued to acquire the remaining algroup shares in accordance with the provisions of Swiss law.
* * 115,386 common shares were issued in accordance with the Company's share exchange offer; 60 common shares were issued after the Company's share exchange offer.

In June 2000, the Company obtained authorization, which terminated on June 18, 2001, to repurchase up to 21,800,000 common shares under a normal course issuer bid. In 2001, no common shares were purchased under this authorization and in 2000, 16,598,100 common shares were purchased and cancelled at a cost of $530.

        Shareholder Rights Plan
In 1990, shareholders approved a plan whereby each common share of the Company carries one right to purchase additional common shares. The plan, with certain amendments, was reconfirmed at the 1995 Annual Meeting and further amendments were approved at the 1999 Annual Meeting. The plan was reconfirmed at the 2002 Annual Meeting with no amendments. The rights under the plan are not currently exercisable but may become so upon the acquisition by a person or group of affiliated or associated persons ("Acquiring Person") of beneficial ownership of 20% or more of the Company's outstanding voting shares or upon the commencement of a takeover bid. Holders of rights, with the exception of an Acquiring Person, in such circumstances will be entitled to purchase from the Company, upon payment of the exercise price (currently $100.00), such number of additional common shares as can be purchased for twice the exercise price based on the market value of the Company's common shares at the time the rights become exercisable.

The plan has a permitted bid feature which allows a takeover bid to proceed without the rights under the plan becoming exercisable, provided that it meets certain minimum specified standards of fairness and disclosure, even if the Board does not support the bid.

The plan expires in 2008, subject to reconfirmation at the Annual Meeting of Shareholders in 2005 but may be redeemed earlier by the Board, with the prior consent of the holders of rights or common shares, for $0.01 per right. In addition, should a person or group of persons acquire outstanding voting shares pursuant to a permitted bid or a share acquisition in respect of which the Board has waived the application of the plan, the Board shall be deemed to have elected to redeem the rights at $0.01 per right.

        Note 20. Stock Options and Other Stock-based Compensation
Under the executive share option plan, certain employees may purchase common shares at an exercise price that is based on the market value of the shares on the date of the grant of each option. The vesting period for options granted beginning in 1998 is linked to Alcan's share price performance, but does not exceed nine years. Options granted before 1998 vest generally over a fixed period of four years from the grant date and expire at various dates during the next 10 years. Changes in the number of shares under option as well as the average exercise price are summarized below:

	Number of Options (in thousands)			Weighted Average Exercise Price (CAN$)
	2002	2001	2000	2002	2001	2000
Outstanding - beginning of year	7,108	7,326	5,472	46.34	43.20	40.91
Granted	1,937	1,945	2,422	44.19	50.96	46.52
Exercised	(292)	(2,158)	(521)	39.69	39.85	35.75
Forfeited	(66)	(5)	(42)	46.53	39.08	32.42
Expired	-	-	(5)	-	-	22.56
Outstanding - end of year	8,687	7,108	7,326	46.08	46.34	43.20
Exercisable - end of year	5,007	4,665	4,913	45.47	44.91	41.56

Options Outstanding at December 31, 2002

			Weighted
		Weighted	Average
Number of	Range of	Average	Remaining
Options	Exercise Price	Exercise Price	Contractual Life
(in thousands)	(CAN$)	(CAN$)	(Years)
73	23.31-34.00	29.37	0.91
1,957	34.01-40.00	37.92	8.24
1,251	40.01-46.00	44.07	4.51
4,259	46.01-52.00	46.93	5.12
1,147	52.01-64.25	60.16	8.62
8,687

Options Exercisable at December 31, 2002

		Weighted
Number of	Range of	Average
Options	Exercise Price	Exercise Price
(in thousands)	(CAN$)	(CAN$)
73	23.31-34.00	29.37
470	34.01-40.00	35.07
1,236	40.01-46.00	44.07
2,975	46.01-52.00	47.00
253	52.01-64.25	58.23
5,007

Upon consummation of the combination with Alusuisse Group Ltd, described in note 5 - Combination with Alusuisse Group Ltd, all options granted under the Company's executive share option plan prior to the consummation were vested.

At December 31, 2002, the Company had reserved for issue under the executive share option plan 15,408,702 shares.

Stock options are generally granted at an exercise price equal to the market price on the grant date. The weighted average fair value of stock options granted in 2002 is $8.69 (2001: $12.00; 2000: $10.87).

To compute the pro forma compensation expense, the Black-Scholes valuation model was used to determine the fair value of the options granted. Using the model, the fair value of options averages approximately 27% to 41% of the exercise price. (See note 2 - Summary of Significant Accounting Policies; Stock Options and Other Stock-based Compensation).

The fair value of each option grant is estimated on the date of grant with the following weighted average assumptions used for the option grants:

	2002	2001	2000
Dividend yield (%)	1.65	1.93	2.11
Expected volatility (%)	35.73	30.83	33.10
Risk-free interest rate (%)	3.50	5.57	5.75
Expected life (years)	6	10	10

For pro forma income purposes, the fair value of options granted is being amortized over their respective vesting periods.

Pro forma net income and net income per common share - basic and diluted, as if the fair value method had been applied to all stock option awards, are presented below.

	2002	2001	2000
Net income as reported	374	2	610
Compensation expense if the fair value method was used	(11)	(24)	(27)
Pro forma net income (Loss)	363	(22)	583
Net income (Loss) per common share - basic - as reported	1.15	(0.02)	2.42
Pro forma net income (loss) per common share - basic	1.12	(0.10)	2.31
Net income (Loss) per common share - diluted - as reported	1.14	(0.02)	2.42
Pro forma net income (loss) per common share - diluted	1.11	(0.10)	2.31

        Compensation To Be Settled in Cash
In addition, a small number of employees are entitled to receive stock price appreciation units whereby they are entitled to receive cash in an amount equal to the excess of the market value of a share on the date of exercise over the market value of a share as of the date of grant of such units. In 2002, 275,600 units (2001: 311,060 units) were granted of which 214,635 units (2001: nil units) were vested. The vesting period is linked to Alcan's share price performance, but does not exceed nine years. At December 31, 2002, 580,305 units (2001: 311,060 units) were outstanding.

A number of employees are entitled to receive cash awards under a cash incentive plan which provides performance awards to eligible employees based on the relative performance of the Company's share value and share dividend yield compared to other corporations included in the Standard & Poor's Industrials Index measured over a 3-year period commencing on October 1, 2002. If the performance results for the shares is below the 30th percentile compared to all companies in the Standard & Poor's Industrials Index, the employee will not receive an award. At or above the 75th percentile rank, the employee will be paid the maximum award, which is equal to 300% of the target set for the period. The actual amount of the award (if any) will be prorated between the percentile rankings. In 2002, a total target cash award of $12 was granted to specific key employees.

Under the Executive Deferred Share Unit Plan, executive officers based in Canada may elect, prior to the beginning of any particular year, to receive Executive Deferred Share Units (EDSUs) with a value equal to either 50% or 100% of their Executive Performance Award in respect of that year, instead of a cash payment. The number of EDSUs is determined by dividing the amount so elected by the average price of a share on the Toronto and New York stock exchanges at the end of the preceding year. Additional EDSUs are credited to each holder thereof corresponding to dividends declared on shares. The EDSUs are redeemable only upon termination of employment (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of EDSUs by the average price of a share on the said exchanges at the time of redemption. In 2002, 9,771 units (2001: 36,214 units; 2000: 70,673 units) were granted and 939 units (2001: 12,467 units; 2000: nil units) were redeemed. At December 31, 2002, 224,869 units (2001: 216,037 units; 2000: 192,290 units) were outstanding.

Under the Non-Executive Directors Deferred Share Unit Plan, non-executive directors receive 50% of compensation payable in the form of Directors' Deferred Share Units (DDSUs) and 50% in the form of either cash or additional DDSUs at the election of each non-executive director. The number of DDSUs is determined by dividing the quarterly amount so elected by the average price of a share on the Toronto and New York stock exchanges on the last five trading days of each quarter. Additional DDSUs are credited to each holder thereof corresponding to dividends declared on shares. The DDSUs are redeemable only upon termination (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of DDSUs by the average price of a share on the said exchanges at the time of redemption. In 2002, 25,913 units (2001: 15,859 units; 2000: 5,777 units) were granted and 8,876 units (2001: 5,905 units; 2000: 921 units) were redeemed. At December 31, 2002, 48,212 units (2001: 31,175 units; 2000: 21,221 units) were outstanding.

The compensation cost for stock-based employee compensation awards that can be settled in cash, which is based on the change in the share price during the year, is recognized in income. Total compensation cost for such awards was $2 in 2002 (2001: $4; 2000: $1).

        Note 21. Retained Earnings
Consolidated retained earnings at December 31, 2002, include $3,146 (2001: $3,243; 2000: $3,118) of undistributed earnings of subsidiaries and joint ventures, some part of which may be subject to certain taxes and other restrictions on distribution to the parent company. No provision is made for such taxes as these earnings are considered to be permanently reinvested in the businesses.

        Note 22. Commitments and Contingencies
In 1997, as part of the claim settlement arrangements related to the British Columbia Government's cancellation of the Kemano Completion Project, the Company obtained the right to transfer a portion of a power supply contract with BC Hydro to a third party. The Company sold the right to supply this portion to Enron Power Marketing Inc. (EPMI), a subsidiary of Enron Corporation (Enron) for cash consideration. In order to obtain the consent of BC Hydro to this sale, the Company was required to retain a residual obligation for EPMI's performance of the power supply contract in the event that EPMI became unable to perform. This contingent obligation is contractually subject to a maximum aggregate amount of $100, with mitigation and subrogation rights. On December 2, 2001, EPMI and Enron filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Powerex Corporation (Powerex), the BC Hydro affiliate which now holds the rights to the portion of the power supply contract transferred to EPMI, maintains that it has terminated the power supply contract and as a result filed a claim for $100 against Enron on March 15, 2002. Neither Enron nor EPMI responded to that claim and the Company received, on March 22, 2002, a demand for payment in the amount of $100 from Powerex. The Company disputed its obligation to pay on the demand by Powerex and the matter was submitted to arbitration in accordance with applicable contractual requirements. The arbitration hearings took place in December and on January 17, 2003, the decision was issued confirming Powerex's claim for $100. The decision will become enforceable after the expiry of the delays to apply for judicial review and the completion by Powerex of the necessary filing process before the appropriate Court. Under the circumstances the Company has recorded a pre-tax charge of $100 in Other expenses (income) - net in the fourth quarter of 2002.

The Company has guaranteed the repayment of approximately $3 of indebtedness by third parties. Alcan believes that none of these guarantees is likely to be invoked. Commitments with third parties and certain related companies for supplies of goods and services are estimated at $140 in 2003, $131 in 2004, $109 in 2005, $109 in 2006, $97 in 2007 and $988 thereafter. Total payments to these entities were $50 in 2002, $36 in 2001 and $106 in 2000, excluding $218 and $749 in 2001 and 2000, respectively, in relation to the Alma smelter.

Minimum rental obligations are estimated at $58 in 2003, $48 in 2004, $43 in 2005, $35 in 2006, $31 in 2007 and $133 thereafter. Total rental expenses amounted to $82 in 2002, $72 in 2001 and $58 in 2000.

Alcan, in the course of its operations, is subject to environmental and other claims, lawsuits and contingencies. The Company has environmental contingencies relating to approximately 29 existing and former Alcan sites and third-party sites. Accruals have been made in specific instances where it is probable that liabilities will be incurred and where such liabilities can be reasonably estimated. Environmental provisions were recorded in 2002 and 2001 for treatment costs relating to spent potlining in Canada and for remediation costs relating to red mud disposal at other sites in Canada and the U.K.

Although it is possible that liabilities may arise in other instances for which no accruals have been made, the Company does not believe that such an outcome will significantly impair its operations or have a material adverse effect on its financial position.

In addition, see reference to income taxes in note 9, capital expenditures in note 14, debt repayments in note 17 and financial instruments and commodity contracts in note 24.

        Note 23. Currency Gains and Losses
The following are the amounts recognized in the financial statements:

	2002	2001	2000
Currency gains (losses) excluding realized deferred translation adjustments:
Gains (Losses) realized and unrealized on exchange derivatives	(146)	15	34
Gains (Losses) on translation of monetary assets and liabilities	106	(23)	(2)
	(40)	(8)	32

Deferred translation adjustments - beginning of year	(151)	(20)	(76)
Effect of exchange rate changes	463	(129)	9
Losses (Gains) realized*	(11)	2	47
Debt designated as an equity hedge of foreign subsidiaries	(42)	(4)	-
Balance - end of year	259	(151)	(20)

* The gain realized in 2002 relates to a gain on the partial sale of the Company's investment in Nippon Light Metal Company, Ltd., which was offset in part by a loss on the sale of Alcan Nikkei Thai Limited. The loss realized in 2000 related principally to the sale of the Company's investment in Indian Aluminium Company, Limited.

In 2001, $6 (2000: $26) of exchange losses relates to hedging of Canadian dollar construction costs of the new smelter at Alma, Quebec. In 2002 and 2001, these costs are included in Property, plant and equipment - cost and in 2000, were included in Construction work in progress. (See note 9 - Income Taxes for amounts of exchange gains and losses included in income taxes).

        Note 24. Financial Instruments and Commodity Contracts
In conducting its business, the Company uses various derivative and non-derivative instruments, including forward contracts, swaps and options, to manage the risks arising from fluctuations in exchange rates, interest rates, aluminum prices and other commodity prices. Generally, such instruments are used for risk management purposes only.

        Derivatives - Currency
The Company enters into forward currency contracts and options that are designated as hedges of certain identifiable foreign currency revenue and operating cost exposures. Foreign currency forward contracts and swaps are also used to hedge certain foreign currency denominated debt and intercompany foreign currency denominated loans.

Outstanding at December 31		2002		2001		2000
Financial		Notional	Fair	Notional	Fair	Notional	Fair
Instrument	Hedge	Amount	Value	Amount	Value	Amount	Value
Forward exchange	Future firm net operating cash flows (1)	876	(16)	933	(16)	2,248	14
contracts
Currency options	Future firm operating cost commitments (1)	163	6	220	(1)	58	(2)
Cross currency	To swap CAN$ commercial	391	-	599	(9)	894	17
interest swap	paper borrowings to US$ (2)
Forward exchange	Intercompany foreign	797	(34)	415	(7)	193	(3)
contracts	currency denominated loans (3)
Cross currency	To swap 5.375% CHF178 million	105	24	105	-	105	4
interest swap	bonds to US$ (4)
Cross currency	To swap US$ third party	271	(5)	-	-	-	-
interest swap and	borrowings to KRW (5)
forward exchange
contracts
Cross currency	To swap €400 million medium term	-	-	360	(8)	373	1
interest swap	notes to CHF608 million (6)
Cross currency	To swap  €21 million medium	23	(1)	20	(2)	21	-
interest swap	term notes to £14 million (6)
Forward exchange	Future commitments (7)	-	-	20	-	212	-
contracts
Cross currency	To swap US$ commercial	-	-	307	3	518	(48)
interest swap	paper borrowings for CHF (8)

(1)   Included in Deferred charges and other assets and Other receivables is an amount of $1 (2001: nil; 2000: $1) consisting of net losses on terminated forward exchange contracts and options, as well as the net cost of outstanding options, used to hedge future costs. These deferred charges will be included in the cost of the underlying transactions being hedged upon their recognition. Included in Payables and accrued liabilities is an amount of $1 which offsets the revaluation of the underlying items being hedged.

(2)   An amount of nil (2001: liability of $12; 2000: asset of $12) related to the swap of the principal has been recorded in Deferred charges and other assets. The CAN$616 million swap, outstanding at December 31, 2002, matures at various dates in 2003. The CAN$940 million swap, outstanding at December 31, 2001, matured in 2002. The CAN$1,368 million swap, outstanding at December 31, 2000, matured in 2001.

(3)   A net liability of $34, which is recorded in the balance sheet, offsets the revaluation of the underlying intercompany foreign currency denominated loans being hedged.

(4)   The 5.375% Swiss franc bonds of principal amount of CHF178 million have been swapped for $105 at an effective interest rate of 8.98%. An asset of $24 related to the swap of the principal (2001: nil; 2000: asset of $4) has been recorded in Other receivables (2000: Deferred charges and other assets). The swap matures in April 2003.

(5)   A liability of $4 which is recorded in Payables and accrued liabilities, offsets the revaluation of the underlying third party borrowings being hedged.

(6)   Part of the EMTN Program, whereby an amount of nil (2001: liability of $8; 2000: asset of $1) has been recorded in the balance sheet.

(7)   Mainly Canadian dollar, principally for the construction of the smelter at Alma, Quebec.

(8)   An amount of nil (2001: asset of $8; 2000: liability of $48) has been recorded in the balance sheet. Because the swap is hedging an intercompany CHF loan, it has no net income impact. The CHF920 million swap, outstanding at December 31, 2000, matured in February 2001. The CHF505 million swap, outstanding at December 31, 2001, matured in May 2002.

        Derivatives - Interest Rates
The Company sometimes enters into interest rate swaps to manage funding costs as well as the volatility of interest rates.

If all interest rate swap agreements had been closed out on December 31, 2002, the Company would have paid nil (2001: paid $1; 2000: received $2).

        Derivatives and Commodity Contracts - Metal

Depending on supply and market conditions, as well as for logistical reasons, the Company may sell primary metal to third parties and may purchase primary and secondary aluminum on the open market to meet its fabricated products requirements. In addition, the Company may hedge certain commitments arising from pricing arrangements with some of its customers.

Through the use of forward purchase and sales contracts and options, the Company seeks to limit the negative impact of low metal prices.

Outstanding at December 31	2002	2001	2000
Financial Instrument
Forward contracts (principally forward purchase contracts)
Tonnes covered	556,051	650,400	410,650
Maturing principally in years	2003 to 2004	2002 to 2004	2001 to 2003
Call options purchased
Number of tonnes	88,050	379,925	175,650
Maturing principally in years	2003	2002 to 2003	2001 to 2002
Put options purchased
Number of tonnes	-	42,000	151,000
Maturing principally in years	-	2002	2001 to 2003
Fair value	15	(25)	10

Included in Other receivables or Deferred charges and other assets is $4 (2001: $12; 2000: $23) representing the net cost of outstanding options. Also included in Other receivables is an amount of $5 consisting of net losses on terminated forward metal contracts used to hedge future costs. These deferred charges will be included in the cost of the items being hedged at the same time as the underlying transactions being hedged are recognized.

        Derivatives - Oil
As a hedge of future oil purchases, the Company had outstanding as at December 31:

	2002	2001	2000
Futures, swaps and options
Number of barrels (in millions)	14.0	17.1	18.1
Maturing at various times in the years	2003 to 2006	2002 to 2006	2001 to 2006
Fair value	9	(12)	(7)

In 2002, a net liability of $4 (2001: $10) relating to the oil derivatives is recorded in the balance sheet.

        Derivatives - Natural gas
As a hedge of future natural gas purchases, the Company had outstanding as at December 31:

	2002	2001	2000
Swaps
Number of decatherms (in millions)	1.5	-	-
Options
Number of decatherms (in millions)	0.4	-	-
Fixed price contracts
Number of decatherms (in millions)	0.8	5.3	-
Maturing in various times throughout	2003	2002	-
Fair value	2	(4)	-

        Counterparty Risk
As exchange rates, interest rates, metal, oil and natural gas prices fluctuate, the above contracts will generate gains and losses that will be offset by changes in the value of the underlying items being hedged. The Company may be exposed to losses in the future if the counterparties to the above contracts fail to perform. However, the Company is satisfied that the risk of such non-performance is remote, due to its monitoring of credit exposures.

        Financial Instruments - Fair Value
On December 31, 2002, the fair value of the Company's long-term debt totalling $3,482 (2001: $3,536; 2000: $3,528) was $3,700 (2001: $3,579; 2000: $3,516), based on market prices for the Company's fixed rate securities and the book value of variable rate debt.

At December 31, 2002, the quoted market value of the Company's portfolio investments having a book value of $28 (2001 and 2000: $31) was $34 (2001: $39; 2000: $46).

At December 31, 2002, the fair value of the Company's preference shares having a book value of $160 (2001 and 2000: $160) was $131 (2001: $128; 2000: $139).

The fair values of all other financial assets and liabilities are approximately equal to their carrying values.

        Note 25. Supplementary Information

	2002	2001	2000
Income statement
Interest on long-term debt	158	218	123
Capitalized interest	(1)	(30)	(81)
Balance sheet
Payables and accrued liabilities include the following:
Income and other taxes	159	203	170
Accrued employment costs	281	242	288
At December 31, 2002, the weighted average interest rate on short-term borrowings was 4.1% (2001: 4.9%; 2000: 6.5%).
Statement of cash flows
Interest paid	205	265	161
Income taxes paid	187	213	203

        Note 26. Post-retirement Benefits
Alcan, its subsidiaries and joint ventures have established pension plans in the principal countries where they operate, generally open to all employees. Most plans provide pension benefits that are based on the employee's highest average eligible compensation before retirement. Pension payments are periodically adjusted for cost of living increases, either by Company practice, collective agreement or statutory requirement. Plan assets consist primarily of listed stocks and bonds.

Alcan's funding policy is to contribute the amount required to provide for benefits attributed to service to date, with projection of salaries to retirement, and to amortize unfunded actuarial liabilities for the most part over periods of 15 years or less. All actuarial gains and losses are amortized over the expected average remaining service life of the employees which is 12 years in 2002 (2001 and 2000: 13 years).

The Company provides life insurance benefits under some of its retirement plans. Certain early retirement arrangements also provide for medical benefits, generally only until the age of 65. These plans are generally not funded.

	Pension Benefits			Other Benefits
	2002	2001	2000	2002	2001	2000
Change in benefit obligation
Benefit obligation at January 1	6,514	6,317	4,047	217	201	186
Service cost	126	120	83	5	5	5
Interest cost	405	376	255	15	15	12
Members' contributions	27	26	21	-	-	-
Benefits paid	(388)	(346)	(217)	(14)	(12)	(10)
Amendments	111	153	435	1	-	(1)
Acquisitions/divestitures	(6)	(71)	2,047	(2)	-	27
Actuarial (gains) losses	(38)	23	(263)	19	8	(18)
Currency (gains) losses	447	(84)	(91)	-	-	-
Benefit obligation at December 31	7,198	6,514	6,317	241	217	201
Change in market value of plan assets (Assets)
Assets at January 1	6,047	7,014	4,917	4	5	-
Actual return on assets	(349)	(537)	250	-	-	-
Members' contributions	27	26	21	-	-	-
Benefits paid	(388)	(346)	(217)	(1)	(2)	-
Company contributions	128	80	44	-	1	-
Acquisitions/divestitures	(4)	(117)	2,087	-	-	5
Currency gains (losses)	316	(73)	(88)	-	-	-
Assets at December 31	5,777	6,047	7,014	3	4	5
Assets in excess of (less than)
benefit obligation	(1,421)	(467)	697	(238)	(213)	(196)
Unamortized
- actuarial (gains) losses	656	(193)	(1,311)	(9)	(24)	(39)
- prior service cost	687	653	590	1	1	1
Net liability in balance sheet	(78)	(7)	(24)	(246)	(236)	(234)

For certain plans, the accumulated benefit obligation (ABO) exceeds the market value of the assets. For these plans, the projected benefit obligation is $3,862 (2001: $2,495; 2000: $657), the ABO is $3,576 (2001: $2,414; 2000: $588) while the market value of the assets is $2,608 (2001: $1,882; 2000: $308).

	Pension Benefits			Other Benefits
	2002	2001	2000	2002	2001	2000
Components of net periodic benefit cost
Service cost	126	120	83	5	5	5
Interest cost	405	376	255	15	15	12
Expected return on assets	(437)	(480)	(345)	-	(1)	-
Amortization
- actuarial (gains) losses	9	(47)	(102)	(2)	(1)	(2)
- prior service cost	69	89	89	-	-	-
Curtailment/settlement (gains) losses	9	40	-	(2)	-	-
Net periodic benefit cost	181	98	(20)	16	18	15
Weighted average assumptions at December 31
Discount rate (%)	5.8	6.1	6.3	6.5	6.9	7.3
Average compensation growth (%)	3.3	3.6	3.7	3.9	4.4	4.5
Expected return on assets (%)	7.1	7.3	7.0	8.5	8.5	n/a

The assumed health care cost trend rate used for measurement purposes is 8.9% for 2003, decreasing gradually to 4.6% in 2008 and remaining at that level thereafter. A one percentage point change in assumed health care cost trend rates would have the following effects:

	Other Benefits
	1%	1%
	Increase	Decrease
Sensitivity Analysis
Effect on service and interest costs	1	(1)
Effect on benefit obligation	12	(10)

        Note 27. Information by Geographic Areas

	Location	2002	2001	2000
Sales and operating revenues	Canada	708	585	625
- third parties (by destination)	United States	4,574	4,598	3,665
	Brazil	395	470	465
	United Kingdom	1,030	1,065	600
	Germany	1,431	1,388	756
	Switzerland	202	194	65
	Other Europe	2,329	2,347	1,475
	Australia	103	39	131
	Asia and Other Pacific	1,648	1,710	1,228
	All other	120	230	138
	Total	12,540	12,626	9,148
Sales and operating revenues	Canada	2,354	2,127	2,042
- intercompany (by origin)	United States	602	541	563
	Brazil	54	64	44
	United Kingdom	385	408	373
	Germany	319	242	181
	Switzerland	770	676	237
	Other Europe	626	612	151
	Australia	299	288	114
	Asia and Other Pacific	13	5	9
	All other	97	190	322
	Sub-total	5,519	5,153	4,036
	Consolidation eliminations	(5,519)	(5,153)	(4,036)
	Total	-	-	-

 

Sales to subsidiary companies are made at fair market prices recognizing volume, continuity of supply and other factors.
	Location	2002	2001	2000
Sales and operating revenues	Canada	999	1,045	915
- third parties (by origin)	United States	4,389	4,355	3,713
	Brazil	420	424	443
	United Kingdom	912	913	565
	Germany	2,028	2,022	1,401
	Switzerland	1,371	1,436	414
	Other Europe	1,168	1,100	599
	Australia	183	208	137
	Asia and Other Pacific	972	1,014	857
	All other	98	109	104
	Total	12,540	12,626	9,148
Net income (Loss) (*) (**)	Canada	94	(57)	287
	United States	74	137	155
	Brazil	38	29	34
	United Kingdom	9	(139)	10
	Germany	36	19	43
	Switzerland	8	(14)	1
	Other Europe	15	(4)	25
	Australia	68	87	59
	Asia and Other Pacific	3	(30)	(22)
	All other	24	(38)	48
	Consolidation eliminations	5	12	(30)
	Total	374	2	610

(*)     In 2002, net income includes after-tax non-recurring charges (income) pertaining to restructuring and other special charges, revisions to environmental provisions, impairment provisions and business and investment disposal gains and losses of $85 for Canada, $20 for the United States, $(2) for Brazil, $12 for the United Kingdom, $(5) for Germany, $2 for Switzerland, $26 for Other Europe, $(16) for Asia and Other Pacific and $(5) for All other.

In 2001, net income included after-tax non-recurring charges (income) pertaining to restructuring and merger integration costs, revisions to environmental provisions, impairment provisions, business disposal loss and a prior year's tax adjustment of $200 for Canada, $23 for the United States, $2 for Brazil, $163 for the United Kingdom, $(3) for Germany, $11 for Switzerland, $42 for Other Europe, $1 for Australia, $4 for Asia and Other Pacific and $90 for All other. (See note 8 - Restructuring, Impairment and Other Special Charges).

In 2002, net income includes income (charges) for transfer pricing adjustments of $69 for Canada, $(70) for the United States and $5 for the United Kingdom. (See note 9 - Income Taxes).

(**)   If presented to reflect the effect of prior years' income tax reassessments described in note 9, in 2000, net income in Canada would be increased by $25 and decreased by $14 in the United States, $5 in the United Kingdom and $6 in Germany.

Location		2002	2001	2000
Property, plant and equipment,	Canada	4,317	4,114	4,002
Intangible assets and Goodwill at	United States	1,500	1,689	1,579
December 31 (*) (**)	Brazil	743	731	736
	United Kingdom	880	826	1,047
	Germany	1,108	1,166	1,322
	Switzerland	645	718	752
	Other Europe	1,821	1,794	1,713
	Australia	1,215	1,199	959
	Asia and Other Pacific	627	607	626
	All other	65	81	296
	Total	12,921	12,925	13,032
Cash paid for capital expenditures	Canada	477	399	1,097
and business acquisitions	United States	96	196	113
	Brazil	78	61	42
	United Kingdom	77	94	49
	Germany	85	73	55
	Switzerland	43	45	18
	Other Europe	113	124	79
	Australia	58	416	12
	Asia and Other Pacific	33	79	239
	All other	13	27	31
	Total	1,073	1,514	1,735
Average number of employees	Canada	12	12	11
(in thousands - unaudited)	United States	9	10	5
	Brazil	3	3	3
	United Kingdom	5	6	3
	Germany	8	8	4
	Switzerland	3	4	1
	Other Europe	6	6	2
	Australia	1	1	-
	Asia and Other Pacific	2	2	5
	All other	1	1	3
	Total	50	53	37

(*)     In 2002, Property, plant and equipment, Intangible assets and Goodwill - net includes goodwill impairment charges of $9 for Canada, $130 for the United States, $34 for the United Kingdom, $208 for Germany, $172 for Switzerland and $195 for Other Europe.

(**)   In 2001, Property, plant and equipment, Intangible assets and Goodwill - net included asset write-offs of $31 for Canada, $33 for the United States, $1 for Brazil, $127 for the United Kingdom, $8 for Germany, $4 for Switzerland, $7 for Other Europe and $11 for Asia and Other Pacific.

        Note 28. Information by Operating Segments
The following presents selected information by operating segment, viewed on a stand-alone basis. Effective January 1, 2002, a new operating management structure comprised of six operating segments was put in place. The six operating segments are Bauxite, Alumina and Specialty Chemicals; Primary Metal; Rolled Products Americas and Asia; Rolled Products Europe; Engineered Products; and Packaging. Prior to 2002, there were four operating segments: Primary Metal; Aluminum Fabrication, Americas and Asia; Aluminum Fabrication, Europe; and Packaging. Comparative information has been restated to conform to the 2002 organizational structure. Transactions between operating segments are conducted on an arm's-length basis and reflect market prices. Thus, earnings from the Primary Metal group represent mainly profit on metal produced by the Company, whether sold to third parties or used in the Company's Rolled Products, Engineered Products and Packaging groups. Earnings from the Rolled Products, Engineered Products and Packaging groups represent only the fabricating profit on their respective products. The accounting principles used to prepare the information by operating segment are the same as those used to prepare the consolidated financial statements of the Company except that the pension costs for the operating segments are based on the normal current service cost with all actuarial gains, losses and other adjustments being included in Intersegment and other. Some corporate office and certain other costs have been allocated to the respective operating segments. The operating segments are described below.

        Bauxite, Alumina and Specialty Chemicals
This segment, which consists of a network of bauxite mines/deposits in five countries and alumina refineries and specialty chemical plants in three countries, supplies the primary metal operations and third-party sales of alumina and specialty chemicals.

        Primary Metal
This segment produces primary aluminum in seven countries. The alumina is sourced primarily from the Bauxite, Alumina and Specialty Chemicals segment and the ingot produced is used by the Company's fabricating businesses as well as sold to third-parties. The segment produces value-added products in the form of sheet ingot, extrusion billet, cable rods and foundry ingot for end-use markets in consumer goods, transportation, building and construction and other industrial applications.

        Rolled Products Americas and Asia
This segment, which has an extensive network of 16 rolled products facilities in North and South America and Asia, manufactures sheet and light-gauge products, including can stock, automotive sheet and industrial products. In addition, the segment has a well-established used beverage can recycling capability in North and South America.

        Rolled Products Europe
This segment has 11 rolled products plants and serves a number of European markets with advanced value-added sheet products, including automotive sheet, lithographic sheet, industrial sheet, can sheet and foil stock.

        Engineered Products
This segment, which has 47 engineered products plants in 17 countries, develops, manufactures and sells value-added engineered products for a variety of applications, including extrusions, composites, systems and components for mass transportation and automotive applications and electrical cables.

        Packaging
This segment has 76 plants in 14 countries and is focused on serving specific end-use markets: food, pharmaceutical and personal care, and tobacco packaging.

        Intersegment and other
This classification includes the deferral or realization of profits on intersegment sales of aluminum and alumina as well as other non-operating items.

Sales and operating revenues	Intersegment			Third parties
	2002	2001	2000	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	757	771	536	435	477	470
Primary Metal	2,205	2,117	1,674	2,447	2,546	1,655
Rolled Products Americas and Asia	185	173	71	3,327	3,316	3,391
Rolled Products Europe	333	338	319	1,814	1,735	1,666
Engineered Products	17	22	18	1,645	1,661	724
Packaging	21	60	58	2,812	2,861	1,216
Other	(3,518)	(3,481)	(2,676)	60	30	26
	-	-	-	12,540	12,626	9,148

 

EBITDA (Earnings before interest, taxes, depreciation and amortization)	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	249	301	265
Primary Metal	858	818	729
Rolled Products Americas and Asia	367	296	261
Rolled Products Europe	132	83	144
Engineered Products	96	103	55
Packaging	347	352	73
EBITDA from operating segments	2,049	1,953	1,527
Depreciation and amortization	(859)	(820)	(545)
Restructuring, impairment and other special charges	(69)	(657)	-
Intersegment and other	(152)	(43)	24
Corporate office	(96)	(75)	(49)
Interest	(203)	(254)	(78)
Income taxes	(293)	(42)	(254)
Minority interests	(3)	13	1
Net income before amortization of goodwill	374	75	626
Net income after amortization of goodwill	374	2	610

Included in 2002 EBITDA for Bauxite, Alumina & Specialty Chemicals is a gain of $5 related to the sale of fixed assets.

Restructuring, impairment and other special charges for 2002 includes $14 for Bauxite, Alumina & Specialty Chemicals , $(6) for Primary Metal, $15 for Rolled Products Americas and Asia, $13 for Rolled Products Europe, $10 for Engineered Products, $8 for Packaging and $15 for Intersegment and other.

Included in 2002 Intersegment and other are net charges of $84 relating principally to a provision of $100 for the ruling on a contract dispute with Powerex (a subsidiary of BC Hydro), an increase of $9 to legal provisions, a loss of $6 on redemption of debt, and partially offset by a gain of $36 on the sale of a portfolio investment.

Included in 2001 EBITDA for Primary Metal and Packaging were $1 and $(5) related to rationalization costs (write-back of provision), respectively.

Restructuring, impairment and other special charges for 2001 included $149 for Bauxite, Alumina & Specialty Chemicals, $201 for Primary Metal, $16 for Rolled Products Americas and Asia, $148 for Rolled Products Europe, $7 for Engineered Products, $95 for Packaging and $41 for Intersegment and other.

Included in 2001 Intersegment and other is a loss on the sale of Jamaican bauxite and alumina operations of $123.

Included in 2000 EBITDA for Bauxite, Alumina & Specialty Chemicals, Primary Metal and Packaging are $3, $15 and $26 related to rationalization costs, respectively.

Total assets at December 31	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	2,073	2,164	2,176
Primary Metal	6,316	5,889	5,682
Rolled Products Americas and Asia	2,496	2,522	2,709
Rolled Products Europe	1,620	1,638	2,139
Engineered Products	1,373	1,490	1,438
Packaging	3,561	3,533	3,712
Other	99	222	533
	17,538	17,458	18,389

	Depreciation and amortization			Cash paid for capital expenditures and business acquisitions
	2002	2001	2000	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	83	93	77	104	479	105
Primary Metal	295	260	167	556	462	1,009
Rolled Products Americas and Asia	146	146	143	73	149	355
Rolled Products Europe	77	82	65	63	73	89
Engineered Products	69	60	21	63	61	30
Packaging	178	166	62	205	266	97
Other	11	13	10	9	24	50
	859	820	545	1,073	1,514	1,735

        Note 29. Prior Year Amounts
Certain prior year amounts have been reclassified to conform with the 2002 presentation.

        Quarterly Financial Data
        (in millions of US$, except where indicated)

(unaudited)	First	Second	Third	Fourth	Year
2002
Revenues	2,937	3,199	3,224	3,180	12,540
Cost of sales and operating expenses	2,331	2,520	2,546	2,537	9,934
Depreciation and amortization	205	217	213	224	859
Income taxes	78	122	63	30	293
Other items	237	269	211	363	1,080
Net income (1)	86	71	191	26	374
Dividends on preference shares	1	1	1	2	5
Net income attributable to common shareholders	85	70	190	24	369
Net income per common share (basic) (in US$) (2)	0.26	0.22	0.59	0.08	1.15
Net income per common share (diluted) (in US$) (2)	0.26	0.22	0.59	0.08	1.14
Net income (Loss) under U.S. GAAP (3)	(595)	58	160	41	(336)

 

(unaudited)	First	Second	Third	Fourth	Year
2001(Restated - note 3)
Revenues	3,270	3,162	3,157	3,037	12,626
Cost of sales and operating expenses	2,577	2,474	2,484	2,464	9,999
Depreciation and amortization	196	204	204	216	820
Income taxes	58	101	67	(184)	42
Other items	286	291	234	879	1,690
Net income (Loss) before amortization of goodwill	153	92	168	(338)	75
Amortization of goodwill	18	18	19	18	73
Net income (Loss) (1)	135	74	149	(356)	2
Dividends on preference shares	2	2	2	2	8
Net income (Loss) attributable to common shareholders	133	72	147	(358)	(6)
Net income (Loss) per common share before amortization
of goodwill (basic) (in US$) (2)	0.48	0.28	0.52	(1.05)	0.21
Amortization of goodwill per common share (in US$) (2)	0.06	0.05	0.06	0.06	0.23
Net income (Loss) per common share (basic) (in US$) (2)	0.42	0.23	0.46	(1.11)	(0.02)
Net income (Loss) per common share (diluted) (in US$) (2)	0.41	0.22	0.46	(1.11)	(0.02)
Net income (Loss) under U.S. GAAP (3)	74	94	104	(326)	(54)

(unaudited)	First	Second	Third	Fourth	Year
2000(Restated - note 3)
Revenues	1,962	2,025	1,979	3,182	9,148
Cost of sales and operating expenses	1,454	1,560	1,530	2,569	7,113
Depreciation and amortization	116	114	120	195	545
Income taxes	104	88	34	28	254
Other items	117	111	116	266	610
Net income before amortization of goodwill	171	152	179	124	626
Amortization of goodwill	-	-	-	16	16
Net income (1)	171	152	179	108	610
Dividends on preference shares	2	3	2	3	10
Net income attributable to common shareholders	169	149	177	105	600
Net income per common share before amortization of goodwill
(basic) (in US$) (2)	0.77	0.69	0.84	0.38	2.47
Amortization of goodwill per common share (in US$) (2)	-	-	-	0.05	0.05
Net income per common share (basic) (in US$) (2)	0.77	0.69	0.84	0.33	2.42
Net income per common share (diluted) (in US$) (2)	0.77	0.68	0.84	0.33	2.42
Net income under U.S. GAAP (3)	171	152	179	104	606

(1) The first quarter of 2002 includes net after-tax charges of $7 relating mainly to the restructuring program announced in 2001. The charges include a fixed asset impairment charge of $9 relating to the recycling operations at the Borgofranco plant in Italy and a loss of $5 on the sale of extrusion operations in Thailand. The second quarter of 2002 includes net after-tax charges of $8 relating mainly to the restructuring program announced in 2001. The charges include severance and pension costs of $7 relating to the closure of the Bracebridge cable plant in Ontario, Canada. The third quarter of 2002 includes net after-tax charges of $16 relating mainly to the restructuring program in 2001 and increases to legal provisions. The restructuring program net charges include fixed asset impairment charges of $12 relating principally to the extrusion operations in Pieve, Italy, severance costs of $4 for the extrusion operations in Malaysia, light-gauge operations in Fairmont, West Virginia, and certain cable operations in North America and income of $8, primarily for the write-back of excess contract loss provisions. The fourth quarter of 2002 includes net after-tax charges of $86 relating mainly to a provision of $68 for the ruling on a contract dispute with Powerex (a subsidiary of BC Hydro) and charges of $20 for the closures of the specialty chemicals plant at Burntisland, U.K. and the Banbury, U.K. R&D facilities. These charges are partially offset by a gain of $26 on the sale of a portfolio investment.

The first quarter of 2001 included after-tax charges for the impairment in value of fixed assets of $70 for Jamaica and rationalization costs of $1. The second quarter of 2001 included an after-tax charge of $20 for post-closing adjustments relating to the divestment of Jamaica, partly offset by a write-back of rationalization costs of $4 in the U.K. The results for the fourth quarter of 2001 included a net non-recurring after-tax charge of $446. This included a $166 charge related to the restructuring program announced on October 17, 2001, and a $37 charge related to the synergy program announced in the fourth quarter of 2000 in relation to the merger with algroup. Also included are impairment provisions of $88 in relation to certain assets and capitalized project costs, a $167 charge related to environmental provisions, and a favourable prior year's tax adjustment of $12.

The second quarter of 2000 included an after-tax gain of $6 from disposal of property and a gain of $10 from the demutualization of the Company's life insurance providers. This was offset in part by a non-operating exceptional provision of $9 in the U.S., merger costs of $4 and rationalization costs of $2. The third quarter of 2000 included favourable tax adjustments of $43, partially offset by asset write-offs of $12. The fourth quarter of 2000 included non-cash merger charges related to the merger with algroup of $25, rationalization charges in respect of the closure of foil operations at Rogerstone in the U.K. of $18, asset write-offs of $6, partially offset by favourable tax adjustments of $14.

(2) Net income per common share calculations are based on the average number of common shares outstanding in each period. (See note 4 - Net Income per Common Share - Basic and Diluted).

(3) See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP) for explanation of differences between Canadian and U.S. GAAP.

EX-21 8 ex21.htm

EXHIBIT NO. 21:  SUBSIDIARIES, RELATED COMPANIES, ETC.

With the exception of a number of subsidiaries which, considered in the aggregate, would not constitute a significant Subsidiary, the Subsidiaries of Alcan, as of 1 March 2003, are listed below.  All subsidiaries and joint ventures named below are consolidated or proportionally consolidated to the extent owned in the financial statements incorporated by reference in this report.  The list also includes several Related Companies for which Alcan reports its interest in the net income or loss of such companies. Alcan is the direct owner of the stock of each Subsidiary or Related Company, except where the name is indented.  Indentation signifies that the principal ownership by Alcan is through the company under which the indentation is made; where there is additional ownership through another company also listed below, that additional ownership is described in the end-note on page 6.

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
3712001 CANADA INC.	Canada	100.00
4033531 CANADA INC.	Canada	100.00
9118-5074 QUÉBEC INC.	Quebec	100.00
9121-5988 QUÉBEC INC.	Quebec	100.00
ALCAN ALUMINIUM QUEBEC AND COMPANY, LIMITED PARTNERSHIP	Quebec	99.00 (2)
9121-5996 QUÉBEC INC.	Quebec	100.00
ALCAN-SPROSTONS LIMITED	Jamaica	100.00
ALCAN ADMINCO (2000) INC.	Canada	100.00
ALCAN ALLUMINIO S.p.A.	Italy	100.00
ALCAN ALUMINIO (AMÉRICA LATINA) INC.	Canada	100.00
ALCAN ALUMINIUM BETEILIGUNGSGESELLSCHAFT mbH	Germany	100.00
ALCAN ALUMINUM CORPORATION	Ohio	100.00
ALCAN ALUMINUM EXPORT, INC.	Georgia	100.00
ALCAN CONNECTICUT, INC.	Connecticut	100.00
ALCAN DE MEXICO, S.A. DE C.V.	Mexico	100.00
ALCAN MANAGEMENT SERVICES USA INC.	Ohio	100.00
ALCAN POWER MARKETING, INC.	Ohio	100.00
LOGAN ALUMINUM INC.	Delaware	40.00
ALCAN ASIA PACIFIC LIMITED	Canada	100.00
ALCAN EMPREENDIMENTOS LTDA.	Brazil	100.00
ALCAN ALUMÍNIO DO BRASIL LTDA.	Brazil	100.00
ALCAN COMPOSITES BRASIL S.A.	Brazil	70.00
ALCAN PACKAGING DO BRASIL LTDA.	Brazil	83.00 (9)
MINERAÇÃO RIO DO NORTE S.A.	Brazil	12.50
PETROCOQUE S.A. - INDÚSTRIA E COMÉRCIO	Brazil	25.00
CONSÓRCIO CANDONGA - (Unincorporated)	Brazil	50.00
ALCAN EUROPE LIMITED	England	100.00
ALCAN FINANCES B.V.	The Netherlands	100.00
ALCAN FINANCES (Bda) LTD.	Bermuda	100.00
ALCAN ASIA LIMITED	Hong Kong	100.00
ALCAN NIKKEI ASIA HOLDINGS LTD.	Bermuda	60.00
ALCAN NIKKEI SIAM LIMITED	Thailand	100.00
ALCOM NIKKEI SPECIALTY COATINGS SDN. BHD.	Malaysia	49.00 (10)
ALUMINIUM COMPANY OF MALAYSIA BERHAD	Malaysia	49.15 (12)
AL DOTCOM SDN. BHD.	Malaysia	100.00
ALCOM ALUMINIUM SERVICES SDN.BHD.	Malaysia	100.00
JEN WU MACHINERY SDN. BHD.	Malaysia	100.00
ALCOM EXTRUSION SDN.BHD.	Malaysia	100.00
NIPPON LIGHT METAL COMPANY, LTD.	Japan	3.61
NONFEMET INTERNATIONAL (China-Canada-Japan) ALUMINIUM COMPANY LIMITED	China	45.00
ALCAN NIKKEI CHINA LIMITED	Hong Kong	49.00

1

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALCAN (BERMUDA) LIMITED	Bermuda	100.00
ALCAN SHIPPING (BERMUDA) LIMITED	Bermuda	100.00
CHAMPLAIN INSURANCE COMPANY LTD.	Bermuda	100.00
HALCO (MINING) INC.	Delaware	33.00
COMPAGNIE DES BAUXITES DE GUINÉE	Delaware	51.00
QUADREM INTERNATIONAL HOLDINGS,  LTD.	Bermuda	9.00
WHEATON PUERTO RICO INC.	New Jersey	100.00
ALCAN FINANCES (IRELAND) LIMITED	Canada	100.00
3088405 CANADA INC.	Canada	100.00
ALCAN FINANCES (IRELAND) COMPANY	Ireland	100.00
ALCAN SOUTH PACIFIC PTY LTD	Australia	100.00
ALCAN GOVE DEVELOPMENT PTY LIMITED	Australia	100.00
ALCAN NORTHERN TERRITORY ALUMINA PTY LIMITED	Australia	100.00
GOVE ALUMINIUM LIMITED	Australia	100.00
ALCAN GOVE PTY LIMITED	Australia	50.00 (5)
ALCAN QUEENSLAND SMELTER PTY LTD	Australia	100.00
NABALCO PTY LIMITED	Australia	100.00
QUEENSLAND ALUMINA LIMITED	Australia	21.39
QUEENSLAND ALUMINA SECURITY CORPORATION	Delaware	20.00
ALCAN ALUMINIUM AG	Switzerland	100.00
ALCAN RORSCHACH AG	Switzerland	100.00
ALCAN FINANCES (U.K.)	England	100.00
ALCAN HOLDINGS IRELAND CO.	Ireland	100.00
ALCAN DEUTSCHLAND HOLDINGS GmbH & Co. KG	Germany	99.99
ALCAN DEUTSCHLAND GmbH	Germany	90.00 (4)
ALUMINIUM NORF GmbH	Germany	50.00
DEUTSCHE ALUMINIUM VERPACKUNG RECYCLING GmbH	Germany	16.70 (15)
FRANCE ALUMINIUM RECYCLAGE SA	France	20.00 (16)
ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)	Switzerland	100.00
AL HOLDING  USA LLC	Delaware	100.00
ALA (NEVADA) INC.	Nevada	62.50 (1)
ALCAN COMPOSITES USA INC.	Missouri	100.00
ALUSUISSE ALUMINUM USA INC.	Delaware	100.00
LAWSON MARDON THERMAPLATE CORPORATION	New Jersey	100.00
LAWSON MARDON USA INC.	Delaware	100.00
PHARMA CENTER SHELBYVILLE INC.	Delaware	100.00
WHEATON USA INC.	New Jersey	100.00
HBE FERMENTATION SYSTEMS INC.	California	10.00
INTERNATIONAL GLASS EQUIPMENT LTD.	Bahamas	100.00
POLAR MATERIALS INC.	Pennsylvania	86.21
PC MATERIALS INC.	Pennsylvania	50.00
POLYPLASMA INC.	Canada	100.00
WHEATON PACIFIC LIMITED	Hong Kong	99.80
ALCAN AIREX AG	Switzerland	100.00
ALCAN ALESA ENGINEERING AG	Switzerland	100.00
ALCAN ALESA TECHNOLOGIES LTD.	Canada	100.00
ALCAN ALLEGA AG	Switzerland	100.00
ALCAN ALUCOBOND (FAR EAST) PTE LTD.	Singapore	100.00
ALCAN ALUMINIO ESPAÑA, S.A.	Spain	100.00
ALUSUISSE PORTUGAL LDA.	Portugal	98.00
ALCAN ALUMINIUM VALAIS SA	Switzerland	100.00
ALCAN AUSTRIA GmbH	Austria	100.00
ALCAN ALPE ADRIA D.O.O.	Slovenia	100.00

2

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALCAN HUNGARIA Kft.	Hungary	100.00
ALCAN CAPITAL JERSEY LIMITED	The Island of Jersey	100.00
ALCAN FINANCE JERSEY LIMITED	The Island of Jersey	100.00
ALCAN CAPITAL MARKET LTD.	Switzerland	100.00
ALCAN DÉCIN EXTRUSIONS s.r.o.	Czech Republic	100.00
ALCAN HOLDINGS EUROPE B.V.	The Netherlands	72.73 (6)
A-L FINANCIAL PRODUCTS LTD.	England	100.00
ALCAN DISTRIBUZIONE srl	Italy	100.00
ALCAN HOLDINGS FRANCE S.A.	France	99.99
ALCAN CMIC SAS	France	100.00
ALCAN FRANCE EXTRUSIONS SAS	France	100.00
ALCAN LAMINÉS FRANCE	France	70.00 (8)
ALCAN PACKAGING FRANCE SAS	France	100.00
BOXAL (FRANCE) SAS	France	100.00
CHARMETTES SAS	France	100.00
CIVILE IMMOBILIÈRE CELI	France	99.50 (14)
COPAL SNC	France	49.00
TECHPION RECHERCHE G.I.E.	France	100.00
LAWSON MARDON MORIN SAS	France	100.00
LAWSON MARDON TRENTESAUX SA	France	99.99
WHEATON FRANCE SAS	France	100.00
ALCAN HOLDINGS GERMANY GmbH	Germany	99.24 (7)
ALCAN BDW BETEILIGUNGS GmbH	Germany	100.00
ALCAN BDW GmbH & CO. KG	Germany	100.00
ALCAN COMPOSITES LTD, SHANGHAI	China	100.00
ALCAN KAPA GmbH	Germany	100.00
ALCAN SINGEN GmbH	Germany	100.00
ALCAN TOMOS d.o.o.	Slovenia	66.67
LAWSON MARDON HANSE-DRUCK GmbH	Germany	100.00
LAWSON MARDON SINGEN GmbH	Germany	99.90 (20)
ALCAN HOLDINGS NEDERLAND B.V.	The Netherlands	100.00
ALCAN NEDERLAND B.V.	The Netherlands	100.00
S.A. ALCAN BELGIUM N.V.	Belgium	99.37 (21)
ALU-VASTGOED B.V.	The Netherlands	100.00
ALUMINIUM & CHEMIE ROTTERDAM B.V.	The Netherlands	65.82 (13)
BOXAL NETHERLANDS B.V.	The Netherlands	100.00
BOXAL SALES GmbH	Germany	100.00
LAWSON MARDON AMSTERDAM B.V.	The Netherlands	100.00
LAWSON MARDON BRABANT B.V.	The Netherlands	100.00
LAWSON MARDON PICOPAC B.V.	The Netherlands	100.00
ALCAN HOLDINGS UK LIMITED	England	100.00
ALCAN PACKAGING BRIDGNORTH LTD	England	100.00
ALCAN PRODUCTS UK LTD.	England	100.00
LAWSON MARDON PACKAGING LTD.	England	100.00
ALCAN PACKAGING PENSION TRUST LTD.	England	100.00
FLEATHAM ESTATES LIMITED	England	100.00
FORMAN MARSHALL LIMITED	England	100.00
HEADLEY (READING) LIMITED	England	100.00
CELLOGLAS HOLDINGS LTD.	England	100.00
ALCAN PRINT FINISHERS LTD.	England	100.00
FIVE STAR CORPORATION LIMITED	England	100.00
PROTECTA PRINT LIMITED	England	100.00
QUALICOAT LIMITED	England	100.00

3

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
UNIVERSAL COATINGS LIMITED	England	100.00
WEST MIDLANDS FOIL BLOCKING LIMITED	England	100.00
LUSTRETEX LTD.	England	100.00
THE UV COMPANY LIMITED	England	100.00
UVIPAK (FINISHING) LIMITED	England	100.00
HEADLEY TRUSTEES LIMITED	England	100.00
LAWSON MARDON GROUP INTERNATIONAL LIMITED	England	100.00
LAWSON MARDON IZMIR GRAVUR BASKILI KARTON SANAYI VE TICARET A.S.	Turkey	100.00
LAWSON MARDON KAZAKHSTAN LIMITED LIABILITY PARTNERSHIP	Kazakhstan	100.00
LAWSON MARDON SELEPRINT s.r.l.	Italy	75.00 (19)
LAWSON MARDON LIMITED	England	100.00
LAWSON MARDON PACKAGING UK LTD.	England	100.00
KOTERS (LIVERPOOL) LIMITED	England	100.00
LAWSON MARDON FIBRENYLE LTD.	England	100.00
FIBRENYLE (CORBY) LIMITED	England	100.00
LAWSON MARDON FLEXIBLE LIMITED	England	100.00
MARDON FLEXIBLE PACKAGING (KENTON) LIMITED	England	100.00
LAWSON MARDON SMITH BROTHERS LTD.	England	100.00
LAWSON MARDON SUTTON LTD.	England	100.00
MARDON PELOREX LIMITED	England	100.00
LMG IRIDON LIMITED	England	100.00
LAWSON MARDON THERMOPLASTICS LTD.	England	100.00
WHEATON UK LTD.	England	100.00
LAWSON MARDON NORTHERN LIMITED	England	100.00
LAWSON MARDON READING LTD.	England	100.00
STALCON PLASTICS LIMITED	England	100.00
LAWSON MARDON SUNER SA	Spain	100.00
LAWSON MARDON THYNE LTD.	Scotland	100.00
LAWSON MARDON (WITHAM) LIMITED	England	100.00
LMG FINANCE LIMITED	England	100.00
LMG LLOYDS LIMITED	England	100.00
MARDON COMPOSITES LIMITED	England	100.00
MARDON WRAPPINGS LIMITED	England	100.00
PRONTOSEAL LIMITED	Scotland	100.00
WILLIAM THYNE (PLASTICS) LIMITED	Scotland	100.00
WILLIAM THYNE (SECURITIES) LIMITED	Scotland	100.00
LAWSON MARDON PACKAGING SALES LTD.	England	100.00
PHARMAFLEX LTD.	England	100.00
ALCAN JAPAN LTD.	Japan	100.00
ALCAN PRODOTTI SPECIALI spa	Italy	100.00
LMG (IRELAND) LIMITED	Ireland	100.00
LAWSON MARDON SUPERIOR LTD.	Ireland	100.00
WCL FLEXIBLE PACKAGING LIMITED	Ireland	100.00
WAXED CARTONS (EXPORT) LIMITED	Ireland	100.00
ZITELI LIMITED	Ireland	100.00
ALCAN ICELAND LTD.	Iceland	100.00
ENDURVINNSLAN LTD.	ICELAND	7.00
ALCAN PACKAGING CANADA LIMITED	Ontario	100.00
LAWSON MARDON PACKAGING OVERSEAS (BRISTOL) LIMITED	England	99.00 (18)
ALCAN PACKAGING SERVICES LTD.	Switzerland	100.00
ALCAN TECHNOLOGY & MANAGEMENT LTD.	Switzerland	100.00
ALCAN TRADING AG	Switzerland	100.00
ALUFLUOR AB	Sweden	50.00

4

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALUSUISSE-LONZA CSFR s.r.o.	Czech Republic	100.00
ALUSUISSE OF AUSTRALIA LIMITED	Australia	100.00
ALCAN ENGINEERING PTY LIMITED	Australia	100.00
SWISS ALUMINIUM AUSTRALIA LIMITED	Australia	100.00
GOVE JOINT VENTURE (THE)	Australia	70.00 (17)
BOXAL (SUISSE) S.A.	Switzerland	100.00
LAWSON MARDON NEHER AG	Switzerland	100.00
METALLICA S.A.	Switzerland	35.00
METALLWERKE REFONDA AG	Switzerland	100.00
SOCIÉTÉ MINIÈRE ET DE PARTICIPATIONS GUINÉE-ALUSUISSE	Guinea	50.00
SOR-NORGE ALUMINIUM AS	Norway	50.00
ALCAN INTERNATIONAL LIMITED	Canada	100.00
ALCAN IRELAND LIMITED	Ireland	100.00
ALCAN MANAGEMENT SERVICES CANADA LIMITED	Canada	100.00
ALCAN NIKKEI ASIA COMPANY LTD.	Bermuda	60.00
ALCAN NIKKEI ASIA CORPORATION SDN. BHD	Malaysia	60.00
ALCAN PRIMARY METAL LIMITED	Canada	100.00
ALCAN REALTY LIMITED	Canada	100.00
ALCAN SHANNON COMPANY	Ireland	100.00
ALCAN SHIPPING SERVICES LIMITED	Canada	100.00
ALCAN SMELTERS AND CHEMICALS LIMITED	Canada	100.00
ALCAN TAIHAN ALUMINUM LIMITED	Korea	67.91
ALUMINERIE ALOUETTE INC.	Quebec	20.00 (11)
ALUMINUM COMPANY OF CANADA LIMITED	Canada	100.00
BRITISH ALCAN ALUMINIUM plc	England	100.00
ALCAN AUTOMOTIVE STRUCTURES (UK) LIMITED	England	100.00
ALCAN CHEMICALS EUROPE LIMITED	England	100.00
ALCAN CHEMICALS LIMITED	England	100.00
ALCAN COLWICK HOLDINGS LIMITED	England	100.00
ALCAN COLWICK LIMITED	England	100.00
ALCAN FARMS LIMITED	England	100.00
ALCAN SWINTON LIMITED	England	100.00
BA METALS LIMITED	England	100.00
PEARHOUSE LIMITED	England	100.00
TBAC LIMITED	England	100.00
ALCAN ALUMINIUM UK LIMITED	England	85.00 (3)
BRITISH ALCAN OVERSEAS INVESTMENTS LIMITED	England	100.00
SARATOGA RESOURCES N.V.	Netherland Antilles	20.00
VIGELAND METAL REFINERY A/S	Norway	50.00
GHANA BAUXITE COMPANY LIMITED	Ghana	80.00
KINLOCHLEVEN ROAD TRANSPORT COMPANY LIMITED	Scotland	25.00
VENESTA FOILS LIMITED	England	100.00
VIGELANDS BRUG A/S	Norway	100.00
THE BOWLING BACK LAND COMPANY LIMITED	England	50.00
N.V. ALCAN ALUMINIUM PRODUCTS BENELUX S.A.	Belgium	100.00
SOCIÉTÉ DES ALUMINES ET BAUXITES DE PROVENCE SARL	France	100.00
THE ROBERVAL AND SAGUENAY RAILWAY COMPANY	Quebec	100.00
UTKAL ALUMINA INTERNATIONAL LIMITED	India	35.00

5

END-NOTE:  ADDITIONAL OWNERSHIP [%] THROUGH THE FOLLOWING SUBSIDIARIES:

(1) WHEATON USA INC.  (37.50)
(2) 9121-5996 QUÉBEC INC.  (1.00)
(3) BRITISH ALCAN ALUMINIUM plc  (15.00)
(4) ALCAN INC.  (10.00)
(5) SWISS ALUMINIUM AUSTRALIA LIMITED  (50.00)
(6) ALCAN HOLDINGS UK LIMITED  (27.27)
(7) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (0.76)
(8) ALCAN ALLUMINIO S.p.A.  (30.00)
(9) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (17.00)
(10) ALUMINIUM COMPANY OF MALAYSIA BERHAD  (51.00)
(11) ALCAN ALUMINIUM QUEBEC AND COMPANY, LIMITED PARTNERSHIP  (20.00)
(12) ALCAN NIKKEI SIAM LIMITED  (10.00)
(13) SOR-NORGE ALUMINIUM AS  (13.00)
(14) ALCAN HOLDINGS FRANCE S.A.  (0.50)
(15) ALCAN HOLDINGS GERMANY GmbH  (16.67)
(16) ALCAN HOLDINGS FRANCE S.A.  (20.00)
(17) GOVE ALUMINIUM LIMITED  (30.00)
(18) LAWSON MARDON PACKAGING LTD.  (1.00)
(19) LAWSON MARDON PACKAGING UK LTD.  (25.00)
(20) ALCAN SINGEN GmbH  (0.10)
(21) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (0.62)

6

EX-24.1 9 ex241.htm

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Roland Berger
                                                                          Name:         Roland Berger
                                                                          Title:            Director

  EX-24.2 10 ex242.htm

Exhibit 24.2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ L. Yves Fortier
                                                                          Name:         L. Yves Fortier
                                                                          Title:            Director

EX-24.3 11 ex243.htm

Exhibit 24.3

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Brian M. Levitt
                                                                          Name:         Brian M. Levitt
                                                                          Title:            Director 

EX-24.4 12 ex244.htm

Exhibit 24.4

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:    /s/ William R. Loomis Jr.
                                                                          Name:     William R. Loomis Jr.
                                                                          Title:        Director

EX-24.5 13 ex245.htm

Exhibit 24.5

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ J. E. Newall
                                                                          Name:         J.E. Newall
                                                                          Title:            Director

EX-24.6 14 ex246.htm

Exhibit 24.6

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Guy Saint-Pierre
                                                                          Name:         Guy Saint-Pierre
                                                                          Title:            Director

EX-24.7 15 ex247.htm

Exhibit 24.7

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Gerhard Schulmeyer
                                                                          Name: Gerhard Schulmeyer
                                                                          Title:    Director

EX-99.2 16 ex992.htm

Alcan Inc. A

Notice of Annual Meeting

of Shareholders

24 April 2003

Management Proxy Circular

A

Dear Shareholder:

You are cordially invited to attend the 101^st Annual Meeting of Shareholders of Alcan Inc., which will take place on Thursday, 24 April 2003, in the Assembly Hall of the International Civil Aviation Organization, 999 University Street, Montreal, Quebec, Canada at 10:00 a.m.

At the Meeting, the Shareholders will be asked to consider the matters set out in the enclosed Notice of Annual Meeting.

Your vote is important. Please complete, sign and date the form of proxy and return it in the enclosed envelope, whether or not you plan to attend the Meeting. Returning the proxy will not limit your right to vote in person if you attend the Meeting.

The Meeting will be webcast on Alcan's web site (www.alcan.com)

If you have any questions regarding the matters to be dealt with at the Meeting or require additional copies of this material, please call Alcan's transfer agent, CIBC Mellon Trust Company, at

1-800-387-0825 (toll free) or collect at 416-643-5500.

Yours sincerely,

L. Yves Fortier
Chairman of the Board of Alcan Inc.
5 March 2003

(i)

What's Inside:

Notice of Annual Meeting of Shareholders of Alcan Inc.	1
Management Proxy Circular	2
Definitions	2
Q & A on Voting and Proxies	3
Business to be Transacted at the Meeting	6
Nominees for Election as Directors	7
Corporate Governance Practices	9
Report of the Audit Committee	13
Auditors	14
Performance Graph	15
Report on Executive Compensation	16
Executive Officers' Compensation	20
Employment Agreements	26
Directors' Remuneration	26
Indebtedness of Directors and Executive Officers	27
Directors and Officers' Liability Insurance	28
Approval of the Board of Directors	28

La version française du présent document ainsi que la formule de procuration qui l'accompagne seront envoyées aux actionnaires sur demande. Veuillez communiquer avec la Compagnie Trust CIBC Mellon, en appelant au 1-800-387-0825 (sans frais) ou à frais virés au 416-643-5500.

(ii)

A

Notice of Annual Meeting of Shareholders of Alcan Inc.

The 101^st Annual Meeting of the holders of the Common Shares of Alcan Inc. will be held on Thursday, 24 April 2003 at 10:00 a.m. in the Assembly Hall, International Civil Aviation Organization, 999 University Street (Atrium entrance), Montreal, Quebec, Canada, for the following purposes:

1. receiving the financial statements and the Auditors' Report for the year ended 31 December 2002,

2. electing Directors, and

3. appointing Auditors and authorizing the Directors to fix their remuneration.

Shareholders who cannot attend the Annual Meeting may submit their proxies in accordance with the procedures set out in the attached Management Proxy Circular.

By order of the Board of Directors,

Roy Millington
Corporate Secretary

Montreal, Canada
5 March 2003

1

A

Management Proxy Circular
(As of 14 February 2003, except as otherwise provided)

This Management Proxy Circular is furnished in connection with the solicitation of proxies by the Board of Directors and management of Alcan Inc. for use at the Annual Meeting of Shareholders to be held in Montreal on 24 April 2003 (and at any adjournment thereof) for the purposes set out in the attached Notice of Annual Meeting.

Definitions

Unless stated otherwise, the following expressions used in this Management Proxy Circular have the meanings indicated:

"Alcan" or "Company" means Alcan Inc.,

"Algroup" means Alusuisse Group Ltd. (now Alcan Holdings Switzerland Ltd.), a Subsidiary of Alcan following the Combination,

"Auditors" means Alcan's external auditors, currently PricewaterhouseCoopers LLP,

"Board" or "Board of Directors" means the board of directors of Alcan,

"CBCA" means the Canada Business Corporations Act,

"Chairman" means the Chairman of the Board of Directors of Alcan,

"CEO" means the Chief Executive Officer of Alcan,

"CIBC Mellon" means CIBC Mellon Trust Company,

"Circular" means this management proxy circular prepared in connection with the Meeting,

"Combination" means the process by which Algroup became a Subsidiary of Alcan on 17 October 2000, through the completion of a share exchange offer by Alcan for the shares of Algroup,

"Director" means a director of Alcan,

"Executive Officers" means the President and Chief Executive Officer, the Executive Vice Presidents, the Senior Vice Presidents, the Vice Presidents, the Treasurer, the Controller and the Secretary of Alcan,

"Meeting" means the Annual Meeting of Shareholders to be held on 24 April 2003 and any adjournment thereof,

"Non-Executive Director" means a Director of Alcan who is not an employee of Alcan or its Subsidiaries or related companies,

"Notice" means the attached Notice of Annual Meeting,

"Option Plan" means the Alcan Executive Share Option Plan described on page 21,

"Share" or "Common Share" means a common share in the capital of Alcan,

"Shareholder" means a holder of the Shares,

"Subsidiary" means a company controlled, directly or indirectly, by Alcan, and

"$" means U.S. Dollars.

2

Questions & Answers on Voting and Proxies

If you are not a registered Shareholder, please refer to page 5 for a description of the procedure to be followed to vote your Shares.

Q: Who is soliciting my proxy?

A: This Circular is furnished in connection with the solicitation by Alcan's management of proxies to be used at the Meeting to vote your Shares. The solicitation of proxies will be made primarily by mail, but may also be made by electronic means, by telephone or in person. The cost of soliciting proxies will be borne by Alcan. Georgeson Shareholder and Morrow & Co., Inc. have been retained by Alcan in Canada and the United States, respectively, to assist in the solicitation of proxies from Shareholders. For these services, Georgeson Shareholder and Morrow & Co., Inc. are expected to receive, from Alcan, fees of approximately Can. $25,000 and $10,000, respectively, plus reimbursement of reasonable expenses. In addition, employees of Alcan may solicit proxies without compensation. CIBC Mellon is responsible for the tabulation of proxies.

Q: What am I voting on?

A: Shareholders will be voting on the:

• Election of Directors; and

• Appointment of PricewaterhouseCoopers LLP as the Auditors and authorization given to the Directors to fix the Auditors' remuneration

Q: What documents are sent to shareholders?

A: Shareholders will receive a package of the usual annual corporate documents (i.e., Alcan's 2002 Annual Report, this Circular and the form of proxy). Registered Shareholders will also receive a consent form for electronic delivery of documents.

Copies of Alcan's annual report on Form 10-K and audited consolidated financial statements filed with the Canadian and U.S. securities regulators may be obtained, without charge, on request from the Corporate Secretary of Alcan, 1188 Sherbrooke St. West, Montreal, Quebec, Canada, H3A 3G2.

Q: Who is entitled to vote?

A: On 5 March 2003, 321,512,436 Shares were outstanding. Shareholders of record as of the close of business on that date (the "Record Date") are entitled to receive notice of the Meeting and they or their duly appointed proxyholder will be entitled to attend the Meeting and vote.

Each holder of Shares is entitled to one (1) vote at the Meeting for each Share registered in his or her name at the close of business on the Record Date.

Q: How do I vote?

A: There are three ways that you can vote your Shares if you are a registered Shareholder.

(1) You may vote in person at the Meeting,

(2) you may complete and sign the enclosed form of proxy appointing the named persons or another person you choose to represent you and to vote your Shares at the Meeting, or

(3) you may vote electronically.

Completing, signing and returning your form of proxy does not preclude you from attending the Meeting in person. If you do not wish to attend the Meeting or do not wish to vote in person, your proxy will be voted or be withheld from voting, in accordance with your wishes as specified on your proxy, on any ballot that may be called at the Meeting. If the Shareholder is a body corporate or association, the form of proxy must be signed by a person duly authorized by that body corporate or association.

To vote electronically, you must go to the following website: www.proxyvoting.com/alcan and enter your personalized e-voting control number located on your form of proxy and follow the instructions.

If your Shares are registered in the name of a nominee, please see "Voting by Non-Registered Shareholders" on page 5.

Q: What if I plan to attend the meeting and vote in person?

A: If you plan to attend the Meeting on 24 April 2003 and wish to vote your Shares in person at the Meeting, it is not necessary for you to complete or return the form of proxy. Your vote will be taken and counted at the Meeting. Please register with the transfer agent, CIBC Mellon, upon arrival at the Meeting. Non-registered Shareholders wishing to attend the Meeting should refer to "Voting by Non-Registered Shareholders" on page 5.

3

Q: What happens when I sign and return the form of proxy?

A: Signing the enclosed proxy gives authority to the named proxyholders on the form, or to another person you have appointed, to vote your Shares at the Meeting in accordance with the voting instructions you provide.

Q: Can I appoint someone other than the named proxyholders to vote my shares?

A: Yes. Write the name of your chosen person, who need not be a Shareholder, in the blank space provided in the form of proxy. It is important to ensure that any other person you appoint is attending the Meeting and is aware that his or her appointment has been made to vote your Shares. Proxyholders should, at the Meeting, present themselves to a representative of CIBC Mellon. Please note that if you choose to vote electronically, only the named proxyholders may be appointed.

Q: What do I do with my completed form of proxy?

A: Return it to the transfer agent, CIBC Mellon, in the envelope provided, or forward it by telecopier to (416) 368-2502, so that it arrives no later than 5:00 p.m. EDT on 23 April 2003. All Shares represented by a properly executed proxy received by CIBC Mellon prior to such time will be voted or be withheld from voting, in accordance with your instructions as specified in the proxy, on any ballot that may be called at the Meeting.

Q: How will my shares be voted if I return my proxy?

A: The persons named in the form of proxy will vote or withhold from voting your Shares in accordance with your instructions. In the absence of such instructions, however, your Shares will be voted FOR the election of the Directors and FOR the appointment of the Auditors.

Q: If I change my mind, can I take back my proxy once I have given it?

A: Yes. A Shareholder who has given a proxy may revoke it with an instrument in, writing which includes another proxy with a later date, executed by the Shareholder or by the Shareholder's attorney authorized in writing and delivered to CIBC Mellon, 200 Queen's Quay East, Unit 6, Toronto, Ontario, M5A 4K9, Canada or by telecopier at (416) 368-2502, no later than 5:00 p.m. EDT on 23 April 2003 or to the chairman of the Meeting on the day of the Meeting or any adjournment thereof. It should be noted that the participation in person by a Shareholder in a vote by ballot at the Meeting would automatically revoke any proxy that has been previously given by the Shareholder in respect of business covered by that vote.

Q: What if amendments are made to these matters or if other matters are brought before the meeting?

A: The persons named in the form of proxy will have discretionary authority with respect to amendments or variations to matters identified in the Notice of Annual Meeting and to other matters which may properly come before the Meeting. As of the date of this Circular, the management of Alcan knows of no such amendment, variation or other matter expected to come before the Meeting. If any other matters properly come before the Meeting, the persons named in the form of proxy will vote on them in accordance with their best judgment.

Q: How can I contact the transfer agent?

A: You can contact the transfer agent at:

                CIBC Mellon Trust Company
                320 Bay Street, 3^rd floor
                Toronto, Ontario, Canada M5H 4A6
                Telephone: (416) 643-5500
                                    1-800-387-0825
                (toll free throughout Canada and the U.S.)
                Telecopier: (416) 643-5501

Q: What is the final date to submit a shareholder proposal for the 2004 annual meeting?

A: The final date for submitting Shareholder proposals to Alcan is 5 December 2003.

Q: Who are the principal shareholders of the company?

A: To the knowledge of the Directors and Executive Officers of the Company, no person or company beneficially owns or exercises control or direction over more than 10% of the outstanding Shares of the Company.

4

Voting by non-registered shareholders

Q: If my shares are not registered in my name but are held in the name of an intermediary (a bank, trust company, securities broker, trustee, etc.), how do I vote my shares?

A: Non-registered or beneficial Shareholders are not personally listed in Alcan's Share register. Their Shares are held in the name of an intermediary or a "nominee", which is usually a trust company, securities broker or other financial institution. If you are a non-registered Shareholder, there are two ways that you can vote your Shares held in the name of your nominee:

     1)    By providing voting instructions to your nominee

Applicable securities laws require your nominee to seek voting instructions from you in advance of the Meeting. Accordingly, you will receive or have already received from your nominee either a request for voting instructions or a form of proxy for the number of Shares you hold. Every nominee has its own mailing procedures and provides its own signing and return instructions, which should be carefully followed by non-registered Shareholders to ensure that their Shares are voted at the Meeting.

      2)     By attending the Meeting in person

The Company generally does not have access to the names of its non-registered Shareholders. Therefore, if you attend the Meeting, the Company will have no record of your shareholdings or of your entitlement to vote unless your nominee has appointed you as proxyholder.

If you wish to vote in person at the Meeting, insert your own name in the space provided on the request for voting instructions or form of proxy to appoint yourself as proxyholder. Non-registered Shareholders who instruct their nominee to appoint themselves as proxyholders should, at the Meeting, present themselves to a representative of CIBC Mellon.

5

Business to be transacted at the Meeting
(See Notice of Annual Meeting of Shareholders of Alcan Inc.)

1.     Presentation of Financial Statements

The consolidated financial statements for the year ended 31 December 2002 and the Auditors' Report for 2002 will be submitted to Shareholders at the Meeting, but no vote with respect thereto is required or proposed to be taken. The consolidated financial statements are included in the Alcan 2002 Annual Report that is being mailed to Shareholders with the Notice of Annual Meeting and this Circular.

2.     Election of Directors

Eleven Directors are to be elected to serve until the close of the next annual meeting of the Company or until they cease to hold office as such. The Board of Directors and management recommend the election of the nominees listed on pages 7 and 8.

3.     Appointment of Auditors

Auditors are to be appointed to serve until the close of the next annual meeting of the Company, and the Directors are to be authorized to fix the remuneration of the Auditors so appointed.

The Board of Directors and management, on the advice of the Audit Committee, recommend that PricewaterhouseCoopers LLP, Montreal, Canada, be appointed as Auditors.

A representative of PricewaterhouseCoopers LLP will be present at the Meeting and will have the opportunity to make a statement should he desire to do so. He will also be available to answer questions.

6

Nominees for Election as Directors

Roland Berger	65, Director since 2002	Travis Engen	58, Director since 1996
	Mr. Berger is chairman and global managing partner of Munich-based Roland Berger Strategy Consultants, one of the leading global strategy consultancies. He is a member of various supervisory boards and consultant groups, pursues extensive commitments in the public sector and is an expert on corporate management and general economic and social issues. (1), (3), (4) 1,287 Deferred Share Units		Mr. Engen has been President and CEO of Alcan since March 2001. He is a member of the U.S. Government's Defense Business Practice Implementation Board. He is a director of Lyondell Chemical Company, the International Aluminium Institute and the Canadian Council of Chief Executives. 225,500 Common Shares 1,848 Deferred Share Units 932,000 Options to purchase Shares
Clarence J. Chandran	53, Director since 2001	L. Yves Fortier, c.c., q.c.	67, Director since 2002
	Mr. Chandran is chairman of the Chandran Family Foundation Inc., chairman of Conros Corporation and of InfoClarus Inc., and president of Le Pages Inc. (U.S.A.). He retired as chief operating officer of Nortel Networks Corporation in 2001. Mr. Chandran is also a director of MDS Inc., and Sirific Wireless Corp., a member of the board of visitors of the Kenan-Flagler Business School, University of North Carolina and a trustee of the America-India Foundation. (1), (3), (4) 4,000 Common Shares 4,808 Deferred Share Units		Mr. Fortier is Chairman of the Board of Alcan and is chairman and a senior partner of the law firm Ogilvy Renault in Montreal. From 1988 to 1992, he was Ambassador and Permanent Representative of Canada to the United Nations. He is also governor of Hudson's Bay Company and a director of DuPont Canada Inc., Groupe TVA Inc., Nortel Networks Corporation, NOVA Chemicals Corporation and the Royal Bank of Canada. Mr. Fortier is a trustee of the International Accounting Standards Committee and a member of the advisory council of Mercer Management Consulting. (1*), (2), (3), (4) 1,000 Common Shares 3,540 Deferred Share Units
L. Denis Desautels, o.c., f.c.a.	60, Nominated in 2003	William R. Loomis, Jr.	54, Director since 2002
	Mr. Desautels is executive director of the University of Ottawa Centre on Governance. He was Auditor General of Canada from 1991 to 2001, prior to which he had been a senior partner of the accounting firm of Ernst & Young LLP. Mr. Desautels is chairman of the Laurentian Bank of Canada, a director of The Jean Coutu Group (PJC) Inc. and of Bombardier Inc. and a member of the Accounting Standards Oversight Council of the Canadian Institute of Chartered Accountants.		Mr. Loomis is in the graduate PhD. Program at the University of California, Santa Barbara. He is limited managing director of Lazard LLC, where he was formerly chief executive officer. He is a director of Ripplewood Holdings LLC and Terra Industries Inc. (1) 10,000 Common Shares 846 Deferred Share Units

7

J.E. Newall, o.c.	67, Director since 1985	Paul M. Tellier, p.c., c.c., q.c.	63, Director since 1998
	Mr. Newall is chairman of NOVA Chemicals Corporation and of Canadian Pacific Railway Limited; he was vice-chairman and chief executive officer of NOVA Corporation from 1991 to 1998. He is a director of BCE Inc., Bell Canada, Maple Leaf Foods Inc. and the Royal Bank of Canada. (1), (3*), (4) 8,454 Common Shares 6,793 Deferred Share Units		Mr. Tellier is president and chief executive officer and a director of Bombardier Inc. From 1992 to 2002, he was president and chief executive officer of the Canadian National Railway Company. He is a director of McCain Foods, Bell Canada and BCE Inc. He is vice-chairman of the Canadian Council of Chief Executives and former chairman of the Conference Board of Canada (1), (2), (4*) 1,938 Common Shares 5,842 Deferred Share Units
Guy Saint-Pierre, c.c.	68, Director since 1994	Milton K. Wong, c.m.	64, Nominated in 2003
	Mr. Saint-Pierre is chairman of the Royal Bank of Canada. He was president and chief executive officer of SNC-Lavalin Group Inc. from 1989 to 1996 and chairman from 1996 to 2002. Mr. Saint-Pierre is a director of BCE Inc., Bell Canada, General Motors of Canada and Telesat Canada. (1), (2*), (3) 13,814 Common Shares 4,446 Deferred Share Units		Mr. Wong is chairman of HSBC Asset Management (Canada) Limited and Chancellor of Simon Fraser University in British Columbia. He serves as a director on the boards of the Aga Kahn Foundation Canada, the Canada-U.S. Fulbright Program, The Canadiana Fund, The Canadian Institute for Advanced Research, Genome BC, Mr. and Mrs. P.A. Woodward's Foundation, the Pierre Elliott Trudeau Foundation and Stem Cell Network. He is the founder and past-chairman of the Laurier Institution, a non-profit organization for advancing knowledge of the economics of cultural diversity.
Gerhard Schulmeyer	64, Director since 1996
	Mr. Schulmeyer is professor of practice at the MIT Sloan School of Business. Until 2001, he was president and chief executive officer of Siemens Corporation. He serves on the boards of Thyssen-Bornemisza Holding N.V., Zurich Financial Services, Ingram Micro Inc., and Korn/Ferry as well as the international advisory board of Banco Santander Central Hispano. (1), (2) 1,928 Common Shares 4,305Deferred Share Units	Committee Memberships 1. Corporate Governance 2. Audit 3. Personnel 4. Environment, Health & Safety * Committee Chairman

8

Corporate Governance Practices

Alcan is committed to the highest levels of corporate governance practices, which are essential to the success of the Company and to the enhancement of Shareholder value. The Common Shares are listed on the Toronto, New York, London and Swiss stock exchanges and Alcan, in addition to making the required filings with Canadian securities regulators, files periodic and current reports with the United States Securities and Exchange Commission. Accordingly, Alcan is subject to a variety of corporate governance and disclosure requirements. Alcan's corporate governance practices meet or exceed the Toronto Stock Exchange Corporate Governance Guidelines (the "TSX Guidelines") and other applicable stock exchange and regulatory requirements and ensure transparency and effective governance of the Company. Alcan's Board has been reviewing its corporate governance practices in light of the Sarbanes-Oxley Act of 2002, as well as proposed revisions to the TSX Guidelines and to the rules of t he New York Stock Exchange relating to corporate governance. As these new provisions come into effect, the Board will reassess its corporate governance practices and implement changes where appropriate.

The following is an overview of Alcan's corporate governance practices with footnotes referencing the TSX Guidelines.

The Board of Directors

The Board has the responsibility for the stewardship of the Company, including the responsibility to ensure that it is managed in the interest of its Shareholders as a whole, while taking into account the interests of other stakeholders.¹

The Board supervises the management of the business and affairs of the Company and discharges its duties and obligations in accordance with the provisions of (a) the CBCA, (b) the Company's articles of incorporation and by-laws, (c) the Worldwide Code of Employee and Business Conduct, (d) the charters of the Board and Board Committees, and (e) other applicable legislation and Company policies.

The charter of the Board of Directors, the Committee charters and the Worldwide Code of Employee and Business Conduct are posted on Alcan's Internet site at www.alcan.com

The Company's corporate governance practices require that, in addition to its statutory duties, the following matters be subject to Board approval: (1) capital expenditure budgets and significant investments and divestments, (2) the Company's strategic and value-maximizing plans², (3) the number of Directors within the limits provided in the Company's articles of incorporation, and (4) any matter which may have the potential for important impact on the Company.

Composition and Independence of the Board

A committee of unrelated Directors (see Corporate Governance Committee below) recommends candidates for election to the Board. Nominees are selected as potential representatives of Shareholders as a whole and not as representatives of any particular Shareholder or group of Shareholders. Alcan does not have a significant or controlling Shareholder.

Care is taken to ensure that the Board of Directors is constituted of a substantial majority of individuals who qualify as Directors who are unrelated to and independent of management, in accordance with stock exchange requirements.³

The present Board is composed of ten Directors. Travis Engen is President and CEO of Alcan. Except for Mr. Engen, all Directors are unrelated. In particular, Messrs. Berger, Chandran, Fortier, Levitt, Loomis, Newall, Saint-Pierre, Schulmeyer and Tellier are (i) "unrelated" Directors within the meaning of the TSX Guidelines and (ii) "independent" Directors within the meaning of the rules of the New York Stock Exchange, owing to their having no material relationship with Alcan, either directly or as a partner, shareholder or officer of a company that has a relationship with Alcan and no interest or relationship which could reasonably be perceived to interfere with their ability to act with a view to the best interests of Alcan.⁴ References herein to "unrelated Directors" include the criteria relating to "independent Directors" referred to above.

9

The Board has a non-executive Chairman (L. Y. Fortier) who is not a member of Alcan's management; this structure contributes to allowing the Board to function independently of management.⁵

The Board is satisfied that its number of Directors enables effective decision-making.⁶

According to their mandates as set out in their charters, the Board and each of its Committees may engage outside advisors.⁷

Committees

The Board has appointed four Committees, each of which is constituted by its own charter, by which the Board delegates certain of its functions as hereinafter set out. Each Committee is made up solely of Directors who are unrelated to management as aforesaid.⁸

The Committee charters are reviewed and assessed on an annual basis.

The Committees of the Board are: the Corporate Governance Committee, the Audit Committee, the Personnel Committee and the Environment, Health & Safety Committee.

Corporate Governance Committee

The Corporate Governance Committee has the broad responsibility of regularly reviewing corporate governance practices in general within Alcan.⁹

One of the Committee's main duties is to maintain an overview of the composition and size of the Board. A sub-committee of the Corporate Governance Committee, composed entirely of unrelated Directors, reviews candidates for nomination as Directors and proposes them to the Board.¹⁰ The Committee develops position descriptions for the Board of Directors and the CEO and approves the latter's corporate objectives.¹¹

The Corporate Governance Committee assesses and ensures the effectiveness of the Board as a whole, of each Committee of the Board and of the contribution of individual Directors, including the CEO.¹² The Committee also assesses the Board's relationship with management and recommends, where necessary, limits on management's authority to act without explicit Board approval.

The Committee's mandate also includes recommending levels of Directors' compensation. To this end, the Committee considers recommendations from the Personnel Committee and considers factors such as time commitment, risks and responsibilities.¹³

Audit Committee

This Committee is established in accordance with the requirements of the CBCA, stock exchange rules and applicable securities laws and regulations. Its roles and responsibilities are set out in its charter. The Audit Committee's main objective is to provide an effective overview of the Company's financial reporting process and internal control functions, and to review financial statements and proposals for issues of securities.¹⁴ It does this by assisting the Board in fulfilling its functions relating to corporate accounting and reporting practices, as well as overseeing financial and accounting controls. The Committee also identifies the principal risks of the Company's business and oversees the implementation of appropriate systems to manage such risks.¹⁵

With respect to compliance and disclosure matters, the Committee ensures that the Company makes timely disclosure of activities that would materially impact its financial statements, that all potential material claims against the Company have been properly evaluated, accounted for and disclosed, and that regular updates are received regarding certain policies and practices of the Company.¹⁶

The Committee reviews financial information prepared in accordance with generally accepted accounting principles ("GAAP") and non-GAAP financial information in its various forms, including earnings releases, quarterly reports and annual reports. It reviews major accounting issues that arise and expected changes in accounting standards and processes that may impact the Company.

10

The Committee has direct communication with the Company's Auditors and internal auditors and meets privately on a regular basis with each of the Auditors, internal auditors and senior members of the Company's financial management. The Audit Committee approves the recommendation of the Auditors for appointment by the Shareholders, reviews their degree of independence and requires regular reports. The Chairman of the Committee signs the Auditor's audit engagement letter. The Committee also discusses with the Auditors the quality and not just the acceptability of the Company's accounting principles and obtains their assurance that the audit was conducted in a manner consistent with applicable laws and regulations.¹⁷

The Board determines each Audit Committee member's financial literacy and whether he or she has accounting or related financial expertise. All members of the Audit Committee have been determined to have the requisite level of financial literacy, being the ability to fully understand balance sheets, income statements, cash flow statements and related notes to financial statements.

The Audit Committee ensures that its process for monitoring compliance and dealing with violations of Alcan's Worldwide Code of Employee and Business Conduct is established and updated. In particular, the Audit Committee has established procedures in relation to complaints or concerns received by the Company involving accounting or audit matters, including the anonymous handling thereof.

(See Report of the Audit Committee on page 13)

Personnel Committee

The Personnel Committee has the broad responsibility to review any and all personnel policy and employee relations matters and to make recommendations with respect to such matters to the Board or the CEO, as appropriate. Its specific roles and responsibilities are set out in its charter. The Committee will periodically review the effectiveness of the Company's overall management organization structure and proposals for succession planning¹⁸, review recommendations for the appointment of Executive Officers, and consider and make recommendations to the Board based on trends and developments in the area of human resource management.

The Committee establishes the Company's general compensation philosophy and oversees the development and implementation of compensation policies and programs. It also reviews and approves the level of and/or changes in the compensation of individual Executive Officers, taking into consideration individual performance and competitive compensation practices. (See Report on Executive Compensation on page 16).

Environment, Health & Safety Committee

This Committee has the broad responsibility to review the policy, management practices and performance of Alcan in environmental, health and safety matters and make recommendations to the Board on such matters in light of current and changing requirements. The Committee also reviews, assesses and provides advice to the Board on worldwide policy and legal, regulatory and consumer trends and developments related to the environment, as they impact the Company, its employees, businesses, processes and products.

Meetings of the Board and Committees

The Board and the Committees meet at pre-set times throughout the year and as needed.

The Board held 11 meetings during 2002, three of which were held by telephone conference. Attendance by Directors at Board and Committee meetings averaged 94%.

The Board and the Committees regularly invite members of management to attend meetings to report on relevant subjects and facilitate communication between the Board and Company management.

In 2002, the Corporate Governance Committee met six times, the Audit Committee met six times, the Personnel Committee met four times and the Environment, Health & Safety Committee met twice. There is no executive committee of the Board. At the next Board meeting following each meeting of a Committee, the chairman of the Committee reports to the Board on the Committee's activities. Minutes of Committee meetings are provided to all Directors.

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At every meeting of the Board, the unrelated Directors meet in executive session, presided by the Chairman, without management present.

Information to the Board

Alcan's Secretary prepares a Directors' Manual which includes information on Company policies and Director responsibilities and liabilities, which is updated as necessary. Detailed current information on the Company, its finances and its operations are sent on a monthly basis to the Directors. Particularly important information requiring urgent attention is conveyed immediately. In addition, new Directors spend time with members of senior management, including those involved in Alcan's business operations, so that they can become rapidly familiar with the Company, its issues, business and operations. Care is taken to ensure that new Directors understand the roles and responsibilities of the Board and its Committees, as well as the commitment level that Alcan expects of its Directors. Director visits to Alcan's plants and business locations are organized to give additional insight into Alcan's business and operations.¹⁹

Code of Conduct

Alcan has a Worldwide Code of Employee and Business Conduct that governs all employees of Alcan, as well as the Directors and senior management. A copy of the Code is posted on the Company's Internet site (www.alcan.com) to emphasize the importance the Company places on adherence to the highest ethical standards. Alcan will promptly disclose any future amendments to the Code on its Internet site.

Role of management

The Board is not involved in the day-to-day management and functioning of the Company. It gives senior management this responsibility, subject to the Board's overall stewardship responsibilities.

Alcan management is responsible for conducting the business and operations of the Company in accordance with a business strategy approved by the Board. Management's authority to act in certain matters that may have the potential for important impact on the Company, including decisions by the CEO, is subject to prior Board approval as described above. Before being submitted to the Board, certain matters such as dividends, securities issues, annual reports and significant investment/divestment proposals are prepared and reviewed by management with external professional advice, as necessary.

Shareholder/Investor Communications

In order to respond to Shareholders' questions and concerns, Alcan maintains an experienced investor relations staff whose responsibility is to provide accurate, timely and non-selective information and analysis to the investing community in accordance with Alcan's disclosure policy. This policy has been established in compliance with applicable legal disclosure requirements in Canada and in the United States and is regularly reviewed. The investor relations staff meets periodically with investors and analysts and is accessible to Shareholders by telephone during business hours. These services facilitate the receiving of Shareholder comments.

Note 1: refers to TSX Guideline 1.
Note 2: refers to TSX Guideline 1(a).
Note 3: refers to TSX Guideline 2.
Note 4: refers to TSX Guideline 3. Yves Fortier is a senior partner of Ogilvy Renault, one of a number of law firms that provide legal services for the Company. Roland Berger is chairman of Roland Berger Strategy Consultants, a consulting firm that is providing services to the Company in connection with a specific matter. The Board has determined that the services rendered in each case are not material to the Company or to the service provider in question and accordingly Messrs. Fortier and Berger are considered to be unrelated Directors.
Note 5: refers to TSX Guideline 12.
Note 6: refers to TSX Guideline 7.
Note 7: refers to TSX Guideline 14.
Note 8: refers to TSX Guideline 9.
Note 9: refers to TSX Guideline 10.
Note 10: refers to TSX Guideline 4.
Note 11: refers to TSX Guideline 11.
Note 12: refers to TSX Guideline 5.
Note 13: refers to TSX Guideline 8.
Note 14: refers to TSX Guideline 1(e).
Note 15: refers to TSX Guideline 1(b).
Note 16: refers to TSX Guideline 1(d).
Note 17: refers to TSX Guideline 13.
Note 18: refers to TSX Guideline 1(c).
Note 19: refers to TSX Guideline 6.

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Report of the Audit Committee

In accordance with its charter, the Audit Committee of the Board is responsible for providing an effective overview of Alcan's financial reporting process and internal control functions.

Management has the primary responsibility for the financial reporting process and the system of internal controls. The Auditors have the responsibility to express an opinion on the financial statements based on their audit in accordance with generally accepted auditing standards. The Audit Committee has the responsibility to monitor and oversee the foregoing.

In carrying out its responsibilities, the Audit Committee has recommended to the Board that it, in turn, recommend to the Shareholders that PricewaterhouseCoopers LLP, Montreal, Canada be appointed as Auditors at the Meeting.

The Auditors discuss with the Audit Committee and provide written disclosures on (1) the independence of the Auditors from Alcan; (2) all critical accounting policies and practices used in the audit; (3) all alternative treatments of financial information within GAAP; (4) the quality and not just the acceptability of the Company's accounts; and (5) the matters required to be communicated under generally accepted auditing standards.

The Audit Committee has reviewed and approved the fees paid for audit services and fees paid to the Auditors for other services (see Auditors on page 14) and has considered whether the fees paid for such other services are compatible with maintaining the Auditors' independence.

The Audit Committee regularly meets separately with the Auditors and with Alcan's chief internal auditor, without management present, to review the results of their audits, their evaluation of internal controls, the quality of Alcan's accounting and financial reporting and other appropriate matters.

The Audit Committee has reviewed the Company's audited financial statements, has discussed them with management and has recommended to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K.

The Audit Committee,

Guy Saint-Pierre, Chairman of the Committee
L. Yves Fortier
Brian M. Levitt
Gerhard Schulmeyer
Paul M. Tellier

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Auditors

PricewaterhouseCoopers LLP and its predecessor (Price Waterhouse) have been Alcan's Auditors since 1936.

In addition to performing the audit of Alcan's consolidated financial statements, PricewaterhouseCoopers LLP provided other services to the Company and its Subsidiaries.

Fees by category for each of 2001 and 2002 are:

	2001 ($'000)	2002 ($'000)
Audit Fees	6,168	7,338
Audit-Related Fees	410	390
Tax Fees	1,528	1,979
All other Fees	928	817
Total	9,034	10,524

"Audit-related fees" include fees for financial due diligence and the audit of the Company's pension benefit plans. "Tax fees" include tax compliance services and tax advisory and planning services. "All other fees" include principally valuation services for tax purposes in Australia, consultation services in Canada related to various procurement initiatives and transfer pricing studies.

All services by the Auditor will be subject to pre-approval by the Audit Committee through established procedures. Management will make regular updates to the Committee of the services rendered by the Auditors.

The Audit Committee reviewed with the Auditors and Alcan's chief internal auditor the overall scope and specific plans for their audits of the Company and its Subsidiaries.

The Auditors, the Audit Committee and management maintain regular and open communication in relation to the audit of the Company's financial statements. There were no disagreements between the Auditors, the Audit Committee and Management and on matters affecting the audit of the Company's financial statements.

In addition, the Auditors reviewed and discussed Alcan's unaudited 2002 quarterly financial statements and earnings releases with management and members of the Audit Committee.

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Performance Graph

The following graph compares the cumulative total Shareholder return on Can. $100 invested in Shares with the cumulative total return of the S&P/TSX Composite Index, assuming reinvestment of all dividends. Additional comparisons are provided with respect to two U.S. Dollar-based indices, the Standard & Poor's 500 Index and the Standard & Poor's Diversified Metals & Mining Index. The Company intends to replace the Standard & Poor's 500 Index with the Standard & Poor's Industrial Composite Index, because the former is a very

broad index encompassing varying industries and markets, while the latter more closely resembles the Company's industry. In accordance with statutory requirements, both of these indices are included this year. The Board believes the comparisons with the additional indices are appropriate.

In May 2002, The Toronto Stock Exchange announced the discontinuance of the TSE 300 Stock Index and its replacement by the S&P/TSX Composite Index.

15

Report on Executive Compensation

General

During the 12 months following the Combination with Algroup, the Personnel Committee of the Board (the "Committee") conducted a comprehensive review of the way it determines the compensation of its executives around the world and the effectiveness of its policies to meet the needs of the combined company. The Committee was assisted by an independent consultant in a study of other global companies based in North America and Europe. As a result of this study and the comparative data collected by the consultant, a number of modifications were made to the compensation policies and programs in 2002.

The Committee concluded that for certain Executive Officers, the home country should be regarded as being of secondary importance in setting remuneration levels. Therefore, in order to ensure greater equity among these Executive Officers, compensation will be set against U.S. competitive compensation practices, irrespective of the countries in which the Executive Officers work.

Changes made during 2002

The Total Direct Compensation policy, which covers base salary, annual incentives (bonus) and long-term incentives, was aligned with prevalent U.S. competitive median compensation practices of a 14 - company peer group. These companies are comparable in size, are involved in cyclical industries, are capital intensive, and have a global presence.

More importantly, both the short-term and long-term incentive plans were modified to be more aligned with the Company's governing objective to maximize value over time. The details of the new incentive programs, which came into effect in 2002, are outlined hereunder.

Compensation of the executive officers

Total direct compensation levels are set to reflect both the responsibility of each position (internal equity) and competitive market levels (external competitiveness). The total compensation policy is set at the median of the compensation peer group.

Base Salary

The target salary is the mid-point of a salary range for an Executive Officer and reflects the competitive level of similar positions in the compensation peer group. Actual base salaries for Executive Officers reflect the individual's performance and contribution to the Company. Base salaries of Executive Officers are therefore reviewed annually and any proposed changes are approved by the Committee before implementation.

Short-Term (Annual) Incentive Plan

The Company's short-term incentive plan, known as the Executive Performance Award ("EPA") Plan, is administered by the Committee, and has two components, each based on a different aspect of performance: (1) the profitability of the Company as measured by Economic Value Added ("EVA" - a registered trademark of Stern Stewart & Co.) and (2) the performance of the Company relative to key strategic objectives. For each position a target award is set (expressed as "percent of target base salary") reflecting both the responsibilities of the position and the competitive compensation levels. These components are described below.

1. 75% of the incentive compensation opportunity of an executive is based on the overall profitability of the Company as measured against the quantifiable financial metric EVA. The incentive compensation for Executive Officers who are part of corporate head office is contingent upon performance versus the pre-established EVA target for the Company, while the incentive compensation for Executive Officers who are responsible for a business group is contingent on meeting the pre-established EVA objectives of their respective business group.

2. 25% of the incentive compensation opportunity of an executive is based on the achievement of key strategic objectives as measured against pre-established operating objectives critical to the success of the business. These strategic objectives include safety, environment, operating efficiencies, reduction of costs, etc. and are set by the Committee for the CEO and are applied in turn to Executive Officers.

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The overall award paid is a function of the combined achieved results of EVA and strategic objectives, and the individual performance and contribution to the Company. The award paid may vary from zero when the results achieved are less than the minimum threshold set by the Committee, to 250% of the target award when the results achieved are at or exceed the maximum level which was set by the Committee. For 2002, the Committee approved EPA awards for Executive Officers that were generally above the target amounts.

Under the terms of the Executive Deferred Share Unit Plan, Executive Officers based in Canada may elect, prior to the beginning of any particular year, to receive Executive Deferred Share Units ("EDSUs") with a value equal to either 50% or 100% of their EPA for that year, instead of a cash payment. The number of EDSUs is determined by dividing the amount elected by the average share price on the Toronto and New York stock exchanges at the end of the preceding year. Additional EDSUs, which correspond to dividends declared on Shares are credited to each holder. The EDSUs are redeemable only upon termination of employment (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of EDSUs by the average share price on the said exchanges at the time of redemption.

Under the terms of the Non-Qualified Deferred Compensation Plan, Executive Officers based in the U.S. may elect, prior to the beginning of any particular year, to defer up to 75% of their base salary and up to 90% of their EPA for that year, instead of receiving a cash payment.

Long-Term Incentive Plan

The long-term incentive compensation value for the most senior executives is provided through (1) The Alcan Total Shareholder Return Performance Plan ("TSR Plan") and (2) The Alcan Executive Share Option Plan ("Option Plan"). Beginning in 2002 certain Executive Officers receive half of their target long-term incentive compensation value from each of these two plans. The details for the two plans are described below.

The Company's TSR Plan aligns the interests of executives with those of Shareholders by rewarding the former for maximizing value over time through relative Share price increases.

1.  The TSR Plan is a cash incentive plan that provides performance awards to eligible employees based on the Company's Share price and cumulative dividend yield performance relative to the performance of the companies included in the S&P Industrials Index over a three-year period (the "Performance Period"). The initial Performance Period commenced on 1 October 2002.

The award amount, if any, is based on the Company's relative Total Shareholder Return performance, as defined in the TSR Plan, and ranking against the other companies in the S&P Industrials Index at the end of the Performance Period. If the Company's Total Shareholder Return performance ranks below the 30^th percentile, the employee will not receive any award for that Performance Period. At the 30^th percentile rank, the employee will be paid an award equal to 60% of the target for that Performance Period. At the 50^th percentile rank, the employee will earn a payout of 100% of the target, and at or above the 75^th percentile rank, the employee will earn a payout of 300% (i.e. the maximum payout). The actual amount of award (if any) will be prorated between the percentile rankings. In 2002, a total target cash award of $12,156,200 was granted to 76 key employees around the world. The amount of the award is expensed th roughout the three-year period through an accounting accrual.

2. The Option Plan also encourages key employees to align their interests with those of Shareholders by providing an incentive to further the Company's growth and development and to assist in retaining and attracting executives critical to the success of the Company.

The Option Plan provides for the granting of Options to key employees of the Company and its Subsidiaries to purchase Common Shares. The Committee, which administers the Option Plan, may determine at its sole discretion which employees of the Company and its Subsidiaries are eligible to be granted Options. The number of Options granted is related to the salary grade midpoint but not to the amount of outstanding Options or SARs (see page 21). The exercise price per Option is set at 100% of the market value of the Share at time of grant with each Option exercisable in whole or in part over a 10-year period. For more details on the different Options granted, see pages 21 and 22.

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Certain Executive Officers participated in the Alcan Stock Price Appreciation Unit Plan ("SPAU Plan") instead of the Option Plan due to certain local conditions of their country of residence (see description on page 24).

Compensation of the chief executive officer

The CEO's annual compensation is administered by the Board, based on recommendations from the Committee according to the policies described above. Mr. Engen became CEO on 12 March 2001. Mr. Engen entered into a five-year employment agreement, which can be renewed annually thereafter. The Board of Directors sets his compensation on a competitive level with other U.S. chief executive officers of global companies of similar size and also provides Mr. Engen with comparable levels of compensation to that received from his previous employer. Decisions pertaining to the CEO's compensation are based on the Board evaluation of the CEO's performance against pre-determined financial and strategic objectives. These objectives are set and approved annually at the beginning of the year.

Given the quality of the leadership provided as well as the progress made on the strategic direction of the Company, the Committee recommended to the Board to set the CEO's Total Direct Compensation (base salary, target annual incentives and target long-term incentives) level between the 50^th and the 75^th percentile of the U.S. market. The profitability objective as measured by EVA was surpassed in spite of challenging economic conditions. Furthermore, very good progress was made on the strategic objectives which were established for 2002. The overall performance was reflected in establishing the compensation of the CEO.

In 2002, Mr. Engen's base salary was increased to $1,300,000 per year from $1,200,000 effective October 2002. An annual EPA award based on an established target and on performance objectives will be paid. For 2002, the target was 100% of the base salary. The actual amount paid was $1,605,000 given that results exceeded the pre-established performance objectives.

Mr. Engen received 353,000 C Options (see page 22) as part of his annual compensation. These Options were granted on 1 March 2002 at an exercise price of Can. $64.25 per Share. These Options will remain outstanding and exercisable for the full 10-year period. He also received a TSR Plan target cash award of $2,500,000 payable at the end of the three-year Performance Period (30 September 2005) under the terms and conditions of the TSR Plan (see page 24).

Mr. Engen's employment agreement provides for a retirement adjustment program under which he will be entitled to the same level of retirement benefits he would have received had he remained employed with his previous employer. Under this program, the monthly pension is calculated by multiplying $6,432 by the number of years of service from 1 April 2001 for a maximum of five years.

The portion of Mr. Engen's compensation attributable to services rendered in Canada is adjusted so that his net income after taxes is the same as it would have been in the United States.

Mr. Engen is eligible for a termination payment in the event his employment is terminated by the Company without cause or by him for defined reasons. Mr. Engen would receive an amount equal to three times the sum of his highest annualized base salary and target bonus. Mr. Engen would also be entitled to the acceleration of vesting of all Options and would be entitled to continuation of employee benefits and additional service credits to bring him to five years.

On 1 August 2002, the Company renewed a change of control agreement with Mr. Engen, which expires on 30 April 2005. The terms of change of control agreements are effective upon the occurrence of two events: (1) a change of control of the Company, and (2) the termination of employment either by the Company without cause or by him for defined reasons. In such cases, Mr. Engen would be entitled to an amount equal to 36 times the sum of his (a) monthly base salary on the date of termination, (b) EPA guideline amount in effect at the date of termination, and (c) other applicable incentive plan guideline amounts at the date of termination.

18

Approval of this Report on Executive Compensation

The Committee, whose members are set forth below, has approved the issue of this Report and its inclusion in this Circular.

J.E. Newall, Chairman of the Committee
Roland Berger
Clarence J. Chandran
L. Yves Fortier
Guy Saint-Pierre

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Executive Officers' Compensation

The following table sets out the compensation for the CEO and the four other most highly compensated Executive Officers (collectively, the "Named Executive Officers") for the year ended 31 December 2002 and each of the two preceding years.

Summary Compensation Table
Name and Principal Position	Year	Annual Compensation					Long-term Compensation (1)				All Other Compensation (3) ($)
							Awards
		Salary ($)	Bonus (Executive Performance Award) (2) ($)		Other Annual Compensation (3) ($)		Shares Under Options Granted (4) (#)		Restricted Share Units (5) (6) (#)
Travis Engen President and Chief Executive Officer	2002 2001 2000	1,225,000 968,182 __	1,605,000 1,200,000 __	(7)	17,592 46,990 __	(9)	353,000 579,000 __	(8) (8)(10)	0 0 __		52,217 29,565 __	(9)
Richard B. Evans Executive Vice President	2002 2001 2000	575,000   520,000 451,250	297,500 125,770 316,800	(11)	520,000 643,954 104,125	(12)	84,900 0 51,000	(8) (8)	8,337 75,000 2,899 0	(11) (13) (14)	13,160 31,208 34,427	(9)
Brian W. Sturgell Executive Vice President	2002 2001 2000	575,000   465,000   432,500	595,000 153,975 307,500		219,182 26,007 38,275		84,900 75,000 32,100	(8) (8) (8)	0 2,899	(14)	56,055 29,677 26,952	(9)
Geoffery E. Merszei Executive Vice President and Chief Financial Officer	2002 2001 2000	485,000   158,333 __	490,000 150,000 __		238,891 57,213 __		62,700 180,000 __	(8)	0 0 __		19,502 263,518 __	(16)
Cynthia Carroll President, Primary Metal	2002 2001 2000	425,000   350,000   267,079	751,433 152,270 177,761		48,667 46,915 92,083		48,700 20,100 16,500	(8)	0 0 0		11,442 8,379 15,513

1. There are no long-term compensation payouts.
2. See page 16 for description of the Executive Performance Award Plan.
3. See Other Compensation on page 21.
4. See page 21 for description of the Alcan Executive Share Option Plan.
5. See page 17 for description of the Executive Deferred Share Unit Plan.
6. See page 24 for description of the Stock Price Appreciation Unit Plan.
7. See Compensation of Chief Executive Officer on page 18.
8. Granted as C Options (see page 22 for description).

9. Company matching payments in excess of U.S. savings plan earnings limit: T. Engen $35,918, R. B. Evans $8,536 and B. W. Sturgell $44,841.

10. Tax equalization, a tax adjustment so that net income after taxes is not less than it would have been in the U.S., is restated for 2001 (see page 18). Upon review, the 2001 payment had been overestimated by $18,423 and Mr. Engen subsequently refunded this amount to Alcan, such that his tax equalization payment for 2001 was restated from $59,621 to $41,198. His total other annual compensation, which includes other items, was restated from $65,414 to $46,990.

11. At the time of exercise of these Options, an adjustment of Can. $3.52 per Share will be paid in the form of Deferred Share Units.

12. Received 50% of the EPA in cash ($297,500) and 50% in the form of 8,337 Deferred Share Units, based on the Share price ($35.68) at the end of 2001.

13. Tax equalization, a tax adjustment so that net income after taxes is not less than it would have been in the U.S., is restated for 2001. Upon review, the 2001 payment had been underestimated by $276,593 relative to U.S./Swiss tax equalization payments after consolidation of 2001 tax returns. Alcan subsequently paid Mr. Evans this amount, such that his tax equalization payment for 2001 was restated from $3,466 to $280,059 and his total other annual compensation, which includes other items, was restated from $367,361 to $643,954.

14. Granted as SPAUs.
15. Granted as Deferred Share Units, based on the share price ($34.50) at the end of 2000.
16. Includes $232,858 of bonus compensation he would have received had he remained with his previous employer.

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Executive Performance Award

The Executive Performance Award Plan and the related Executive Deferred Share Unit Plan are described on pages 16 and 17.

Other Compensation

Compensation benefits made available to senior employees under various plans included those under (a) the Executive Performance Award Plan mentioned above, (b) the Alcan Executive Share Option Plan described below, (c) the Stock Price Appreciation Unit Plan described below, (d) the TSR Plan described below, (e) retirement benefit plans, (f) life insurance plans, (g) savings plans, (h) plans for the use of automobiles, (i) plans for professional financial advice and for club membership fees, and (j) in applicable cases, expatriate benefits, tax equalization payments, housing assistance and directors' fees from subsidiaries and related companies.

In the Summary Compensation Table on page 20, the amounts indicated for the year 2002 under the column titled Other Annual Compensation include benefits paid to the Named Executive Officers under these plans: automobile usage (T. Engen, $15,890; C. Carroll, $13,702), housing assistance (B.W. Sturgell, $59,769), tax equalization payments (R.B. Evans, $195,829; G. Merszei,$118,701; C. Carroll, $27,636), and relocation costs (R.B. Evans, $157,613; B.W. Sturgell, $133,604; G. Merszei, $82,021).

Alcan Executive Share Option Plan

The Option Plan provides for the granting to senior employees of non-transferable options ("Options") to purchase Shares (see also Report on Executive Compensation - Compensation of the Executive Officers on page 16). The Option Plan is administered by a sub-committee of the Personnel Committee.

A Options

Prior to 22 April 1993, the Option Plan provided for the granting of Options hereinafter referred to as "A Options". No further A Options have been, or may be, issued after that date. The exercise price per Share under A Options was initially set in 1981 at not less than 90% of themarket value of the Share on the effective date of each grant of an A Option, but all A Options granted after 1985 were set at 100% of the market value of the Share on their effective dates. The effective date was fixed at the time of each grant. Each A Option is exercisable in whole or in part during a period commencing not less than three months after the effective date and ending not later than 10 years after that date. In the event of retirement or death of the employee, any remainder of this 10-year period in excess of five years is reduced to five years. Each A Option has connected therewith stock appreciation rights ("SARs") in respect of one-half of the Shares covered by the A Op tion. Each SAR entitles the optionee to surrender unexercised the right to subscribe for one Share in return for a cash payment in an amount equal to the excess of the market value of such Share at the time of surrender over the subscription price.

As at September 2002 all A Options had been exercised or had expired.

B Options

Beginning on 22 April 1993, the Option Plan provides for Options hereinafter referred to as "B Options".

The exerciseprice per Share under B Options is set at not less than 100% of the market value of the Share on the effective date of the grant of each B Option. The effective date is fixed at the time of the grant. Each B Option is exercisable (not less than three months after the effective date) in respect of 25%, 50%, 75% or 100% of the grant after a Waiting Period (as defined in the Option Plan) of 12, 24, 36 and 48 months, respectively, following the effective date. The Options expire 10 years after the effective date; in the event of retirement or death of the employee, any remainder of this 10-year period in excess of five years is reduced to five years. The B Options do not have connected SARs.

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C Options

Beginning on 23 September 1998, the Option Plan provides for Options hereinafter referred to as "C Options".

The exercise price per Share under C Options is set at not less than 100% of the market value of the Share on the effective date of the grant of each C Option. The effective date is fixed at the time of the grant. Each C Option is exercisable (not less than three months after the effective date) in respect of one-third of the grant when the market value of the Share has increased by 20% over the exercise price, two-thirds of the grant when the market value of the Share has so increased by 40% and the entire amount of the grant when the market value of the Share has so increased by 60%. The said market values must exceed those thresholds for at least 21 consecutive trading days. The said thresholds are waived 12 months prior to the expiry date, which is 10 years after the effective date. In the event of death or retirement, any remainder of this 10-year period in excess of five years is reduced to five years, and the said thresholds are waived. The C Options do not have connected SARs .

D Options

In respect of B and C Options granted to certain senior executives in 1996, 1997 and 1998, Alcan has granted further Options, hereinafter referred to as "D Options", which grant shall become effective upon the exercise of associated B or C Options and upon the executive placing at least one-half of the Shares resulting from the exercise of the B or C Option, as the case may be, in trust with an agency named by Alcan for a minimum period of five years. The exercise price per Share of each D Option is set at not less than 100% of the market value of the Share on the exercise date of the associated B or C Options. D Options are exercisable in the same manner as the associated B or C Option. The option period for the D Option will terminate on the same date as the associated B or C Options. In the event of death or retirement, any remainder of this Option period in excess of five years is reduced to five years. The vesting provisions of the D Options are identical to those of th e associated B or C Option. The D Options do not have connected SARs.

E Options

Options granted under the share option plan of Algroup, a Subsidiary of Alcan as a result of the Combination, were converted into Options for Shares of Alcan. These Options are hereinafter referred to as "E Options". The exercise price per Share was originally set at 110% of market price and the right to purchase one share of Algroup was converted into the right to purchase 21.66 Shares of Alcan. Each E Option is exercisable in whole or in part during a period commencing not less than three years after the date of grant and ending not later than five years after that date. In the event of death or disability, the three year waiting period is waived. As this was a transitional measure related to the Combination, no further E Options will be issued.

Limits on Grants of B, C and D Options

As stated above, no further A or E Options may be issued.

Alcan may issue in any year B, C or D Options in respect of a Yearly Allotment, as defined in the Option Plan, in aggregate not exceeding 0.75% of the Shares outstanding as at the end of the previous calendar year. In addition, the unused portion of any previous Yearly Allotment may be carried forward. The cumulative maximum number of Shares which can be issued under the Option Plan after 31 December 1995 is 20,500,000.

Options Exercisable

The Personnel Committee had determined that upon the completion of the Combination, all Options granted prior thereto became immediately exercisable in accordance with the terms of the Option Plan.

22

The following table provides information pertaining to Options granted to the Named Executive Officers during 2002:

Option Grants during 2002

Name	Shares Under Options Granted (#) (1)	Percent of Total Options Granted To Employees in 2002	Exercise Price and  Market Value on Date of Grant (Can. $/Share)	Expiration Date
T. Engen	353,000	18.2	64.25	28 Feb. 2012
R. B. Evans	84,900	4.4	38.82	24 Sept. 2012
B. W. Sturgell	84,900	4.4	38.82	24 Sept. 2012
G. E. Merszei	62,700	3.2	38.82	24 Sept. 2012
C. Carroll	48,700	2.5	38.82	24 Sept. 2012

(1) C Option grant.

The following table summarizes, for each of the Named Executive Officers, (a) the number of Shares acquired by Options exercised during 2002, (b) the aggregate value realized upon exercise, which is the difference between the market value of the underlying Shares on the exercise date and the exercise price of the Option, (c) the total number of unexercised Options held at 31 December 2002 and (d) the aggregate value of unexercised in-the-money Options at 31 December 2002, which is the difference between the exercise price of the Options and the market value of the Shares on 31 December 2002, which was Can. $46.54 per Share. The aggregate values indicated with respect to unexercised in-the-money Options at financial year-end have not been, and may never be, realized. These Options have not been, and may never be exercised, and actual gains, if any, on exercise will depend on the value of the Shares on the date of exercise. There can be no assurance that these values will be realized.

Aggregated Option Exercises during 2002 and Year-End Option Values

Name	Shares Acquired on Exercise (#)	Aggregate Value Realized (Can. $)	Shares Underlying Unexercised Options at 31 Dec. 2002 (1) (#)		Value of Unexercised In-the-Money Options at 31 Dec. 2002 (1) (Can. $)
T. Engen	0	0	E: U:	193,000 739,000	E: U:	0 0
R. B. Evans	0	0	E: U:	110,000 101,900	E: U:	239,650 658,148
B. W. Sturgell	0	0	E: U:	111,850 145,600	E: U:	164,029 657,140
G. E. Merszei	0	0	E: U:	60,000 182,700	E: U:	0 484,044
C. Carroll	0	0	E: U:	55,666 67,600	E: U:	137,169 376,844

(1)   E: Exercisable      U: Unexercisable

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Alcan Stock Price Appreciation Unit Plan

The Alcan Stock Price Appreciation Unit Plan ("SPAU Plan") also provides for the granting to senior employees of non-transferable Stock Price Appreciation Units ("SPAU"). The purpose of the SPAU Plan is to attract and retain employees and to encourage an increased proprietary interest in the Company. The SPAU Plan is administered by the Personnel Committee and was approved on 26 September 2001.

A SPAU is a right to receive cash in an amount equal to the excess of the market value of a Share on the date of exercise of a SPAU over the market value of a Share as of the date of grant of such SPAU. The exercise price per SPAU is set at not less than 100% of the market value of the Share on the effective date of the grant of each SPAU. The effective date is fixed at the time of the grant. Each SPAU is exercisable (not less than three months after the effective date) in respect of one-third of the grant when the market value of the Share has increased by 20% over the exercise price, two-thirds of the grant when the market value of the Share has so increased by 40% and the entire amount of the grant when the market value of the Share has so increased by 60%. The said market values must exceed those thresholds for at least 21 consecutive trading days. The said thresholds are waived 12 months prior to the expiry date which is 10 years after the effective date. In the event of death or retirement, any remainder of this 10-year period in excess of five years is reduced to five years, and the said thresholds are waived.

Grants are made under the SPAU Plan instead of under the Option Plan due to certain local conditions of countries of the employees' residence.

Total Shareholder Return Performance Plan

The TSR Plan, described on page 17, is a cash incentive plan that provides performance awards to eligible employees based on the Company's Share price and cumulative dividend yield performance relative to the performance of the companies included in the Standard & Poor's Industrials Index over a three-year period.

The following table summarizes target cash performance award incentives under the TSR Plan for each of the Named Executive Officers.

TSR Plan Awards during 2002

Name	Securities, Units or other Rights (#) (1)	Performance Period	Estimated Future Payouts
			Threshold ($)	Target ($)	Maximum ($)
T. Engen	0	1 Oct. 2002 __ 30 Sept. 2005	0	2,500,000	7,500,000
R. B. Evans	0	1 Oct. 2002 __ 30 Sept. 2005	0	975,000	2,925,000
B. W. Sturgell	0	1 Oct. 2002 __ 30 Sept. 2005	0	975,000	2,925,000
G. E. Merszei	0	1 Oct. 2002 __ 30 Sept. 2005	0	719,900	2,159,700
C. Carroll	0	1 Oct. 2002 __ 30 Sept. 2005	0	559,600	1,678,800

(1) The TSR Plan provides for a grant of a target cash award - no securities, units or other rights were awarded.

24

Retirement Benefits

U.S. Plan

During 2002, C. Carroll, R.B. Evans and B.W. Sturgell participated in an Alcan-sponsored pension plan in the U.S. which, together with supplemental arrangements for payment directly by Alcan of pensions in excess of statutory limits, is herein referred to as the "U.S. Plan".

The U.S. Plan provides for pensions calculated on service of up to 35 years and eligible earnings which consist of the average annual salary and EPA up to its guideline amount during the 36 consecutive months when they were the greatest. Eligible earnings are subject to a maximum, which is set with reference to the position of each Named Executive Officer at 31December 2001.

The following table shows estimated retirement benefits, expressed as a percentage of eligible earnings, payable upon normal retirement at age 65 to persons in the indicated earnings and service classifications.

Pension Plan Table

Eligible Earnings	Years of Service
	10	15	20	25	30	35
$500,000	17%	25%	34%	42%	50%	59%
$600,000 __ $900,000	17%	25%	34%	42%	51%	59%

The normal form of payment of pensions is a lifetime annuity with either a guaranteed minimum of 60 monthly payments or a 50% lifetime pension to the surviving spouse.

The 2002 eligible earnings and estimated service upon normal retirement age of 65 were as follows: C. Carroll, $577,000 and 33 years; R.B. Evans, $701,000 and 16 years; B.W. Sturgell, $729,000 and 26 years.

Pension Plan for Officers

The three aforementioned Named Executive Officers also participated in the Alcan Pension Plan for Officers. Participants are designated by the Personnel Committee. This plan provides for pensions calculated on service up to 20 years as an Officer and eligible earnings which consist of the excess of the average annual salary and EPA at its guideline level during the 60 consecutive months when they were the greatest over eligible earnings in the U.S. Plan. The following table shows the percentage of eligible earnings, payable upon normal retirement age after 60 according to years of service as Officer.

Years as Officer

5	10	15	20
20%	30%	40%	50%

The normal form of payment of pensions is a lifetime annuity. Pensions are not subject to any deduction for social security or other offset amounts.

The 2002 salary and EPA at its guideline amount and estimated service as an Officer upon retirement age of 65 were as follows: C. Carroll, $756,000 and 24 years; R.B. Evans, $1,016,000 and 16 years, B.W. Sturgell, $1,016,000 and 18 years.

Individual Pension Undertakings

During 2002, G. E. Merszei participated in the Alcan Pension Plan (Canada) which provides for annual pensions up to a statutory limit of $1,100 per year of service. In addition, he will receive from the Company a supplemental pension equal to the excess of a base amount, varying from $240,000 per year at a retirement age of 55 to $430,000 at a retirement age of 65, over the sum of his pension from the Alcan Pension Plan (Canada) and the pension equivalent of the lump sum settlement of his pension rights from his previous employer.

Mr. Engen does not participate in any of the pension plans sponsored by the Company. (See Compensation of the Chief Executive Officer on page 18)

Retiring allowances

Upon his retirement, R. B. Evans will be paid a retiring allowance equal to $38,700 increased by 7% per annum from 31 December 1999.

25

Employment Agreements

On 31 December 2001, Alcan has entered into employment agreements with certain Named Executive Officers including C. Carroll, R. B. Evans and B.W. Sturgell, setting out the terms and conditions of their employment. Each of these Named Executive Officers is entitled to base salary, annual bonus, Option grants, awards under the TSR Plan, pension plan participation and customary perquisites, as described herein. The portions of the Named Executive Officers' compensation attributable to services rendered in Canada is adjusted so that their income after taxes is the same as it would have been in the United States. They are also eligible for a termination payment equal to 24 months of their base salary and EPA at the guideline amount if they are terminated without cause.

Mr. Merszei entered into an employment agreement with Alcan on 13 June 2001. The terms of his employment agreement are similar to those of the other above Named Executive Officers. Upon joining Alcan, Mr. Merszei received Options for 80,000 Shares to compensate him for leaving his previous employer and Options for 50,000 Shares as an employment incentive. These Options will vest at the rate of 33.33% per year over a three-year period. In addition, Mr. Merszei will be entitled to receive 15,000 Shares on the third anniversary date of employment with Alcan.

During 2002, the Company renewed change of control agreements with certain Executive Officers, including all Named Executive Officers except Mr. Engen. These agreements expire on 30 April 2005. The terms of change of control agreements are effective upon the occurrence of two events: (1) a change of control of the Company, and (2) the termination of the Executive Officer's employment with the Company either by the Company without cause or by the Executive Officer himself for defined reasons. In such cases, the Executive Officer will be entitled to an amount equal to either 24 or 36 months of their base salary and EPA at the guideline amount and other applicable incentive plan guideline amounts.

For information relating to Mr. Engen, see Compensation of the Chief Executive Officer on page 18.

Directors' Remuneration

Each Non-Executive Director is entitled to receive compensation equal to $100,000 per annum, payable quarterly, regardless of membership on Committees of the Board. The Chairman is entitled to receive additional compensation equal to $150,000 per annum, payable quarterly over and above the $100,000 referred to herein. 50% of the compensation is payable in the form of Director's Deferred Share Units ("DDSUs") (see below) and 50% in the form of either cash or additional DDSUs at the election of each Non-Executive Director.

Non-Executive Directors are reimbursed for transportation and other expenses incurred in attending Board and Committee meetings.

Non-Executive Directors who are not Canadian residents are entitled to paid tax advice.

During 2002, Gerhard Schulmeyer was reimbursed $3,000 for this purpose.

Director's Deferred Share Unit Plan

The number of DDSUs to be credited each quarter is determined by dividing the quarterly amount payable by the average price of a Share on the Toronto and New York stock exchanges on the last five trading days of the quarter. Additional DDSUs are credited to each Non-Executive Director corresponding to dividends declared on Shares. The DDSUs are redeemable only upon termination (retirement, resignation or death). The amount to be paid by Alcan upon redemption will be calculated by multiplying the accumulated balance of DDSUs by the average price of a Share on the said exchanges at the time of redemption.

26

Share Investment Plan for Directors

Non-Executive Directors may invest all or part of the cash portion of their fees (if applicable) in Shares through the Share Investment Plan for Directors. This plan is similar to the Share Investment Plan available to all Alcan Shareholders. It allows for purchases of Shares up to a maximum of $15,000 per quarter year and for dividends to be invested in additional Shares.

The Shares are purchased and held by a custodian.

Board Fees

An employee of Alcan who is a Director is not entitled to receive fees for serving on the Board.

Indebtedness of Directors and Officers

Non-Executive Directors

Non-Executive Directors and former Non-Executive Directors are not indebted to Alcan.

Loans to Executive Officers

The required details with regard to loans given to Executive Officers in connection with the exercise of A Options ("Option Loans") is shown in the following table. The aggregate indebtedness of 43 Executive Officers and employees and former Executive Officers and employees of Alcan and its Subsidiaries (including the Named Executive Officers) to Alcan in respect of Option Loans at 14 February 2003 was $1,119,800. The largest Option Loan outstanding on that date was $86,921.

No further Option Loans will be given to Executive Officers under the Option Plan.

Table of Indebtedness of Executive Officers under Option Plan

Name and Principal Position	Involvement of Alcan	Largest Amount Outstanding During 2002 ($)	Amount Outstanding as at 14 February 2003 ($)	Financially Assisted Share Purchases During 2002 (1) (#)	Security for Indebtedness
R. L. Ball Former Executive Vice President	Lender	56,449	49,202	0	(2)
E. P. Leblanc Former Executive Vice President	Lender	40,834	38,217	0	(2)
G. Ouellet Senior Vice President	Lender	43,336	40,628	0	(2)
G. R. Lucas Vice President and Treasurer	Lender	33,076	29,456	0	(2)

(1) In respect of A Options only.

(2) Security for the indebtedness is provided by the deposit of the certificates representing the relevant Shares with CIBC Mellon, as trustee, which holds the certificates registered in its name until full repayment of the particular Option Loan has been made to Alcan.

27

As of 14 February 2003, there was no outstanding indebtedness (other than "routine indebtedness" as defined under applicable Canadian securities laws) of officers, directors and employees and former officers, directors and employees of the Company and its Subsidiaries other than under the Option Plan.

Directors' and Officers' Liability Insurance

Alcan carries insurance covering liability, including defence costs, of directors and officers of Alcan and its Subsidiaries, incurred as a result of their acting as such, except in the case of failure to act honestly and in good faith. The policy provides coverage against certain risks in situations where Alcan may be prohibited by law from indemnifying the directors or officers. The policy also reimburses Alcan for certain indemnity payments made by Alcan to such director or officer, subject to a $10 million deductible in respect of each insured loss.

The premium paid by Alcan for coverage in 2002 was $438,000 and the limit of insurance is $125 million per occurrence and in the aggregate per year.

Approval of the Board of Directors

The Board of Directors has approved the contents of this Circular and its issue to Shareholders.

Roy Millington
Corporate Secretary

A

28

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EX-10.8.5

EXHIBIT 10.8.5. : ALCAN SUPPLEMENTAL RETIREMENT BENEFIT PLAN (CANADA)

SCHEDULE OF AMENDMENTS 02-1

1.            The following subsection is added immediately after subsection 1.01:

"1.01.1      Supplemental Plan Amendments (from the Effective Date to June 2002)

During this period, the Supplemental Plan was amended on numerous occasions for the purpose of augmenting and improving pension benefits and coordinating the provisions of the Supplemental Plan with those of the Plan.  Eight pension benefit augmentations were granted, a bridge benefit was added and early retirement factors were improved.  A new payment guarantee was added providing a 60% spousal with a 10 year guarantee.  Several pension payment guarantees now apply as well to the bridge benefit."

2.            The sole paragraph of subsection 5.02 is replaced by the following:

"The annual rate of Interest credited for a calendar year shall be the annual return for that calendar year derived from the investment of the assets of the Plan, less investment expenses and administration costs, as determined by the Actuary of the Plan."

3.      The sole paragraph of subsection 5.03 is replaced by the following:

"The rate of interest credited on a lump sum payment which falls due shall be at the rate applied to similar payments under the Plan in respect of each month of the period starting from either the Date of Determination or the last calendar year-end when interest was computed and credited in accordance with subsection 5.02, whichever applies, and ending with the first of the month of payment."

4.      Paragraph 6.02 (ii) is replaced by the following:

"he has attained age 55 and he is not entitled to a refund under subsection 12.01 of the Plan."

5.      Paragraph 8.02(c) is amended by replacing the clause which reads

"The bridge benefit begins on the Pension Commencement Date of his retirement benefit and is payable in monthly instalments until the earlier of the following dates:  (i) his date of death and, (ii) the limit date and, is reduced by any bridge benefit or its equivalent payable from the Plan and from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b) of the Plan."

1

by the following clause

"The bridge benefit begins on the Pension Commencement Date of his retirement benefit and is payable to him in monthly instalments until the limit date; or until his death if before the limit date and thereafter is payable to his Spouse or Beneficiary, as the case may be, in accordance with the retirement pension guarantee elected by the Member under section 9 and, is reduced by any bridge benefit or its equivalent payable from the Plan and from a pension plan of an Affiliated Company or a Predecessor Company to the extent that credited service under such plan is recognized as Credited Past Service under the Plan in accordance with paragraphs 4.03(a) or 4.03(b) of the Plan."

6.      Subsection 8.03 is amended by adding the following sentence "Such deferral shall cause the bridge benefit to which he may be entitled to commence only from his elected pension commencement date under the plan." and by adding the following paragraph:

"The eligibility to the bridge benefit of a Member electing early deferred retirement is determined at his Early Retirement Date and the amount of the bridge is determined in accordance with subsection 8.02(c)."

7.      The following subsection is added immediately following subsection 8.07:

"8.08         Adjustment for Early Retirement Pension from Another Company Source

The retirement benefit determined in this section after the application of any early retirement factor in respect of a Member, is reduced or increased as the case may be by the total of all amounts each of which is the amount, in respect of a pension payable from another company source deducted under subsection 7.01, determined by the formula

            A - B

            times

the amount of normal pension payable from the other company source deducted under subsection 7.01

where

"A"    equals the early retirement factor applied under this section,

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"B"    equals the early retirement factor applied to the normal pension from the other company source deducted under subsection 7.01."

8.      Subsection 9.02 is amended by adding immediately following the first paragraph the following paragraph:

"The right of the surviving Spouse of a Member to a joint and survivor pension shall terminate and the pension guarantee elected by the Member under paragraph 9.02(b.1), 9.02(b.2) and 9.02(b.3) or under an equivalent provision of the Supplemental Plan as it read prior to 1 January 2001 shall be null and void following modification effected pursuant to subsection 9.06."

9.      Clause (b) of subsection 9.02 is replaced by the following:

"(b.1)         the Spouse's pension payment guarantee (option 1)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him 50% of such retirement benefit as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.

Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void.

(b.2)          the Spouse's pension payment guarantee (option 2)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him, either 60% (not available to Provincial Employees of Manitoba) or 66 2/3% (only available to Provincial Employees of Manitoba), 75% or 100% of such retirement benefit as elected by the Member at the time of electing the guarantee will be payable after his death to the Spouse nominated by the Member at the time of electing the guarantee during the remaining lifetime of the Spouse.

Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit, a corresponding percentage of the bridge benefit will be payable after his death to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

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Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void.

(b.3)          the Spouse's pension payment guarantee (option 3)

Under this guarantee the retirement benefit is payable during the Member's lifetime with a provision that if his Spouse survives him and his death occurs prior to having received 120 monthly payments, payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 payments in all have been made and thereafter 60% of the retirement benefit will be payable during the remaining lifetime of such Spouse.  If such Spouse predeceases the Member or dies before the 120 monthly payments have been made, payments will be continued to the Member's Beneficiary until 120 monthly payments in all have been made.

Furthermore under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began before he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c), (iii) the death of the Member occurs before having received 120 bridge benefit payments and (iv) his Spouse survives him, bridge benefit payments will be continued to the Spouse nominated by the Member at the time of electing the guarantee until 120 bridge benefit payments in all have been made and thereafter 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived,  would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of the Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before 120 bridge benefit payments have been made, bridge benefit payments will be continued to the Member's Beneficiary until 120 bridge benefit payments in all have been made.  If under condition (iii) above the death of the Member occurs after having received 120 bridge benefit payments and all other conditions remain unchanged, 60% of the bridge benefit will be payable to such Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.

Alternatively under this guarantee, if (i) the death of the Member occurs while he is still in receipt of a bridge benefit, (ii) payment of the bridge benefit began on or after he attained the age that is ten years under his limit date, as such term is defined in paragraph 8.02(c) and (iii) his Spouse survives him, payments will be continued to such Spouse nominated by the Member at the time of electing the guarantee until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of such Spouse's death.  If such Spouse predeceases the Member or dies after the Member but before the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c), payments will be continued to the Member's Beneficiary until the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c).

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Should the Spouse die before the Member's Payment Commencement Date, the election of this guarantee shall be null and void."

 

10.       Table A of clause (c) of subsection 9.02 is amended by inserting after the second row the following additional row:

            "60%/10yr. guar.          96 2/3%             -"

11.    The second paragraph of clause (d) of subsection 9.02 is replaced by the following:

"Furthermore under this guarantee, if the death of the Member occurs while he is still in receipt of a bridge benefit and before having received 120 bridge benefit payments, payments of the bridge benefit will be continued to the Member's Beneficiary until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date at which 120 payments in all have been made.

If the Member elects such guarantee at his Early Retirement Date, Normal Retirement Date or Postponed Retirement Date, his retirement pension is multiplied by the greater of 95% and a factor, in percent, which will make the resulting benefit the Actuarial Equivalent of his retirement benefit in the five-year payment guarantee and his bridge benefit is multiplied by a factor which will make the resulting bridge benefit the Actuarial Equivalent of his bridge benefit that without this guarantee would normally have terminated at the earlier of his death or the limit date, as such term is defined in paragraph 8.02 (c)."

11.       The following subsections are added immediately following subsection 9.05:

"9.06         Retirement Benefit Redetermination after Payment

Commencement Date

This subsection applies only to a Member who at the relevant time is a Provincial Employee of Quebec.  If after Payment Commencement Date the right of a Spouse to a joint and survivor pension is terminated under the Plan and there exists no legal obligation or demand pending upon the Supplemental Plan to pay such joint and survivor pension upon the Member's death, the Administrator must upon application redetermine, as of the effective date of such termination or if the Spouse's right terminated prior to 1 January 2001, as of the date of application by the Member, the Member's retirement benefit that has been established based on the election by the Member of a Spouse's pension payment guarantee under paragraph 9.02(b.1), 9.02(b.2) or 9.02(b.3) or under an equivalent provision of the Supplemental Plan as it read prior to 1 January 2001. The redetermined retirement benefit shall be in the same amount and have the same characteristics as the retirement benefit according to the five-year guarantee.  The redetermination of a retirement pension under this subsection cannot alone operate to reduce the amount of the retirement pension paid to the Member.

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9.07          Pension Payment Guarantee (transition)

Where a Member whose Payment Commencement Date occurred during the period beginning 1 January 2001 and ending 30 September 2001 dies while still in receipt of a bridge benefit and is survived by the Spouse nominated by the Member at the time of electing the Spouse's pension payment guarantee (option 1) described in paragraph 9.02(b.1), 60% of the bridge benefit will be payable after the Member's death to that Spouse until the earlier of the date on which the Member, had the Member survived, would have reached his limit date, as such term is defined in paragraph 8.02(c) and the date of that Spouse's death."

12.    Subsection 10.01 is amended by deleting the words "after the completion of two years of Continuous Service as a Member or two years of Credited Service and".

13.    The two paragraphs of subsection 10.06 are replaced by the following:

"The amount payable to a Member's Beneficiary of any retirement benefit under the five-year guarantee, the ten year guarantee or the spouse's pension payment guarantee (option 3) and of any bridge benefit under the spouse's pension guarantee (option 3) or the ten year guarantee may, if so requested by the Beneficiary, be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement benefit payments or bridge benefit payments under the guarantee.

The amount payable to a Member's estate of any retirement benefit under the five-year guarantee, the ten-year guarantee or the spouse's pension payment guarantee (option 3) and  of any bridge benefit under the spouse's pension payment guarantee (option 3) or the ten year guarantee shall be paid in a lump sum that is the Actuarial Equivalent of the remaining retirement benefit payments or bridge benefit payments under the guarantee."

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14.    The sole paragraph of subsection 10.07 is replaced by the following:

"The Beneficiary designation made in accordance with subsection 10.04 shall apply to any retirement benefit payments payable upon the death during retirement of a Member who received a retirement benefit under the five-year guarantee, the 10-year pension payment guarantee or the spouse's pension payment guarantee (option 3), to any remaining retirement benefit payments payable upon the death of the Member's Spouse who received benefit payments under the spouse's pension payment guarantee (option 3), to any bridge benefit payments payable upon the death of a Member who received a retirement benefit under the spouse's pension payment guarantee (option 3) or under the ten year guarantee and to any remaining bridge benefit payments payable upon the death of the Member's Spouse who received benefit payments under the spouse's pension payment guarantee (option 3)."

15.   Subsection 11.02 is amended by deleting the words "after the completion of two years of Continuous Service while a Member or two years of Credited Service, (or for a Provincial Employee of Saskatchewan, a continuous period of one year if his age and the number of years of service or Credited Service when added equals at least 45)" and by inserting immediately after the words "under (a) unless" the words ", where he is otherwise entitled to a deferred retirement pension under the Plan,".

16.   The following subsection is added immediately following subsection 11.03:

"11.04       Ceasing to be a Canadian Resident

An application by a Member in accordance with subsection 12.07 of the Plan to receive a lump sum payment equal to the value, according to his entitlement, of his retirement benefit under the Plan shall be deemed to include an application to receive a lump sum payment equal to the value, according to his entitlement, of his retirement benefit under the Supplemental Plan.  However, payment in such lump sum is subject to approval by the Company."

The above amendments are effective from 1 January 2001.

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SCHEDULE OF AMENDMENTS 02-2

1.      The following subsection is added immediately following subsection 15.09:

15.10     Pension Augmentation at 1 October 2002

15.10.1    The retirement pension, the deferred retirement pension and the Disability Pension of a Member who has retired, terminated his employment or became disabled as the case may be, before 2 September 2002, including the pension payable under any attached elected pension payment guarantee, either contingent or in payment, and the pension, either deferred or in payment, to a surviving spouse, shall be augmented on 1 October 2002.

The monthly amount of the augmentation on any date of calculation on or after 1 October 2002 is equal to the product of the Adjusted Augmentation Factor and the Monthly Pension.

15.10.2  For the purposes of this subsection 15.10 only, the following expressions shall have the meanings set out below:

"Commencement Date" means the earliest of a Member's retirement date;  the date he became disabled;  the date of termination of service;  the date he became eligible to an unreduced early retirement pension, but not before 1 January 2001, if on 30 December 2000 he had been on the non-active payroll of a Participating Company and, in the case of a pre-retirement surviving spouse's pension, the first of the month following the Member's date of death.

"Consumer Price Index" for a month means the Consumer Price Index for the month as published by Statistics Canada under authority of the Statistics Act or the corresponding index of the country in whose currency the Monthly Pension is paid at a fixed rate of exchange.

"Monthly Pension" means the monthly equivalent of the pension referred to in subparagraph 15.10.1.

"Adjusted Monthly Pension" means the sum of adjusted monthly pension determined under paragraph 19.10.2 of the Plan and the Monthly Pension payable at 1 October 2002, excluding that portion which ceases to be paid at age 65, or payable at normal retirement date in the case of a deferred pension.

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"Augmentation Factor" means the factor determined by the following formula[1]:

the greater of

(i)         A + B - 1
and
(ii)        nil

where

"A" equals the lesser of

(i)         1.03^C/12
and
(ii)        CPI₁ / CPI₂,

"B" equals the greater of

(i)         0.5 x (CPI₁ / CPI₂ - 1.03^C/12)
and
(ii)        nil

"C" equals the lesser of

(i)         12
and
(ii)        the number of months that the Commencement Date precedes 1 October 2002,

"CPI₁" equals the average Consumer Price Index for the 12-month period ending 30 June 2002,

and

"CPI₂" equals the average Consumer Price Index for the 12-month period ending the later of

(i)         three calendar months prior to the month during which the Commencement Date occurred
and
(ii)               30 June 2001.

________________________________

[1] The formula may also be expressed as follows:

              Max. {nil;  [ Min. (1.03^C/12; CPI₁ /  CPI₂ ) + 0.5 x Max. (nil; CPI₁ /  CPI₂ - 1.03^C/12 ) ] - 1}

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"Adjusted Augmentation Factor" means the factor determined by the following formula:

                        Augmentation Factor x A
                   ---------------------------------
                     Adjusted Monthly Pension

where A equals the lesser of

(i)                 Adjusted Monthly Pension
and
(ii)        $25,000.00 or where the Monthly Pension is paid at a fixed rate of exchange in a currency other than Canadian dollars, the equivalent of $25,000.00 in that other currency converted at the rate of exchange of 30 June 2002.    

15.10.3  The retirement pension of a Member, who retires on or after 1 October 2002 and who immediately prior to such retirement was in receipt of an Approved Disability Benefit, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had his date of disability been his Commencement Date for the purpose of calculating such augmentation.

15.10.4  The retirement pension of a Member, who retires on or after 1 October 2002 and, who on 30 December 2000 and immediately prior to such retirement was on the non-active payroll of a Participating Company, shall be augmented from his retirement date by the same augmentation percentage that would otherwise have applied to his retirement pension had the date of his eligibility to an unreduced early retirement pension, but not before 1 January 2001, been his Commencement Date for the purpose of calculating such augmentation.

15.10.5  Unless it is an integral number of hundreds of 1%, the sum, on a compounded basis, of the augmentation factors under this and all previous pension augmentations since Commencement Date shall be rounded to the next higher multiple of 0.01%.

The above amendment shall come into force on 1 October 2002.

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EX-10.18

EXHIBIT 10.18

CHANGE OF CONTROL AGREEMENT

A G R E E M E N T

Agreement made as of the 1^st day of August 2002, by and between Alcan Inc., a corporation incorporated under the laws of Canada with its registered office at 1188 Sherbrooke Street West, Montreal, Québec, Canada H3A 3G2 (the "Corporation") and Travis Engen (the "Executive").

WITNESSETH:

                        WHEREAS, the Corporation and the Executive have entered into an Employment Agreement, dated 23^rd February 2001 (the "Employment Agreement") whereby the Executive has agreed to become the President and Chief Executive Officer of the Corporation;

                        WHEREAS, the Corporation believes that the establishment and maintenance of a sound and vital management of the Corporation is essential to the protection and enhancement of the interests of the Corporation and its shareholders; and

                        WHEREAS, the Corporation also recognizes that the possibility of a Change of Control of the Corporation (as defined in Section 1 hereof), with the attendant uncertainties and risks, might result in the departure or distraction of key employees of the Corporation to the detriment of the Corporation and its shareholders; and

                        WHEREAS, the Corporation has determined that it is appropriate to take steps to induce key employees to remain with the Corporation, and to reinforce and encourage their continued attention and dedication, when faced with the possibility of a Change of Control of the Corporation.

                        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows:

1.         Change of Control shall mean any of the following:

1.1              the acquisition of direct or indirect beneficial ownership (as determined under Rule 13d-3 promulgated under the United States Securities Exchange Act of 1934), in the aggregate, of securities of the Corporation representing twenty percent (20%) or more of the total combined voting power of the Corporation's then issued and outstanding voting securities entitled to vote in the general election for directors, by any person or entity or group of associated persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934) acting jointly or in concert (other than its subsidiaries or any employee benefit plan of either) (a "Person"), provided that, if a buyback of shares by the Corporation causes the Person to attain such limit, such limit shall not be deemed attained unless and until such Person acquires any such voting securities of the Corporation after the buyback that caused the level to be attained;

1.2       the amalgamation, merger, arrangement, reorganization or consolidation of the Corporation with a Person (including for the purposes of this Agreement any transaction or series of transactions such as share exchange transaction with the same stated or effective objective) other than:

(a)        an amalgamation, merger, arrangement, reorganization or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) two-thirds or more of the combined voting power (based on normal issue voting) of the voting securities of the Corporation or such surviving or parent entity outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation in substantially the same proportion as immediately prior to such amalgamation, merger, arrangement, reorganization or consolidation, without there occurring as a result or in connection therewith any substantial change in the composition of the Corporation's Board; or

(b)        an amalgamation, merger, arrangement, reorganization or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly (as determined under Rule 13-d-3 promulgated under the United States Securities Exchange Act of 1934), of securities representing more than the amounts set forth in paragraph 1.1 above;

1.3              the approval by shareholders of the Corporation of any plan or proposal for the complete liquidation or dissolution of the Corporation;

1.4              the issuance by the Corporation of shares (of the same or equivalent class as the principal class of publicly listed voted equity shares of the Corporation) in connection with an exchange offer acquisition (including, for the purposes of this Agreement, a series of connected exchange offer acquisitions), if such issuance results in the holders of the Corporation's principal class of publicly listed voting shares (immediately prior to the issuance) holding less than two-thirds of the total number outstanding (immediately following the issuance) and there occurs in connection therewith any substantial change in the composition of the Corporation's Board.

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1.5       the sale or other disposition of all or substantially all of the assets of the Corporation other than the sale or other disposition of all or substantially all of the assets of the Corporation either

(a)        to a person or persons who beneficially own, directly or indirectly, at least fifty percent (50%) or more of the combined voting power (based on normal issue voting) of the voting securities of the Corporation at the time of the sale; or

(b)        in a manner such that after such sale or other disposition the ultimate parent entity of the acquirer is, directly or indirectly, owned (based on normal issue voting) at least fifty percent (50%) by shareholders who immediately prior to such transaction owned at least fifty percent (50%) of the voting power (based on normal issue voting) of the Corporation immediately prior to such transaction in materially the same proportion as owned by such shareholders immediately prior to such transaction;

provided that there does not occur in connection therewith any substantial change in the composition of the Corporation's Board.

1.6              the approval by the vote of the Corporation's holders voting shares of any amalgamation, merger, arrangement, reorganization or consolidation in which the Corporation will not survive as a publicly-owned corporation or should the Corporation for any reason become a subsidiary (as defined in the Canada Business Corporations Act) of any other corporation;

1.7              individuals who, as of the close of business on the effective date of this Agreement, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at  least two-thirds of the Board; provided that any person becoming a Director subsequent to the close of business on the effective date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the Management Proxy Circular of the Corporation in which such person is named a nominee for Director, without objection to such nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a Director of the Corporation initially as a result of an actual or threatened proxy or election contest with respect to Directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of or in connection with any amalgamation, merger, arrangement, reorganization, consolidation or share exchange acquisition transaction by the Corporation with any Person, shall be deemed to be an Incumbent Director;

Only the first Change of Control after the date hereof shall be deemed a Change of Control hereunder.

Notwithstanding the foregoing, should the Person referred to in paragraph 1.1 above include Mr. Martin Ebner or BZ Group Holding Limited, the reference to "twenty percent (20%)" in such paragraph shall be replaced with "thirty percent (30%)."

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2.     Term.  This agreement shall commence on the date hereof and shall expire, unless previously terminated as provided herein, on the earliest of

(i)         30 April 2005;

(ii)        the date of the Executive's death or termination as a result of Disability, as defined below;

(iii)       subject to Section 3 hereof, the date of the retirement or other termination of the Executive's employment (voluntarily or involuntarily) with the Corporation prior to a Change of Control; or

(iv)       if prior to a Change of Control, the entity for which the Executive is then working ceases to be a Subsidiary, as defined in Section 8 hereof, of Corporation. 

Notwithstanding anything in this Agreement to the contrary, if the Corporation becomes obligated to make any payment to the Executive pursuant to the terms hereof at or prior to the expiration of this Agreement, then this Agreement shall remain in effect for such purposes until all of the Corporation's obligations hereunder are fulfilled. Further, the provisions of paragraph 9.1 hereunder shall survive and remain in effect notwithstanding the termination of this Agreement, the termination of the Executive's employment or any breach or repudiation of alleged breach or repudiation by the Corporation of this Agreement or any one or more of his terms.

Disability shall have the meaning ascribed to such term in the Corporation's long term disability plan in which the Executive participates.  A termination for Disability shall be deemed to occur when the Executive is terminated by the Corporation by written notice after the disability is established and the Executive remains disabled.

3.         Termination Following Change of Control.

3.1       If, and only if, a Change of Control occurs and one of the following occurs : (i)  the Executive's employment with the Corporation is terminated by the Corporation without Cause other than for Disability, or (ii)  by the Executive for Good Reason, during the period running from the date of the Change of Control to twelve (12) months after the date of such Change of Control, then the Executive shall be entitled to the amounts provided in Section 4 upon such termination.

In addition, notwithstanding the foregoing, in the event the Executive is either terminated without Cause or terminates employment for Good Reason (based on an event occurring within three (3) months prior the occurrence of a Change of Control) within three (3) months prior the occurrence of a Change of Control, such termination shall, upon the occurrence of a Change of Control, be deemed to be covered under the Agreement and the Executive shall be entitled to the amounts provided under Section 4 hereof reduced by any amounts otherwise received in connection with his termination of employment.

3.2       As used in this Agreement, termination for Good Reason shall mean a termination by the Executive within ninety (90) days after the occurrence of the Good Reason event, failing which such event shall not constitute Good Reason under this Agreement. For purposes of this Agreement, "Good Reason" shall mean the occurrence or failure to cause the occurrence of any of the following events without the Executive's express written consent:

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(i)         any material diminution in the Executive's duties and responsibilities, authority (except in each case in connection with the termination of the Executive's employment for Cause or as a result of the Executive's death, or temporarily as a result of the Executive's illness or other absence,);

(ii)        a reduction in the Executive's annual base salary rate;

(iii)       a relocation of the Executive's principal business location to an area outside the country of the Executive's principal business location at the time of the Change of Control;

(iv)       a failure by the Corporation after a Change of Control to continue any annual Executive Performance Award Plan, program or arrangement in which the Executive is then entitled to participate (the "Bonus Plans"), provided that any such plan(s) may be modified at the Corporation's discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor ("Substitute Plans"), or a failure by the Corporation to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus and the achievability thereof as the Executive participated immediately prior to any change in such plans of awards, in accordance with the Bonus Plans and the Substitute Plans;

(v)        a failure to permit the Executive after the Change of Control to participate in cash or equity based incentive plans and programs (i.e. the Corporation's Executive Deferred Share Unit Plan, Non-Qualified Deferred Compensation Plan, Executive Share Option Plan) other than Bonus Plans on a basis providing the Executive in the aggregate with an annualized award value in each fiscal year after the Change of Control at least equal to the aggregate annualized award value being provided by the Corporation to the Executive under such incentive plans and programs immediately prior to the Change of Control (with any awards intended not to be repeated on an annual basis allocated over the years the awards are intended to cover);

(vi)       the failure by the Corporation to continue in effect any employee benefit program such as a saving, pension, excess pension, medical, dental, disability, accident, life insurance plan or a relocation plan or policy or any other material plan, program, perquisite or policy of the Corporation intended to benefit the Executive in which the Executive is participating at the time of a Change of Control (or programs providing the Executive with at least substantially similar benefits) other than as a result of the normal expiration of any such employee benefit program in accordance with its terms as in effect at the time of a Change of Control, or taking of any action, or the failure to act, by the Corporation which would adversely affect the executive's continued participation in any of such employee benefit programs on at least as favourable a basis to the Executive as is the case  on the date of a Change of Control; or which would materially reduce the Executive's benefits in the future under any of such employee benefit programs or deprive him of any material benefit enjoyed by the Executive at the time of a Change of Control;

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(vii)      a material breach by the Corporation of any other written agreement with the Executive that remains uncured for twenty-one (21) days after written notice of such breach is given to the Corporation;

(viii)      failure of any successor (as defined in Section 10 herein) to assume in a writing delivered to the Executive the obligations hereunder within twenty-one (21) days after written notice by the Executive, or

3.3       As used in this Agreement, the term "Cause" shall mean

(i)         the failure by the Executive to attempt to substantially perform his or her duties and responsibilities with regard to the Corporation or any affiliate (other than any such failure resulting from the Executive's incapacity due to physical or mental illness of any such actual or anticipated failure by the Executive for Good Reason, as defined in paragraph 3.2) after demand for substantial performance is delivered by the Corporation that specifically identifies the manner in which the Corporation believes the Executive has failed to attempt to substantially perform his or her duties and responsibilities and a reasonable time for the Executive to correct or remedy;

(ii)        the willful engaging by the Executive in misconduct in connection with the Corporation or its business which is materially injurious to the Corporation monetarily or otherwise (including but not limited to conduct which is prohibited by the provisions of Section 9.1 herein); or

(iii)       any misappropriation or fraud with regard to the Corporation or any of the assets of the Corporation (other than good faith expense account disputes).

For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interests of the Corporation. In the event that the Executive alleges that the failure to attempt to perform his or her duties and responsibilities is due to a physical or mental illness, and thus not "Cause" under paragraph 3.3, the Executive shall be required to furnish the Corporation with a written statement from a licensed physician who is reasonably acceptable to the Corporation which confirms the Executive's inability to attempt to perform due to such physical or mental illness. A termination for Cause after a Change of Control shall be based only on events occurring after such Change of Control; provided, however, the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Corporation prior to a Change of Control.

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4.         Compensation Upon Termination.

4.1       If the Executive's employment is terminated for Cause following a Change of Control or upon the occurrence of a Change of Control in a manner described in paragraph 3.1 the Corporation shall :

(a)        pay to the Date of Termination, the Executive's Base Salary, the prorated amount of the guideline award under the Corporation's Executive Performance Award Plan (EPA) and the cash value of any untaken and accrued vacations to the Date of Termination.  The aggregate amount will be paid within five (5) days of the Date of Termination;

(b)        accrue service under the Corporation's pension plans to the Date of Termination;

(c)        maintain all other benefits and perquisites in which the Executive participates to the Date of Termination, but limited to the coverage in force under those benefit plans on the Date of Notice of Termination; and

(d)       not grant any options to purchase shares under the Alcan Executive Share Option Plan to the Executive between the date of Notice of Termination and the actual Date of Termination.

4.2              In the event of Termination for Cause following a Change of Control, the Corporation's obligations to the Executive shall be limited to those under paragraph 4.1.

4.3       If the Executive's employment is terminated after the first occurrence of a Change of Control in a manner described in paragraph 3.1 then, the Executive shall be entitled without regard to any contrary provisions of any benefit plan, to a severance pay, subject to the following paragraph, as provided below :

(a)        an amount equal to 36 times the Executive's monthly base salary on the Date of Termination;

(b)        an amount equal to 36 times the monthly EPA guideline amount in force on the Date of Termination; and

(c)        an amount equal to 36 times the monthly Mid-Term Incentive Program (MTIP) guideline amount in force on the Executive's Date of Termination.

If the Date of Termination is before the Executive's declared retirement date, the severance pay shall be calculated using a number, in lieu of 36, equal to the number of months remaining to such retirement date, in each of sub-paragraphs (a), (b) and (c) above.

The Executive may, in writing, (in the Notice of Termination or otherwise) direct the Corporation that the severance pay pursuant to the paragraph 4.3 hereof shall be paid, either :

(i)         in a lump sum payable within five (5) days of the Date of Termination where in such case, all benefit plan coverage cease on such date, or

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(ii)        in 36 equal monthly installments, (or for a period consistent with the Corporation's practices as approved by the Personnel Committee of the Board) after having the Executive transferred to the non-active payroll of the Corporation where in such case all benefit plan coverage continue at the previous level for that same number of months except coverage under the Corporation's short-term and long-term disability plans, vacation program, eligibility in the Alcan Share Option Plan and perquisite benefit (car, financial and tax counseling, club membership) which shall cease on Date of Termination.

Monthly installments paid on the non-active payroll shall be excluded in the calculation of pensionable earnings while the duration on the non-active payroll shall be included as service for calculating years of service under the Corporation's pension plans.

4.4              Any loans owing by the Executive to the Corporation shall become due and payable as per the terms of the applicable loan agreement.

4.5       After the occurrence of a Change of Control, as defined in Section I, all options under the Corporation's Executive Share Option Plan shall become immediately exercisable and all waiting periods and holding periods, as defined in such plan, shall be waived.

5.     Notice of Termination.  After a Change of Control, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 13.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment. 

6.     Date of Termination.  "Date of termination", with respect to any purported termination of the Executive's employment after a Change of Control, shall mean the date specified in the Notice of Termination (which, in the case of a termination by the Corporation, shall not be less than thirty (30) days except in the case of a termination for Cause which shall be the date specified in the Notice of Termination and, in the case of a termination by the Executive for Good Reason, shall not be earlier than twelve (12) months after the Change of Control). In the event of Notice of Termination by the Corporation, the Executive may treat such notice as having a date of termination at any date between the date of the receipt of such notice and the date of termination indicated in the Notice of Termination by the Corporation; provided, that the Executive must give the Corporation written notice of the date of termination if he or she deems it to have occurred prior to the date of termination indicated in the notice.

7.    No Duty to Mitigate/Set-off.  The Corporation agrees that if the Executive's employment with the Corporation is terminated pursuant to this Agreement during the term of this Agreement, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Corporation pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive or benefit provided to the Executive as the result of employment by another employer or otherwise. Except as otherwise provided herein and apart from any disagreement between the Executive and the Corporation concerning interpretation of this Agreement or any term or provision hereof, the Corporation's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive.

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8.     Service with Subsidiaries or the Corporation.  For purposes of this Agreement, employment by the Corporation or a Subsidiary of the Corporation shall be deemed to be employment by the Corporation and references to the Corporation shall include all such entities, except that the payment obligation hereunder shall be solely that of the Corporation. A Change of Control, however, as used in this Agreement, shall refer only to a Change of Control of Alcan Inc.  For purposes of this Agreement a "Subsidiary" shall mean any entity in which the Corporation owns, directly or indirectly, at least fifty percent (50%) of the outstanding securities entitled to vote for the election of directors.

9.         Confidentiality - No Non-Competition - - No Resignation.

9.1       The Executive shall not at any time during the term of this Agreement, or thereafter, directly or indirectly, for any reason whatsoever, communicate or disclose to any unauthorized person, firm or corporation, or use for the Executive's own account, without the prior written consent of the Board, any proprietary processes, trade secrets or other confidential data or information of the Corporation and its related and affiliated companies concerning their businesses or affairs, accounts, products, services or customers, it being understood, however, that the obligations of this Section shall not apply to the extent that the aforesaid maters (i) are disclosed in circumstances in which the Executive is legally required to do so, or (ii) become known to and available for use by the public other than by the Executive's wrongful act or omission.

9.2       Upon the occurrence of a Change of Control, any non-competition agreement between the Corporation and the Executive shall be considered null and void.

10.   Successors - Binding Agreement.  In addition to any obligations imposed by law upon any successor to the Corporation, the Corporation will require any successor (whether direct or indirect, by purchase, amalgamation, merger, arrangement, reorganization, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors and heirs. If the Executive shall die after termination of his employment while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. This Agreement is personal to the Executive and neither this Agreement nor any rights hereunder may be assigned by the Executive.

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11.   Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement and the Employment Agreement constitute the entire agreement between the parties hereto pertaining to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement or the Employment Agreement. All references to any law shall be deemed also to refer to any successor provisions to such laws.

12.   Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.   Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, or sent by registered mail, postage prepaid as follows:

            (i)         If to the Corporation, to:

                        Alcan Inc.
                        1188 Sherbrooke Street West
                        Montreal, Quebec
                        H3A 3G2

                        Attention:  Corporate Secretary

            (ii)        If to the Executive, to his last shown address
                        on the books of the Corporation.

Any such notice shall be deemed given when so delivered personally, or, if mailed, five days after the date of deposit in the Canadian mail. Any party may by notice given in accordance with this Section to the other parties, designate another address or person for receipt of notices hereunder.

14.   Severability.  If any provisions of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

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15.   Legal Fees.  In the event the Corporation does not make the payments due hereunder on a timely basis and the Executive collects any part or all of the payments provided for hereunder or otherwise successfully enforces the terms of this Agreement by or through a lawyer or lawyers, the Corporation shall pay all costs of such collection or enforcement, including reasonable legal fees and other reasonable fees and expenses which the Executive may incur. The Corporation shall pay to the Executive interest at the prime lending rate as announced from time to time by Royal Bank of Canada on all or any part of any amount to be paid to Executive hereunder that is not paid when due. The prime rate for each calendar quarter shall be the prime rate in effect on the first day of the calendar quarter.

16.    Non-Exclusivity of rights.  Except as otherwise specifically provided therein, (i) nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive, equity or other plan or program provided by the Corporation and for which the Executive may qualify, nor (ii) shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other currently existing plan, agreement as to employment or severance from employment with the Corporation or statutory entitlements, provided, that to the extent such amounts are paid under paragraph 4.2(a) hereof or otherwise, such amounts shall be offset against any amounts that the Executive is entitled to under any other program, plan, agreement or statute, including without limitation the Employment Agreement. Amounts that are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation, at or subsequent to the date of termination shall be payable in accordance with such plan or program, except as otherwise specifically provided herein or in the Employment Agreement.

17.    Not an Agreement of Employment.  This is not an agreement assuring employment and the Corporation reserves the right to terminate the Executive's employment at any time with or without cause, subject to the Employment Agreement and the payment provisions hereof if such termination is after, or within three (3) months prior to, a Change of Control, as defined herein. The Executive acknowledges that he is aware that he shall have no claim against the Corporation hereunder or for deprivation of the right to receive the amounts hereunder as a result of any termination that does not specifically satisfy the requirements hereof or as a result of any other action taken by the Corporation. The foregoing shall not affect the Executive's rights under any other agreement with the Corporation.

18.   Governing Law.  This Agreement shall be construed, interpreted, and governed in accordance with the laws of the Province of Quebec.

19.   English Language.  The parties hereto declare that they require that this Agreement and any related documents be drawn up and executed in English.

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            Les parties déclarent qu'elles requièrent que cette convention ainsi que tous documents relatifs à cette convention soient rédigés et exécutés en anglais.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed and the Executive has hereunto set his hand as of the date first set forth above.

ALCAN INC.

By:       _______________________

_______________________

Travis Engen

EX-10.19

EXHIBIT 10.19

CHANGE OF CONTROL AGREEMENT

A G R E E M E N T

Agreement made as of the 1^st day of August 2002, by and between Alcan Inc., a corporation incorporated under the laws of Canada with its registered office at 1188 Sherbrooke Street West, Montreal, Québec, Canada H3A 3G2 (the "Corporation") and Richard B. Evans, residing at 3033 de Breslay, Montreal, Quebec, Canada, H3Y 2G8,  (the "Executive").

WITNESSETH:

                        WHEREAS, the Executive is the Executive Vice President of Alcan Inc.

                        WHEREAS, the Corporation believes that the establishment and maintenance of a sound and vital senior management team is essential to the protection and enhancement of the interests of the Corporation and its shareholders; and

                        WHEREAS, the Corporation also recognizes that the possibility of a Change of Control of the Corporation (as defined in Section 1 hereof), with the attendant uncertainties and risks, might result in the departure or distraction of key employees of the Corporation to the detriment of the Corporation and its shareholders; and

                        WHEREAS, the Corporation has determined that it is appropriate to take steps to induce key employees to remain with the Corporation, and to reinforce and encourage their continued attention and dedication, when faced with the possibility of a Change of Control of the Corporation.

                        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows:

1.         Change of Control shall mean any of the following:

1.1              the acquisition of direct or indirect beneficial ownership (as determined under Rule 13d-3 promulgated under the United States Securities Exchange Act of 1934), in the aggregate, of securities of the Corporation representing twenty percent (20%) or more of the combined voting power of the Corporation's then issued and outstanding voting securities by any person or entity or group of associated persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934) acting jointly or in concert (other than its subsidiaries or any employee benefit plan of either) (a "Person"), provided that, if a buyback of shares by the Corporation causes the Person to attain such limit, such limit shall be deemed not to have been attained without such Person having acquired further voting securities of the Corporation;

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1.2       any amalgamation, merger, arrangement, reorganization or consolidation in respect of the Corporation (the foregoing shall include, for the purposes of this Agreement any transaction or series of transactions, such as share exchange transaction with the same stated or effective objective) other than:

(a)        an amalgamation, merger, arrangement, reorganization or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) two-thirds or more of the combined voting power of the voting securities of the Corporation or such surviving, combined or parent entity outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation, without there occurring as a result or in connection therewith any substantial change in the composition of the Corporation's Board of Directors; or

(b)        an amalgamation, merger, arrangement, reorganization or consolidation  initiated by the Corporation for the purpose of implementing a recapitalization of the Corporation (or similar transaction) provided that pursuant thereto no Person is or becomes the beneficial owner, directly or indirectly (as determined under Rule 13-d-3 promulgated under the United States Securities Exchange Act of 1934), of securities representing twenty per cent (20%) or more of the contained voting power of the voting securities of the Corporation outstanding immediately after such amalgamation, merger, arrangement, reorganization or consolidation;

1.3              the approval by shareholders of the Corporation of any plan or proposal for the complete or effective liquidation or dissolution of the Corporation;

1.4              the issuance by the Corporation of shares in connection with an exchange offer acquisition (including, for the purposes of this Agreement, a series of connected exchange offer acquisitions), if such issuance results in the holders of the Corporation's principal class of publicly listed voting shares (immediately prior to the issuance) holding less than two-thirds of the combined voting power of the voting securities of the Corporation which are outstanding immediately following such issuance and if there occurs in connection therewith any substantial change in the composition of the Corporation's Board of Directors.

1.5       the sale or other disposition of all or substantially all of the assets of the Corporation other than the sale or other disposition of all or substantially all of the assets of the Corporation:

(a)        to a person or persons who beneficially own, directly or indirectly, at least two-thirds of the then outstanding common equity of the Corporation to which are attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer; or

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(b)               in a manner such that after such sale or other disposition the acquirer is, directly or indirectly, owned or controlled as to at least two-thirds of its then outstanding common equity to which are attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer  by shareholders of the Corporation who owned or controlled, immediately prior to such transaction, at least two-thirds of the Corporation's then outstanding common equity to which were attached at least two-thirds of the combined voting power of the outstanding voting securities of the acquirer;

provided that there does not occur in connection therewith any substantial change in the composition of the Corporation's Board of Directors.

1.6              the completion of the corporate approvals necessary on the part of the Corporation to give effect to any amalgamation, merger, arrangement, reorganization, continuance or consolidation in respect of the Corporation (including any transaction or series of transactions with the same stated or effective objective) pursuant to which the Corporation will not survive as a stand-alone publicly-traded corporation (in this regard, but without limitation, the Corporation shall be deemed not to have survived as a publicly traded corporation should (i) there cease to be a liquid market for the Corporation's common shares on an internationally recognized exchange,  (ii) more than fifty percent (50%) of the corporation's outstanding common shares to which are attached more than fifty percent (50%) of the then outstanding combined voting power of the outstanding securities of the Corporation be held by a single shareholder or group of shareholders acting jointly or in concert, or (iii) the Corporation become a subsidiary, as defined in the Canada Business Corporations Act, of another Corporation);

1.7              any occurrence pursuant to which individuals who, as of the close of business on the effective date of this Agreement, constitute the Board of Directors (the "Incumbent Directors") cease for any reason to constitute at  least two-thirds of the Board; provided that any person becoming a Director subsequent to the close of business on the effective date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board of Directors (either by a specific vote or by approval of the Management Proxy Circular of the Corporation in which such person is named a nominee for Director, without objection to such nomination) shall be an Incumbent Director; but further provided, that no individual elected or nominated as a Director of the Corporation initially as a result of an actual or threatened proxy or election contest with respect to Directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors or as a result of or in connection with any amalgamation, merger, arrangement, reorganization, consolidation or share exchange acquisition transaction by the Corporation with any Person, shall be deemed to be an Incumbent Director;

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For the purposes of this Agreement : (i) only the first Change of Control after the date hereof shall be deemed a Change of Control hereunder; (ii) voting power of securities shall be determined by reference to the right to vote in respect of the general election of Directors: (iii) a substantial change in the composition of the Board of Directors of the Corporation shall be any change involving the immediate confirmed departure of at least three Directors or any other change pursuant to which the Directors in office immediately prior thereto cease to constitute at least two-thirds of the members of the Board of Directors; and (iv) no event of Change of Control shall have occurred if immediately prior thereto the Corporation was in a state of insolvency or in a position of being protected from its creditors by virtue of any applicable legislation or court order.

2.     Term.  This agreement shall commence on the date hereof and shall expire, unless previously terminated as provided herein, on the earliest of

(i)                  30 April 2005;

(ii)                the date of the Executive's death or termination as a result of Disability, as defined below;

(iii)       subject to Section 3 hereof, the date of the retirement or other termination of the Executive's employment (voluntarily or involuntarily) with the Corporation prior to a Change of Control; or

(iv)              if, prior to and without causing a Change of Control, the entity for which the Executive is then working ceases to be a subsidiary, (as defined in the Canada Business Corporations Act) of the Corporation. 

Notwithstanding anything in this Agreement to the contrary, if the Corporation becomes obligated to make any payment to the Executive pursuant to the terms hereof at or prior to the expiration of this Agreement, then this Agreement shall remain in effect for such purposes until all of the Corporation's obligations hereunder are fulfilled. Further, the provisions of paragraph 9.1 hereunder shall survive and remain in effect notwithstanding the termination of this Agreement, the termination of the Executive's employment or any breach or repudiation of alleged breach or repudiation by the Corporation of this Agreement or any one or more of its terms.

Disability shall have the meaning ascribed to such term in the Corporation's long-term disability plan in which the Executive participates.  A termination for Disability shall be deemed to occur when the Executive is terminated by the Corporation by written notice after the disability is established and the Executive remains disabled.

3.     Termination Following Change of Control.

3.1       If, and only if, a Change of Control occurs and one of the following occurs : (i)  the Executive's employment with the Corporation is terminated by the Corporation without Cause other than for Disability, or (ii)  by the Executive for Good Reason, during the period running from the date of the Change of Control to twelve (12) months after the date of such Change of Control, then the Executive shall be entitled to the amounts provided in Section 4 upon such termination.

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In addition, notwithstanding the foregoing, in the event the Executive is either terminated without Cause or terminates employment for Good Reason within three (3) months prior the occurrence of a Change of Control, such termination shall, upon the occurrence of a Change of Control, be deemed to be covered under the Agreement and the Executive shall be entitled to the amounts provided under Section 4 hereof reduced by any amounts otherwise received in connection with his termination of employment.

3.2       As used in this Agreement, termination for Good Reason shall mean a termination by the Executive within ninety (90) days after the occurrence of the Good Reason event, failing which such event shall not constitute Good Reason under this Agreement. For purposes of this Agreement, "Good Reason" shall mean the occurrence or failure to cause the occurrence of any of the following events without the Executive's express written consent:

(i)         any material diminution in the Executive's duties and responsibilities, authority (except in each case in connection with the termination of the Executive's employment for Cause or as a result of the Executive's death, or temporarily as a result of the Executive's illness or other absence,);

(ii)        a reduction in the Executive's annual base salary rate;

(iii)       a relocation of the Executive's principal business location to an area outside the country of the Executive's principal business location at the time of the Change of Control;

(iv)       a failure by the Corporation after a Change of Control to continue any annual Executive Performance Award Plan, program or arrangement in which the Executive is then entitled to participate (the "Bonus Plans"), provided that any such plan(s) may be modified at the Corporation's discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor ("Substitute Plans"), or a failure by the Corporation to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus and the achievability thereof as the Executive participated immediately prior to any change in such plans of awards, in accordance with the Bonus Plans and the Substitute Plans;

(v)        a failure to permit the Executive after the Change of Control to participate in cash or equity based long-term incentive plans and programs other than Bonus Plans on a basis providing the Executive in the aggregate with an annualized award value in each fiscal year after the Change of Control at least equal to the aggregate annualized award value being provided by the Corporation to the Executive under such incentive plans and programs immediately prior to the Change of Control (with any awards intended not to be repeated on an annual basis allocated over the years the awards are intended to cover);

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(vi)       the failure by the Corporation to continue in effect any employee benefit program such as a saving, pension, excess pension, medical, dental, disability, accident, life insurance plan or a relocation plan or policy or any other material plan, program, perquisite or policy of the Corporation intended to benefit the Executive in which the Executive is participating at the time of a Change of Control (or programs providing the Executive with at least substantially similar benefits) other than as a result of the normal expiration of any such employee benefit program in accordance with its terms as in effect at the time of a Change of Control, or taking of any action, or the failure to act, by the Corporation which would adversely affect the executive's continued participation in any of such employee benefit programs on at least as favourable a basis to the Executive as is the case  on the date of a Change of Control; or which would materially reduce the Executive's benefits in the future under any of such employee benefit programs or deprive him of any material benefit enjoyed by the Executive at the time of a Change of Control;

(vii)      a material breach by the Corporation of any other written agreement with the Executive that remains uncured for twenty-one (21) days after written notice of such breach is given to the Corporation;

(viii)           failure of any successor (as defined in Section 10 herein) to assume in a writing delivered to the Executive the obligations hereunder within twenty-one (21) days after written notice by the Executive, or

For the purposes of the foregoing, there shall be deemed to have occurred a material diminution in the duties and responsibilities of an Executive occupying the position of or performing the functions normally assigned to any of the Chief Executive Officer or other member of the Office of the President, the Chief Financial Officer or the Chief Legal Officer in the event of any Change of Control referred to in any of paragraphs 1.2 to 1.6 (inclusive) above.

3.3       As used in this Agreement, the term "Cause" shall mean:

(i)         the failure by the Executive to attempt to substantially perform his or her duties and responsibilities with regard to the Corporation or any affiliate (other than any such failure resulting from the Executive's incapacity due to physical or mental illness of any such actual or anticipated failure by the Executive for Good Reason, as defined in paragraph 3.2) after demand for substantial performance is delivered by the Corporation that specifically identifies the manner in which the Corporation believes the Executive has failed to attempt to substantially perform his or her duties and responsibilities and a reasonable time for the Executive to correct or remedy;

(ii)        the willful engaging by the Executive in misconduct in connection with the Corporation or its business which is materially injurious to the Corporation monetarily or otherwise (including but not limited to conduct which is prohibited by the provisions of Section 9.1 herein); or

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(iii)       any misappropriation or fraud with regard to the Corporation or any of the assets of the Corporation (other than good faith expense account disputes).

For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interests of the Corporation. In the event that the Executive alleges that the failure to attempt to perform his or her duties and responsibilities is due to a physical or mental illness, and thus not "Cause" under paragraph 3.3, the Executive shall be required to furnish the Corporation with a written statement from a licensed physician who is reasonably acceptable to the Corporation which confirms the Executive's inability to attempt to perform due to such physical or mental illness. A termination for Cause after a Change of Control shall be based only on events occurring after such Change of Control; provided, however, the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Corporation prior to a Change of Control.

4.     Compensation Upon Termination.

4.1       If the Executive's employment is terminated for Cause following a Change of Control or upon the occurrence of a Change of Control in a manner described in paragraph 3.1 the Corporation shall :

(a)        pay to the Date of Termination, the Executive's Base Salary, the prorated amount of the guideline award under the Corporation's Executive Performance Award Plan (EPA) and the cash value of any untaken and accrued vacations to the Date of Termination.  The aggregate amount will be paid within five (5) days of the Date of Termination;

(b)        accrue service under the Corporation's pension plans to the Date of Termination;

(c)        maintain all other benefits and perquisites in which the Executive participates to the Date of Termination, but limited to the coverage in force under those benefit plans on the Date of Notice of Termination; and

(d)               not grant any options to purchase shares under the Alcan Executive Share Option Plan, nor any other long-term incentive plans adopted by the Corporation, to the Executive between the date of Notice of Termination and the actual Date of Termination.

4.2        In the event of Termination for Cause following a Change of Control, the Corporation's obligations to the Executive under this Agreement shall be limited to those under paragraph 4.1.  In all other cases, the Executive shall have each of the following additional rights and entitlements, to the extent applicable;

(a)                If the Executive's employment is terminated after the first occurrence of a Change of Control in a manner described in paragraph 3.1 then, the Executive shall be entitled, without regard to any contrary provisions of any benefit plan and subject to any express limitations hereinafter set forth, to  severance pay as follows :

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(i)         an amount equal to 36 times the Executive's monthly base salary as of the Date of Termination;

(ii)        an amount equal to 36 times the monthly EPA guideline amount in force as regards the Executive Performance Award Plan as of the Date of Termination;

(b)               the amount payable under the provisions of the TSR Performance Plan (or its equivalent) in the event of a Change of Control, provided that the amount payable shall never be less than the amount payable to the Executive thereunder had he retired on the Date of Termination.

Notwithstanding the foregoing, if the Date of Termination is before the Executive's declared retirement date and the number of months remaining to such retirement date is less than the number specified in paragraphs a(i) and a(ii) above, the number specified in each of sub-paragraphs (a)(i) and (a)(ii) above shall be replaced by the number of months remaining to such retirement date.

4.3       The Executive may, in writing, (in the Notice of Termination or otherwise) direct the Corporation that the severance pay pursuant to the paragraph 4.2 hereof shall be paid, either :

(i)         in a lump sum payable within five (5) days of the Date of Termination where in such case, all benefit plan coverage cease on such date, or

(ii)                in 36 equal monthly installments, (or for a period consistent with the Corporation's practices as approved by the Personnel Committee of the Board) after having the Executive transferred to the non-active payroll of the Corporation in which case all benefit plan coverage continue at the previous level for that same number of months except for coverage under the Corporation's short-term and long-term disability plans, vacation program, eligibility in the Alcan Executive Share Option Plan or any other long-term incentive plans adopted by the Corporation and perquisite benefit (car, financial and tax counseling, club membership) all of which shall cease on Date of Termination.

            Monthly installments paid on the non-active payroll shall be excluded in the calculation of pensionable earnings while the duration on the non-active payroll shall be included as service for calculating years of service under the Corporation's pension plans.

4.4        Any loans owing by the Executive to the Corporation shall become due and payable as per the terms of the applicable loan agreement.

4.5       After the occurrence of a Change of Control, as defined in Section 1, all options under the Corporation's Executive Share Option Plan shall become immediately exercisable and all waiting periods and holding periods, as defined in such plan, shall be waived.

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5.     Notice of Termination.  After a Change of Control, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 13.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment.  The "Date of Notice of Termination" is the date, determined in accordance with Section 13 below, when the Notice of Termination is deemed to have been given. 

6.    Date of Termination.  "Date of Termination", with respect to any purported termination of the Executive's employment after a Change of Control, shall mean the date specified in the Notice of Termination.  In the case of a termination by the Corporation, the Date of Termination shall not be less than thirty (30) days after the Change of Control except in the case of a termination for Cause which shall be the date specified in the Notice of Termination.  In the case of a termination by the Executive for Good Reason, the Date of Termination shall not be earlier than 90 days after the Change of Control. In the event of Notice of Termination by the Corporation, the Executive may treat such notice as having a date of termination at any date between the date of the receipt of such notice and the date of termination indicated in the Notice of Termination by the Corporation; provided, that the Executive must give the Corporation written notice of the Date of Termination if he or she deems it to have occurred prior to the Date of Termination indicated in the notice.

7.    No Duty to Mitigate/Set-off.  The Corporation agrees that if the Executive's employment with the Corporation is terminated pursuant to this Agreement during the term of this Agreement, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Corporation pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive or benefit provided to the Executive as the result of employment by another employer or otherwise. Except as otherwise provided herein and apart from any disagreement between the Executive and the Corporation concerning interpretation of this Agreement or any term or provision hereof, the Corporation's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive.

8.    Service with Subsidiaries or the Corporation.  For purposes of this Agreement, employment by the Corporation or subsidiary (as defined in the Canada Business Corporations Act) of the Corporation shall be deemed to be employment by the Corporation and references to the Corporation shall include all such entities, except that the payment obligation hereunder shall be solely that of the Corporation. A Change of Control, however, as used in this Agreement, shall refer only to a Change of Control of Alcan Inc.

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9.         Confidentiality and Non-Competition Undertakings.

9.1       Without prejudice to any other confidentiality undertakings or obligations by which the Executive may be bound in favor of the Corporation, the Executive shall not at any time during the term of this Agreement, or thereafter, directly or indirectly, for any reason whatsoever, communicate or disclose to any unauthorized person, firm or corporation, or use for the Executive's own account, without the prior written consent of the Board of Directors, any proprietary processes, trade secrets or other confidential data or information of the Corporation and its related and affiliated companies concerning their businesses or affairs, accounts, products, services or customers, it being understood, however, that the obligations set forth in this Section shall not apply to the extent that the aforesaid matters (i) are disclosed in circumstances in which the Executive is legally required to do so, or (ii) become known to and available for use by the public other than by the Executive's wrongful act or omission.

9.2       Upon the occurrence of a Change of Control, any non-competition agreement between the Corporation and the Executive shall be considered null and void.  For the purposes of this Agreement, a non-competition agreement shall include, without limitation, any provision restricting the Executive's freedom to seek or obtain employment or invest in or advise any corporation or business.

10.   Successors - Binding Agreement.  In addition to any obligations imposed by law upon any successor to the Corporation, the Corporation will require any successor (whether direct or indirect, by purchase, amalgamation, merger, arrangement, reorganization, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors and heirs. If the Executive shall die after termination of his employment while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. This Agreement is personal to the Executive and neither this Agreement nor any rights hereunder may be assigned by the Executive.

11.   Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board of Directors. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement and the Employment Agreement constitute the entire agreement between the parties hereto pertaining to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement or the Employment Agreement. All references to any law shall be deemed also to refer to any successor provisions to such laws.

10

12.    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.    Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, or sent by registered mail, postage prepaid as follows:

            (i)         If to the Corporation, to:

                        Alcan  Inc.
                        1188 Sherbrooke Street West
                        Montreal, Quebec
                        H3A 3G2

                        Attention:  Corporate Secretary

            (ii)        If to the Executive, to his last shown address
                        on the books of the Corporation.

Any such notice shall be deemed given when so delivered personally, or, if mailed, five days after the date of deposit in the Canadian mail. Any party may by notice given in accordance with this Section to the other parties, designate another address or person for receipt of notices hereunder.

14.   Severability.  If any provisions of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

15.   Legal Fees.  In the event the Corporation does not make the payments due hereunder on a timely basis and the Executive collects any part or all of the payments provided for hereunder or otherwise successfully enforces the terms of this Agreement by or through -legal counsel, the Corporation shall pay all costs of such collection or enforcement, including reasonable legal fees and other reasonable fees and expenses which the Executive may incur. The Corporation shall pay to the Executive interest at the prime lending rate as announced from time to time by Royal Bank of Canada on all or any part of any amount to be paid to Executive hereunder that is not paid when due. The prime rate for each calendar quarter shall be the prime rate in effect on the first day of the calendar quarter.

11

16.    Non-Exclusivity of rights.  Except as otherwise specifically provided therein, (i) nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive, equity or other plan or program provided by the Corporation and for which the Executive may qualify, nor (ii) shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other currently existing plan, agreement as to employment or severance from employment with the Corporation or statutory entitlements, provided, that to the extent such amounts are paid under paragraph 4.2(a) hereof or otherwise, such amounts shall be offset against any amounts that the Executive is entitled to under any other program, plan, agreement or statute, including without limitation the Employment Agreement. Amounts that are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation, at or subsequent to the date of termination shall be payable in accordance with such plan or program, except as otherwise specifically provided herein or in the Employment Agreement.

17.    Not an Agreement of Employment.  This is not an agreement assuring employment and the Corporation reserves the right to terminate the Executive's employment at any time with or without cause, subject to the Employment Agreement and the payment provisions hereof if such termination is after, or within three (3) months prior to, a Change of Control, as defined herein. The Executive acknowledges that he is aware that he shall have no claim against the Corporation hereunder or for deprivation of the right to receive the amounts hereunder as a result of any termination that does not satisfy the requirements hereof or as a result of any other action taken by the Corporation. The foregoing shall not affect the Executive's rights under any other agreement with the Corporation.

18.   Governing Law.  This Agreement shall be construed, interpreted, and governed in accordance with the laws of the Province of Quebec.

19.   English Language.  The parties hereto declare that they require that this Agreement and any related documents be drawn up and executed in English.

            Les parties déclarent qu'elles requièrent que cette convention ainsi que tous documents relatifs à cette convention soient rédigés et exécutés en anglais.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed and the Executive has hereunto set his hand as of the date first set forth above.

ALCAN INC.

By:       _______________________

                    Gaston Ouellet

EXECUTIVE

____________________________

                     Richard B. Evans

12

EX-13

Management's Discussion and Analysis

Alcan's improved earnings demonstrate its ability to deliver results despite soft economic conditions.

23 Market Overview
24 Merger with algroup
25 Results of Operations
28 Cash Flows and Liquidity
29 Environment, Health and Safety (EHS)
29 Operating Segment Review
38 Risks and Uncertainties
40 Responsibility for the Annual Report
40 Auditors' Report
41 Consolidated Financial Statements
44 Notes to Consolidated Financial Statements
78 Quarterly Financial Data
80 Eleven-Year Summary

Market Overview
Western World* Primary Aluminum Balance

Demand
Total Western World consumption grew by an estimated 2.8% to about 28.5 million tonnes (Mt) in 2002, a weak recovery following last year's sharp decline of 5.3%. Of this, 19.5 Mt was primary metal, up 3.2% from 2001, with the balance comprising secondary/recycled metal. Demand was up in all regions except Latin America and Africa, but remained below levels reached in 2000. North American consumption showed the strongest improvement at 4.6%, rebounding from a steep decline of 11.3% in 2001. Asian demand rose 4.0% driven by a recovery in exports to China and North America. A slow economy in Europe generated growth of only 1.0% while the biggest disappointment was in Latin America, where uncertainty in Brazil and turmoil in Argentina and Venezuela led to a decline of 2.5%.

Supply
Total Western World primary aluminum supply (production plus imports) increased 3.1% to 20.0 Mt in 2002. Of this, primary aluminum production represented 17.2 Mt, up 3.4% from the previous year but still below the 17.3 Mt reached in 2000, with the balance comprising 2.8 Mt of net imports from China and the former Eastern Bloc (C.I.S. and Eastern Europe). The increase in Western World primary production was due to restarts of idled capacity in Brazil and the U.S. Pacific Northwest and a full year of production from the new Alma and Mozal smelters in Canada and Mozambique. Net imports from China and the former Eastern Bloc remained essentially flat, with Chinese increases largely offset by reductions from the C.I.S.

 ((Graph))

Western World Primary Aluminum Supply and Demand
Mt/y

Supply

98:	19115	19016	19111	19289
99:	19386	19478	19639	19901
00:	19744	19688	19559	19805
01:	19666	19467	19108	19237
02:	19780	20050	19780	20300
Demand (seasonally adjusted)
98:	19454	19010	19201	18610
99:	19560	19201	19385	19825
00:	20132	20646	20062	19862
01:	18908	18897	19072	19072
02:	19480	18880	20050	19900

Balance
With primary aluminum supply and demand increasing at almost the same rate, the surplus remained unchanged from 2001 at about 450 thousand tonnes (kt). This registered as a 407 kt increase in reported stocks with the remainder in unreported stocks. By the end of the year, inventories held by the London Metal Exchange (LME), COMEX and aluminum producers had increased to approximately 4.3 Mt, or the equivalent of about 11.0 weeks of consumption. Average LME prices declined 6% during the year to $1,365 /t from $1,454 /t in 2001.

 ((Graph))

Total Aluminum Inventories and Ingot Prices

Total inventories (IAI*, LME and COMEX**)
MT

98:	3923	3762	3816	3997
99:	3931	3833	3967	4001
00:	3919	3612	3552	3488
01:	3734	3784	3872	3872
02:	4084	4226	4250	4230
LME three-month price
US$/t
98:	1484	1392	1344	1300
99:	1212	1332	1471	1535
00:	1652	1502	1587	1527
01:	1562	1511	1404	1337
02:	1395	1377	1329	1358

 *International Aluminum Institute
** Inventories held by the New York Mercantile Exchange

* Defined as the world excluding the Commonwealth of Independant States (C.I.S.), Eastern Europe and China.

Outlook
Demand is expected to rise at a slightly slower pace than supply in 2003, resulting in a forecast surplus of approximately 495 kt compared to 450 kt in 2002. Most of the increase in supply is expected to come from expansions of existing capacity in Norway, India, Mozambique and Brazil, although there is some risk that drought conditions could idle capacity in various areas of the globe.

Western World Consumption
Western World demand was up in all end-use markets except beverage cans. Transportation remained the largest end-use market for aluminum and the fastest growing in 2002, up 5.5% to 8.6 Mt. Global light vehicle production rose an estimated 3% in 2002, including a 35% increase in China. Aluminum use continued to increase in automobiles. The heavy truck and aerospace markets remained weak. Alcan's revenues from the transportation market increased by 10% to $0.9 billion.

((Graph))

2002 Western World Consumption by End-Use Market

Containers and Packaging	17%
Building and Construction	18%
Electrical	9%
Transportation	30%
Other	26%

Consumption in the containers and packaging market was up a slight 0.7% at 5.0 Mt. Can stock demand declined by 0.2% in 2002, mirroring the U.S. decline in beverage can shipments. Other packaging, principally foil, rose by almost 3%. Alcan's revenues from the packaging and beverage can markets, which represented the largest share of the Company's revenues increased by 2% to $5.3 billion.

Demand from the building and construction sector rose a modest 1.7% to 5.1 Mt. While housing starts reached a 16-year high of 1.7 million in the U.S., the building and construction market was very weak in Asia and Europe. Alcan's revenues from building and construction increased by 2% to $1 billion.

After declining more than 7% in 2001, the electrical market saw a 1.4% gain last year to 2.4 Mt. Much of the increase took place in Brazil (up 21%) in response to the power crisis of 2001. There was little change in other regions. Alcan's revenues from the electrical market declined by 10% to $0.6 billion.

Demand from all other markets increased by 2.3% in 2002 to 7.4 Mt. This includes 2.4 Mt from the machinery and equipment market, and 1.7 Mt from the consumer durables market. Alcan's revenues from these other markets, including aluminum ingot, decreased by 5% to $4.7 billion.

Merger with algroup
Alcan completed its merger with algroup in October 2000. The merger was recorded under the purchase method of accounting, in a transaction that valued algroup at $5.7 billion. This included the issue by the Company of 116.1 million shares, having a market value of $3.6 billion, and the assumption of algroup's debt totaling $2.1 billion.

As of the fourth quarter of 2000, results from the operations of algroup have been included in the financial results of Alcan.

((Graph))

Western World Consumption by Geographic Market

North America	33%
South America	7%
Western Europe	31%
Asia/Pacific/Africa	29%

Alcan's 2002 Revenues by Geographic Market

North America	42%
South America	3%
Western Europe	40%
Asia/Pacific/Africa	15%

Merger integration synergies in excess of $200 million before tax have been achieved, with benefits of $157 million recorded in 2002 earnings. In 2001, Alcan benefited from about $70 million of synergies. Total one-time disbursements necessary to obtain these synergies will amount to $89 million, of which $19 million was incurred in 2002, with $55 million having been spent up to 2001.

Merger synergies delivered $157 million in savings.

((Graph))

Results of Operations

Net Income

	2002	2001	2000
Net Income (US$M)	374	2	610
Non-recurring* (US$M)	158	482	37
LME (US$/t)	1,365	1,454	1,567
Exchange rate on balance sheet translation

 *Non-recurring items include both non-recurring charges (gains) and the effects of foreign currency balance sheet translation.

Benefits from the Company's cost-saving initiatives, diversified portfolio and continued financial discipline helped offset lower LME prices in 2002.

Net income was $374 million in 2002 compared to $2 million in 2001 and $610 million in 2000. The improvement in 2002 reflected the success of the Company's cost-saving initiatives together with higher overall volumes, a higher-value product mix, lower interest expense and the absence of goodwill amortization. These factors combined to offset lower LME prices and higher pension costs.

Net income in 2002 included non-recurring charges of $117 million after-tax. The largest of these were provisions of $68 million for a ruling on a contract dispute with Powerex (a subsidiary of BC Hydro) and $22 million for the impairment of certain businesses in Italy. In addition, charges of $21 million were taken for the closures of the Burntisland Specialty Chemicals plant and the Banbury R&D facility in the U.K., $17 million relating to other merger synergies and restructuring as well as $15 million in other special charges. These items were partially offset by an after-tax gain of $26 million on the sale of more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd.

Foreign currency balance sheet translation losses in 2002 were $41 million after-tax, and originated from the revaluation of deferred income taxes and other net monetary liabilities mostly in Canada and in Australia. In 2001, there were gains amounting to $51 million after-tax and in 2000 gains of $40 million after-tax.

Anticipating challenging economic conditions, Alcan moved to safeguard its competitiveness in 2001 by launching a restructuring program aimed at achieving annual savings of pre-tax $200 million. In 2002, the Company realized $178 million in cost reductions under the program and reached an annual run rate in excess of the $200 million by year-end. Costs to implement the program were $270 million compared to an estimate of $276 million, half of which involved cash expenditures for redundancy with the balance comprising non-cash items such as asset write-downs.

Results in 2001 were adversely affected by large restructuring, impairment and other special charges. Excluding these items, operating income declined from 2000 as a result of lower average metal prices, partially offset by merger synergies and the inclusion of algroup results for a full year.

Non-recurring after-tax charges for 2001 consisted mainly of the loss on the disposal of operations in Jamaica of $90 million, charges related to the restructuring program of $166 million, charges for the synergy program of $37 million, asset impairment provisions of $88 million and increases to environmental reserves of $167 million. These charges were slightly offset by a favourable prior year's tax adjustment of $12 million.

Non-recurring after-tax charges for 2000 included non-cash merger related costs of $25 million, rationalization charges of $30 million for the closure of Rogerstone Foil operations in the U.K. and of the village of Kemano, B.C. in Canada, offset by favourable prior years' tax adjustments of $57 million in Canada and in Germany.

Economic Value Added (EVA®)
EVA® amounted to negative $674 million in 2002 as compared to reported amounts of negative $468 million in 2001 and positive $15 million in 2000. The decrease in 2002 reflects a change in assumptions, lower metal prices, the negative effects of foreign currency balance sheet translation in the operating segments, and a full year of commercial production at Alma. The decrease in 2001 was due in large part to the impact of lower metal prices and difficult economic conditions, in addition to purchase accounting adjustments related to the algroup merger.

In 2002, the Company changed its cost of capital assumption to 10% from 9.5% for the purpose of calculating EVA® only, and started to include construction work-in-progress in the capital base. Had these same assumptions been used, EVA® would have been a negative $612 million in 2001 and negative $187 million in 2000.

Restructuring benefits reached $178 million.

((Graph))

Revenues and Aluminum Volumes

	2002	2001	2000
Sales and operating revenues (US$M)	12,540	12,626	9,148
Total aluminum volume * (kt)	4,437	4,253	3,509

 *Includes ingot products and rolled products shipments, conversion of customer-owned metal (tolling) as well as aluminum used in engineered products and packaging.

Increased volumes helped offset a 6% reduction in the average 3-month LME price.

((Graph))

Sales Price Realizations

	2002	2001	2000
Ingot products (US$/t)	1,507	1,581	1,667
Rolled products (US$/t)	2,295	2,385	2,455
LME (US$/t)	1,365	1,454	1,567

Realizations for both ingot products and rolled products declined in line with lower LME prices.

Sales and Operating Revenues
Sales and operating revenues remained flat as increased volumes in primary metal and rolled product businesses, and the benefits of a stronger euro, offset a 6% reduction in the average three-month LME price.

Costs and Expenses
Despite a 6% drop in average LME prices, cost of sales and operating expenses as a percentage of sales and operating revenues remained flat at 79% compared to 2001 (78% in 2000). The relative improvement was primarily due to the benefits from cost initiative programs, including merger integration synergies and the 2001 restructuring program, as well as the reduction in start-up and pre-operating expenses related to the new smelter in Alma, Quebec.

Depreciation expense was $859 million as compared to $820 million in the previous year and $545 million in 2000. This increase reflected depreciation on the Alma smelter, which reached its full capacity at the end of September 2001, and the Company's 40% share of the Alouette smelter in Quebec that was acquired in two tranches of 20% each in 2002. These increases were offset in part by the sale of operations in Jamaica in May 2001.

Selling, administrative and general expenses, at $577 million, increased by 5% from $547 million in 2001, and from $405 million in 2000. The increase in 2002 was due principally to higher pension expenses, and increased consultant fees related to performance improvement initiatives. Expressed as a percentage of sales and operating revenues, these expenses increased to 4.6%, representing a slight deterioration relative to the 2001 and 2000 rates of 4.3% and 4.4%, respectively.

((Graph))

Alcan's 2002 Revenues by Market

Packaging	26%
Beverage cans	16%
Aluminum ingot	17%
Building and construction	8%
Electrical	5%
Transportation	7%
Other	21%

Alcan's research and development (R&D) activities are closely aligned with the needs of its core businesses, principally bauxite and alumina, smelting, fabrication, and packaging. The Company maintains a strong effort in developing sheet applications and technology for the automotive industry and is working closely with a number of automotive companies in this regard. In 2002, the Company decided to focus its fabrication R&D in two locations, Kingston, Canada and Neuhausen, Switzerland, and is therefore closing its laboratories in Banbury, U.K. R&D expenses were $115 million for 2002 compared to $135 million in 2001 and $81 million in 2000. Most of the increase from 2000 was due to the integration of algroup and its dedicated research and development in the engineered products and packaging sectors.

((Graph))

Total Aluminum Volume and Purchases

	2002	2001	2000
Total aluminum volume *(kt)	4,437	4,253	3,509
Total purchases (kt)	1,804	1,822	1,670

*Includes ingot products and rolled products shipments, conversion of customer-owned metal (tolling) as well as aluminum used in engineered products and packaging.

Increased primary production covered higher rolled product shipments and reduced the need for purchased metal.

((Graph))

Interest

	2002	2001	2000
Capitalized interest	1	30	81
Interest expense	203	254	78
Effective average interest rate	5.0	6.1	7.1

Interest expense fell as rates declined and debt decreased.

Both the effective average interest rate and debt levels decreased in 2002 reflecting lower short-term interest rates and the Company's strong free cash flows. Total interest costs rose in 2001 due to the inclusion of algroup debt for a full year and to the debt incurred to finance capital expenditures.

Interest capitalized in the previous years related mainly to the construction of the new smelter in Alma, Quebec. The Company does not expect to capitalize interest in 2003.

The interest coverage ratio, excluding non-recurring charges and the effects of foreign currency balance sheet translation, improved to 4.7 times in 2002 as compared to 3.5 times in 2001, and was 5.9 times in 2000.

Other pre-tax expenses (net of other income) of $116 million, compared to $113 million in 2001 and $51 million in 2000, comprised mainly a $100 million provision for a ruling on a contract dispute with Powerex (a subsidiary of BC Hydro), partially offset by a gain on the sale of more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd. of $36 million. In 2001, other expenses included a $123-million loss on the disposal of the Jamaican operations. The 2000 figure included rationalization costs of $45 million as well as a non-recurring environmental provision of $14 million.

Income Taxes
The Company's effective tax rate, excluding non-recurring charges and foreign currency balance sheet translation effects, was 36% in 2002 and 2001 compared to 38% in 2000. The effective Generally Accepted Accounting Principles (GAAP) tax rate was 44% (42% in 2001 and 29% in 2000). The differences between the effective tax rate on operating earnings and the effective tax rate on a GAAP basis were the effects of foreign currency balance sheet translation and the income tax provided on non-recurring charges of $36 million ($236 million in 2001; $89 million in 2000).

The foreign currency balance sheet translation included two portions. The first was the loss of $32 million ($33-million gain in 2001 and $18-million gain in 2000) on the translation of deferred income taxes denominated in foreign currencies, as well as other currency translation items, that is charged directly to income taxes. The second relates to the translation of net monetary liabilities in operating segments that resulted in losses of $9 million ($18-million gain in 2001; $22-million gain in 2000) for which no related tax provisions are required.

The reported effective tax rate of 44% in 2002 (42% in 2001 and 29% in 2000) compares to a composite statutory tax rate of 39% in Canada (40% in 2001 and 2000). The difference represents principally the impact of the foreign currency items referred to above, net of unrecorded tax benefits on losses, investment and other allowances and lower foreign tax rates. A full reconciliation between these two rates is presented in note 9 to the financial statements.

Goodwill
In 2002, the Company adopted new accounting standards on goodwill. As a result of this change, goodwill is no longer being amortized. Goodwill amortization was $73 million and $16 million in 2001 and 2000, respectively. Also under these standards, the Company completed a review of goodwill and recorded an impairment charge of $748 million as a reduction in opening retained earnings as of January 1, 2002. The adjustment reflected the decline in end-market conditions in the period from the algroup merger in October 2000 to January 1, 2002. This adjustment has no impact on the future growth of the Company, nor did it affect its cash flows.

Debt decreased as a result of strong free cash flow.

Cash Flows and Liquidity

Operating Activities

((Graph))

Cash from Operations and Free Cash Flow

	2002	2001	2000	1999	1998
Free Cash Flow (US$M)	683	75	-582	-135	-214
Cash from Operations (US$M)	1,614	1,387	1,066	1,182	739

Free Cash Flow (US$M)
Cash from Operations (US$M)

Cash from operations reached record levels in 2002.

The Company achieved an all-time record cash from operations in 2002, despite lower LME prices, as a result of continued financial discipline. The improvement in 2001 was attained despite lower net income, and resulted mainly from improved operating working capital.

The substantial increase in free cash flow (calculated by subtracting dividends and capital expenditures from cash from operating activities) reflected higher cash from operations as well as lower capital expenditures.

Continued focus on working capital management resulted in a decline in net operating working capital of $155 million in 2002, in addition to the decrease of $139 million in 2001. Net operating working capital increased in 2000 by $223 million. The improvement in 2001 and 2002 was due to reductions in trade receivables and inventories (30 kt over the two years), offset in part by a decrease in payables. The increase in 2000 was due mainly to a refinancing of trade payables by short-term borrowings in Korea and the reduction in payables related to the Alma smelter in Quebec.

Investment Activities
Alcan adopted Maximizing Value as its governing objective in 2001 and as such uses a value-based approach to identify investment opportunities. A number of resulting value-maximizing initiatives were implemented in 2002.

Financial discipline resulted in capital expenditures that were well below depreciation in 2002. Capital expenditures included amounts related to the Alma smelter project of $250 million in 2001 and $850 million in 2000. The Company expects to incur $800 to $850 million of capital expenditures in 2003.

During 2002, the Company acquired a 40% joint venture interest in the Aluminerie Alouette consortium. The first tranche of 20% was purchased from the Sociétégénérale de financement (SGF) and the second tranche of 20% from the Corus Group plc at costs of $172 million and $171 million, respectively, subject to certain post-closing adjustments.

Asset disposals in 2002 were mainly comprised of the molded glass operations in the U.S. and China and the rolled products circles operations in Italy, as well as three company-owned ships and more than half of the Company's remaining portfolio investment in Nippon Light Metal Company, Ltd.

((Graph))

Capital Expenditures and Depreciation

	2002	2001	2000	1999	1998
Capital Expenditures (US$M)	728	1,110	1,491	1,169	805
Depreciation (US$M)	859	820	545	477	462

Capital expenditures were well below depreciation.

Financing Activities
In January 2002, the Company redeemed all of its $150-million 8 7/8% debentures originally due on January 15, 2022, for 104.15% of their face value. A loss of $6 million was recognized in the first quarter of 2002. The redemption was financed by commercial paper borrowings at a significantly lower rate of interest. In September 2002, the Company issued $500-million of 4 7/8% global notes due September 15, 2012. Net proceeds were used to repay existing long-term debt and commercial paper borrowings.

The quarterly common share dividend remained at 15 cents per share in 2002. Total dividends paid (common and preference) to shareholders were $197 million in 2002 compared to $200 million in 2001 and $155 million in 2000.

((Graph))

Total Borrowings and Equity

	2002	2001	2000	1999	1998
Borrowings (US$M)	3,867	4,091	4,608	1,489	1,789
Equity* (US$M)	8,775	8,902	9,253	5,738	5,629
Debt as a percent of invested capital (%)	31	32	33	21	24

* Includes minority interests and preference shares.

Total borrowings declined during 2002, resulting in an improved debt/equity ratio.

Cash and time deposits totaled $110 million at the end of 2002, which is slightly lower than the $119 million at the end of 2001. Alcan has committed credit facilities totaling $2 billion. The Company expects that cash from operations, combined with the $2 billion still available under its credit facilities, will be more than sufficient to meet the cash requirements of operations, planned capital expenditures and dividends. In addition, the Company believes that its ability to access global capital markets, considering its investment grade rating, should provide any additional liquidity that may be required to meet unforeseen events.

Environment, Health and Safety (EHS)
Continuous improvement in performance while increasing value for stakeholders is the core feature of Alcan's EHS approach. In 2002, the Company began to implement its revised EHS Policy. An initiative entitled "A Call to Action" was cascaded throughout the organization to capture employee feedback on improving Alcan's safety record at an even faster rate. Other developments during 2002 included better integration of EHS into business systems and the development of improved performance metrics.

Alcan produced its first sustainability report, entitled Alcan's Journey Towards Sustainability, that charts the Company's progress in measuring and managing its economic, environmental and social impacts and also draws a definitive link between Alcan's business success and its EHS activities. Furthermore, Alcan was selected for the Dow Jones Sustainability World Index and for the Gobal Reporters Survey conducted by the United Nations Environment Program (UNEP) and SustainAbility in recognition of its on-going efforts to implement sustainability within its businesses.

Finally, the Company won a UNEP award for excellence in sustainable development, a result of promoting the benefits of recycling and fostering an entrepreneurial spirit among school children around the world.

Alcan believes that existing and planned EHS measures allow it to exceed statutory and regulatory demands while improving its competitive position and efficiency. Alcan's capital expenditures to protect the environment and improve working conditions were $67 million in 2002. Similar expenditures for 2003 and 2004 are projected to be $106 million and $147 million, respectively. In addition, expenditures charged against income for environmental protection were $140 million in 2002, and are expected to be $137 million both in 2003 and 2004.

Operating Segment Review
At the beginning of 2002, the Company re-aligned its management structure from four to six business groups in order to improve its performance, move closer to its markets and increase responsiveness. The six business groups or segments are Bauxite, Alumina and Specialty Chemicals; Primary Metal; Rolled Products Americas and Asia; Rolled Products Europe; Engineered Products; and Packaging. In addition to EVA®, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) continues to be a key financial performance measure for the operating segments. Additional operating segment information is presented in note 28 to the financial statements.

((Graph))

Alcan's 2002 Revenues by Business Group

Bauxite, Alumina and Specialty Chemicals	3%
Primary Metal	20%
Rolled Products Americas and Asia	27%
Rolled Products Europe	15%
Engineered Products	13%
Packaging	22%

The information that follows is reported by operating segment on a stand-alone basis. Transactions between groups are conducted at arm's-length and reflect market prices. Accordingly, earnings from Bauxite, Alumina and Specialty Chemicals as well as from Primary Metal operations include profit on alumina or metal produced by the Company, whether sold to third parties or used in the Company's fabricating and packaging operations. Earnings from the downstream operations represent only the value-added portion of the profit from rolled products, engineered products and packaging products.

Bauxite, Alumina and Specialty Chemicals
The Bauxite, Alumina and Specialty Chemicals (BASC) group operates five refineries and two specialty chemicals plants and has seven wholly or partially owned bauxite mines/deposits. The alumina produced is generally used to supply the Company's own smelting requirements. BASC spent much of the last few years repositioning its business portfolio around low-cost bauxite and alumina assets in Australia and has moved from the fourth to the second cash-cost quartile in the industry.

In 2002, record production levels at the Gove refinery in Australia and Vaudreuil in Canada refineries helped offset the decrease in production due to the sale of the Jamaican operations in the second quarter of 2001.

In the first quarter of 2001, the Company acquired the remaining 30% of the Gove alumina refinery and related bauxite mine at a cost of $379 million (subject to certain post-closing adjustments) bringing its interest in these assets to 100%. This low-cost refinery has total annual capacity of 1.9 Mt and set production records in 2001 and 2002. This investment has helped the Company to further reduce its average alumina cost, while giving it access to Gove's significant low-cost expansion potential in the future.

On May 31, 2001, the Company completed the sale of its operations in Jamaica, which had an annual capacity of some 1.1 Mt of alumina.

As a result of a value-based review of its activities in specialty chemicals, Alcan announced in January 2002 that it would exit this business in Europe due to the unprofitable nature of this market, and because of its disadvantaged cost position. A significant effort was made to sell the Burntisland Specialty Chemicals plant in the U.K., but a successful transaction could not be structured. Consequently, Alcan ceased operations in November 2002, following a consultation process with employees and union representatives.

The decrease in production and lower alumina prices, partially offset by improved production costs, contributed to lower EBITDA in 2002. Higher production and substantial cost reductions, partially offset by lower alumina prices, contributed to higher EBITDA in 2001 compared to 2000.

Average realized prices for alumina decreased both in 2002 and 2001 in line with LME prices. The Company continues to pursue lower costs in the face of ongoing pricing pressure.

((Graph))

Sales and Production - BASC

	2002	2001	2000
Intersegment sales (US$M)	757	771	536
Third-party sales (US$M)	435	477	470
Alumina production (kt)	4,271	4,625	3,941

Lower production in 2002 reflected the earlier sale of Jamaican operations partly offset by record production at Gove and Vaudreuil.

((Graph))

EBITDA - BASC

	2002	2001	2000
EBITDA (US$M)	249	301	265
LME (US$/t)	1,365	1,454	1,567

Lower alumina prices and production contributed to lower EBITDA in 2002.

Production costs hit record lows for second consecutive year.

Production costs were 6% better in 2002, setting a new record for a second consecutive year, due to the divestment of high-cost operations in Jamaica, lower raw material prices and to ongoing cost reduction efforts. Production costs decreased by 3% in 2001 compared to 2000, as a result of divestment activities, ongoing cost reduction efforts, including synergies from the algroup merger, and improved productivity.

In the second quarter of 2002, a production optimization project at Gove was initiated. This $40-million project will increase the refinery's capacity by 100 kt/y and is expected to further reduce costs on a per tonne basis. Construction work should be completed in the first quarter of 2003.

((Graph))

Sales and Production - Primary Metal

	2002	2001	2000
Intersegment sales (US$M)	2,205	2,117	1,674
Third-party sales (US$M)	2,447	2,546	1,655
Aluminum production (kt)	2,238	2,042	1,562

Alma and Alouette were major contributors to a 10% increase in production.

Specialty Chemicals
Operating results for 2002 were 24% lower than in 2001 mainly due to an operating loss of $10 million attributable to the European business from which the Company exited in November 2002.

Operating results for 2001 were 35% lower than in 2000. While the European business underwent a major restructuring that streamlined the organization and improved process efficiencies, worldwide operations were adversely impacted by the economic slowdown resulting in lower shipments and prices.

Primary Metal
Alcan is the second largest aluminum producer in the Western World. Its Primary Metal group operates or has interests in sixteen smelters worldwide, 62% of which are supplied by company-owned power (compared to the industry average of 28%) - a major competitive advantage. With its focus on continuous improvement in technology and cost, the Company has an excellent low-cost primary metal position with 50% of its smelting capacity in the top tier of industry cash cost. In addition to LME-grade ingot, Primary Metal produces value-added aluminum in the form of sheet ingot, extrusion billet, cable rods and foundry ingot for other Alcan plants or third-party customers serving the transportation, building and construction, consumer goods and machinery markets.

A full year of production at Alma, the 40% acquisition of Alouette and capacity restarts contributed to the 10% increase in production.

Eleven of the thirteen smelters operating without any water restrictions set all-time production records in 2002. The Alma smelter reached full production of 405 kt in 2002, after all pots became operational on September 30, 2001, as compared to the 272 kt produced in 2001.

As part of its maximizing value initiatives, Alcan acquired a 20% interest in the Aluminerie Alouette consortium from Sociétégénérale de financement (SGF) in April 2002. Later, in September 2002, the Company purchased an additional 20% interest in Alouette from Corus Group plc, bringing its total participation to 40%. Alouette is a world-class aluminum smelter located in Sept-Îles, Quebec, with an annual capacity of 243 kt/y; the acquisition will help the Company leverage value maximizing synergies within its Quebec smelter system.

In 2002, production at the Kitimat smelter in British Columbia was lower due to production cut-backs that occurred in 2001 as a result of water shortages. However, because water levels improved in the Nechako Reservoir in B.C. during 2002, 60 kt/y of idled capacity was gradually restarted beginning in the third quarter.

Most of Alcan's smelter production is in the form of value-added ingot. Sales of these products increased by 12% in 2002 and in fact were at all-time record levels for each of the three major products: sheet ingot, foundry ingot and extrusion billet.

Record production was also achieved at the partially owned anode plant, Aluchemie, in the Netherlands and calcined coke plant in Strathcona, Alberta, as well as at the Company's power facilities in Quebec.

Additional sales volumes and lower operating costs (including the reduction in Alma start-up expenses) and benefits from merger synergies and the restructuring program more than offset a 6% reduction in LME prices and the unfavourable effects of foreign currency balance sheet translation of $10 million in 2002.

The main factors contributing to the increase in EBITDA in 2001 were additional production volumes, lower operating costs and initial merger synergy savings as well as a gain on foreign currency balance sheet translation of $18 million, partially offset by lower ingot realizations and increased start-up costs for the new Alma smelter.

((Graph))

EBITDA - Primary Metal

	2002	2001	2000
EBITDA (US$M)	858	818	729
Average third party realized price (US$/t)	1,533	1,614	1,747
LME (US$/t)	1,365	1,454	1,567

Higher volumes and improved costs more than offset a 6% reduction in LME prices.

The decrease of $78 /t in total metal production costs in 2002 was attributable to a decrease in Alma start-up expenses, lower raw material costs and the benefits from the merger synergy and restructuring programs.

The largest of the special charges in 2002 was related to Kitimat's idled capacity. The charges also included Alma pre-operating and start-up expenses of $10 million ($140 million in 2001 and $73 million in 2000).

((Graph))

Cost of Production - Primary Metal

	2002	2001	2000
Special charges (US$/t)	43	111	97
Cost of production (US$/t)	1,204	1,214	1,233

Total metal production costs for the year declined by $78/t.

In September 2002, the five co-venturers of Alouette announced their approval of the phase II expansion project, which will increase production capacity to 550 kt/y. While the project commenced in late 2002, Alcan's $350-million contribution to the cost will not begin until 2004. The new pots will gradually come on line starting in February 2005 with completion expected in the fall of 2005. The expansion project was predicated on a 500 MW block of power that was awarded to Alouette by the provincial power authority.

A $66-million, 44 kt/y expansion project in Soeral, Norway, in which Alcan has a 50% interest, is on budget and expected to be completed in the first quarter of 2003.

The high amperage/low energy project at the Lynemouth and Lochaber smelters in the U.K. was approved in June 2002 for $38 million. By increasing the amperage in existing pots, this project will result in additional production of 16 kt/y, improved current and power efficiencies and reduced CO2 emissions.

Construction of a pot-relining centre at the Alma smelter was approved in January 2003 for $39 million. The centre will include processes for pot demolition, relining, cathode rodding, as well as minimum storage and shipping facilities for spent potlining.

A project to build the Candonga hydropower plant on the Doce River in Brazil, with a total installed capacity of 140 MW, was approved in 2001. Alcan is participating equally in this project with CVRD (Companhia Vale do Rio Doce). Construction began in July 2001 with the first turbine expected to be in operation by November 2003. Alcan's share of the cost is estimated at $48 million. The project is 75% complete, on budget and ahead of schedule.

Other value-maximizing options were developed in 2002. For example, on June 6, 2002, the Company announced an agreement in principle to form a joint venture with Qingtongxia Aluminum Company (QTX), a leading aluminum company in China. The proposed joint venture provides an opportunity for Alcan to acquire a 50% share in a 130 kt/y aluminum smelter that utilizes modern, pre-bake technology. In addition, Alcan would have an option for a 50% share in the planned and approved 150 kt/y expansion of the smelter. Due diligence and the development of an implementation plan were the main focuses in the latter part of 2002, in preparation for formal negotiations with QTX and Chinese officials in 2003.

Our 40% stake in Alouette exemplifies value-maximizing investment.

Rolled Products Americas and Asia
Alcan Rolled Products Americas and Asia (RPAA), with sixteen production facilities in six countries, is focused on meeting the ever-changing needs of its global and regional fabrication customers through the rapid transfer and adoption of best technology and management practices. The RPAA group manufactures and sells high-quality sheet and light gauge rolled products serving numerous markets including beverage, automotive, construction, and other durable goods.

((Graph))

Sales and Realized Prices - RPAA

	2002	2001	2000
Sales (US$M)	3,327	3,316	3,391
Average realized price *(US$/t)	2,218	2,359	2,401

* Excluding conversion of customer-owned metal

Revenues increased despite lower price.

The sales increase was driven by higher volumes despite lower average realized prices. Highlights for 2002 included record shipments in North America and Asia despite difficult economic and market conditions. Volumes increased by 4% in North America and 23% in Asia, offsetting market declines in South America caused largely by currency volatility. Growth in can demand resulted in higher sales volumes through the Company's Asian assets, as can company qualifications were completed during the year. Alcan also made further inroads into the North American beverage can and industrial products markets, as well as in the South American can market. Increased demand for can stock in North America was attributable to new brand introductions and packaging innovations by the major soft drink companies.

Rolled Products Americas and Asia revenues can be broken down by end-use market as follows:

((Graph))

Can and Closures	54%
Distribution	8%
Foil and Foilstock	17%
Industry	10%
Automotive	7%
Other	4%

The financial results for RPAA in 2002 reflected a significant increase in EBITDA compared to 2001. This was attributable to volume increases along with particularly successful cost reduction efforts in North America and the favourable impact of metal price movements. These factors more than offset the negative impact of a stronger Korean won and a volatile Brazilian economic situation and currency.

The improvement in 2001 EBITDA was mainly due to higher can sheet volume in South America and the benefits from cost reduction initiatives, partially offset by higher energy prices.

In the past decade, Alcan has made important investments in the expansion, upgrade and acquisition of rolled products facilities in North and South America and Asia with a commitment to innovation, cost reduction, manufacturing excellence and maximizing value for the shareholder.

RPAA Business Units
In North America, record shipments were achieved in 2002 within the industrial products, container, industrial fin stock and converter foil markets. In addition to the increase in overall volumes, RPAA's shipments of higher value-added can stock grew by 12% as a result of the focus on value-based management. Over the past few years, industry over-capacity in the common alloys market was rationalized through the closing of two competitors' plants, which helped stabilize the market and improve margins. In response to global over-capacity in the light gauge sheet and foil markets and heightened competition from imports, Alcan announced that it would reduce production at its Fairmont, West Virginia, plant effective in the first quarter of 2003.

((Graph))

EBITDA and Shipments - RPAA

	2002	2001	2000
EBITDA (US$M)	367	296	261
Shipments * (kt)	1,613	1,522	1,487

* Includes shipments of rolled products and conversion of customer-owned metal.

Higher volumes and lower costs led to improved EBITDA.

In 2002, the automotive sector continued to be a growth market for Alcan. Automotive sheet sales were up over 2001 as North American automobile demand increased in response to financing incentives offered by the automakers. New Alcan automotive sheet programs for the year included innovations in sport utility vehicle (SUV) lift-gate and hood technologies resulting from continued close co-operation with customers.

South American economies were severely impacted in 2002 by political uncertainty in Brazil, Argentina and Venezuela. The Brazilian real fell 53% during the year, which reduced demand for U.S.$-based aluminum products and led to an 8% drop in sheet shipments. Alcan is turning to new export markets and new product introductions, as well as focusing on higher value-added products, to help mitigate the decline in local demand. As the only company capable of producing can sheet in South America, Alcan is well positioned to benefit from the improving economic trend that began in late 2002.

In Asia, Alcan Taihan Aluminum Limited (ATA) in Korea achieved a major milestone when, after two and a half years of dedicated efforts, it qualified its can-body stock with 28 customer can manufacturing plants in Australia, China, Korea, Malaysia, Singapore, Taiwan, Thailand and Vietnam. Alcan became the number two supplier to the Chinese rolled products market, which continues to benefit from double-digit growth in demand.

Recycling
During 2002, Alcan remained the world's leader in recycling used aluminum beverage cans (UBCs). Alcan's U.S. operations recycled 24 billion UBCs, representing an estimated 45% of all aluminum cans recycled in the United States. RPAA operates three aluminum can recycling plants located in Oswego, New York; Berea, Kentucky; and Greensboro, Georgia. At Alcan's Berea recycling facility, the largest UBC recycling facility in the world, production increased by nearly 22% as a result of improved manufacturing efficiencies.

In South America, Brazil with its 85% recycling rate was recognized as the world-wide leader among countries where UBC recycling is not legally mandated. At its state-of-the-art recycling operation in Pinda, Alcan recycled 36% of these cans in addition to metal received from a third-party metal recycler and utilized 59% of the recycled material to produce can stock.

In Korea, ATA's Ulsan plant commissioned a new aluminum recycling furnace that is being used to process scrap from its own operations and from customers. The 30-tonne capacity furnace uses technology that was developed by Alcan, which enhances the scrap recovery rate.

Rolled Products Europe
Rolled Products Europe (RPE) produces a variety of flat rolled products through its eleven plants, with Alunorf in Germany as its hub. RPE is focused on fully capturing the integration synergies from the merger with algroup, and continues to optimize its product portfolio and its production system to better serve its customers and reduce costs. RPE supplies a number of European markets including beverage can, industrial sheet and plate, foilstock, lithographic and automotive.

Higher realized prices and a 10% increase in shipments resulted in increased sales. RPE's realized prices improved relative to LME prices as a result of portfolio changes towards higher value-added products in more economically attractive markets.

The European beverage can market grew 5% in 2002, mainly driven by the growing demand in Eastern Europe. RPE can volumes increased at a faster pace than growth in demand. The distribution market was slow at the beginning of the year, but recovered significantly after the summer period, ending 1.5% above 2001 levels.

Most end-user markets remained weak all year. The industrial plate sector suffered from difficulties in the aerospace market, while the recovery in the construction market by-passed Germany. The trend toward substitution of aluminum for steel in these markets continued, exemplified by the demand for aluminum automotive sheet which remained strong, with volumes up 16% over 2001.

((Graph))

Sales and Realized Prices - RPE

	2002	2001	2000
Sales (US$M)	1,814	1,735	1,666
Average realized price * (US$/t)	2,467	2,448	2,571

* Excluding conversion of customer-owned metal.

Higher prices and shipments resulted in increased sales.

Significant volume increases drive Rolled Products' EBITDA performance.

Rolled Products Europe third-party revenues can be broken down by end-use market as follows:

((Graph))

Can and Closures	23%
Distribution	17%
Foil and Foilstock	7%
Industry	16%
Lithographic	10%
Automotive	9%
Other	18%

((Graph))

EBITDA and Shipments - RPE

	2002	2001	2000
EBITDA (US$M)	132	83	144
Shipments * (kt)	836	759	696

* Includes shipments of rolled products and conversion of customer-owned metal.

Increased volumes and lower costs resulted in higher EBITDA.

Increased volumes, at a sustained higher-value mix, as well as benefits from merger synergy and restructuring programs resulted in higher EBITDA. The strengthening of the euro and Swiss franc against the U.S. dollar contributed approximately $7 million to EBITDA in 2002.

Despite increased volumes with the inclusion of algroup's operations for a full year, lower EBITDA in 2001 was mainly due to the economic downturn in the second half of the year and lower price realizations.

After a value-based review of alternatives, Alcan announced in late 2001 the restructuring of its rolled products businesses in the U.K. and Italy. The aim of these measures was twofold: to make the businesses more competitive in the face of economic difficulties; and to put them in the best possible position to meet future industry needs.

Virtually all of these measures were completed on plan by the fourth quarter of 2002. Alcan sold its circles business in Pieve, Italy. In addition, the restructuring and downsizing of the rolling mill at Rogerstone in the U.K. have been completed, helping to optimize the product portfolio and align production capacity across Alcan's European rolling system.

During 2002, the Banbury R&D facility was closed and the main resources and programs were reallocated to Neuhausen, Switzerland and Kingston, Canada.

Recycling
In the U.K., Alcan has an infrastructure of over 300 independent recyclers. In addition to UBCs, post-consumer and can process scrap support a dedicated recycling facility at Latchford in the U.K. with a total annual capacity of 148 kt.

This facility significantly increased its scrap intake and produced over 10% more sheet ingot than in 2001.

Engineered Products
Engineered Products manufactures extruded and cast aluminum products, including cable, wire and rod, as well as composite materials such as aluminum-plastic, fibre-reinforced plastic and foam-plastic. The group provides value-added solutions for weight reduction in the automotive and mass transportation markets, as well as for the building façade and display markets. Engineered Products also has the largest aluminum cable position in North America. Its focus is to capitalize on profitable growth opportunities by leveraging its superior technology on a global basis.

((Graph))

Sales and EBITDA - Engineered Products

	2002	2001	2000
EBITDA (US$M)	96	103	55
Sales and operating revenues (US$M)	1,645	1,661	724

Difficult business conditions contributed to slightly lower EBITDA.

EBITDA was slightly below 2001 due to the difficult business conditions in light of the strengthening euro, particularly in extrusions and distribution markets in Europe.

The increase in both revenues and EBITDA in 2001 was mainly due to the inclusion of algroup for the full year, as well as good volume growth in the first half of the year.

Alcan's engineered products revenues can be broken down by business as follows:

((Graph))

Extrusions	24%
Composites	19%
Automotive	12%
Cable	26%
Service Centres	13%
Mass Transportation	6%

Engineered Products Business Units
EBITDA for Alcan's North American cable business is comparable to 2001. A softening trend in the latter part of the year followed a strong market in the first quarter. Total shipments were flat with increasing rod sales offset by lower building wire and cable sales. Prices remained under pressure throughout the year, reflecting difficult conditions in customer markets.

The overall volume for Alcan's extrusions was slightly below that of 2001. Market share in the soft alloys and large profiles industry was largely maintained, while slight increases in hard alloys and supplies to the mass transportation market were achieved. However, specialized industry volumes were lower due to depressed end-use markets, principally machinery and capital goods.

The use of composites in transport and industrial applications continued to grow, particularly in the wind-power generation market, where the Company is a leading supplier. While display volumes and prices remained under pressure throughout the year, architectural applications in Europe and North America had another year of strong performance. Geographic coverage was improved in 2002 with the opening of a new plant for the production of Alucobond in Bahia, Brazil.

Overall car production in Europe decreased by 1.5% compared to the previous year. New car sales dropped by 3.1% in Western Europe and 1.9% in the U.S. Although the market success of each new model is different, Alcan was able to maintain sales and further increase order backlogs for structural parts, including bumper systems, extrusions and high-pressure die-cast structural parts. For example, sales of cockpit carriers showed strong growth in 2002.

Alcan's mass transportation systems again achieved record sales in 2002. This trend reflects the continuing growth in public-sector projects, mainly involving new high-speed trains, metro trams and light-rail systems. The "Transrapid" magnetic levitation train project in Shanghai, China, received much market and media attention for example.

Packaging
With 2002 revenues of $2.8 billion, Alcan Packaging has leading positions in the end-use markets of food, pharmaceutical, cosmetic and personal care, and tobacco packaging markets. It offers a variety of packaging solutions using plastics, paper and paperboard as well as aluminum and other materials. Alcan Packaging is capitalizing on profitable growth opportunities, both internally and externally, created by enhanced product ranges, broader distribution systems and new customer relationships formed by the algroup merger. The group is also focused on reorganizing its European foil rolling and container businesses.

Benefits from cost initiatives, largely related to merger synergy and restructuring programs, compensated for the weak economic environment resulting in comparable EBITDA performance relative to 2001.

Margin pressures associated with customer consolidation and over-capacity in a weakened economic environment characterized packaging markets in 2002. Demand for food, pharmaceutical and technical applications softened in the first quarter of 2002 reflecting general economic uncertainty, then gradually recovered as the year progressed. The divestiture of the molded glass operations in the third quarter also had an unfavourable impact on sales and operating revenues compared to 2001.

Both revenues and EBITDA increased in 2001 largely due to the inclusion of algroup businesses for the full year.

((Graph))

Sales and EBITDA - Packaging

	2002	2001	2000
EBITDA (US$M)	347	352	73
Sales and operating revenues (US$M)	2,812	2,861	1,216

Significant cost improvements helped offset a weak economic environment.

Alcan's packaging revenues can be broken down as follows:

((Graph))

By Market

Food	43%
Pharmaceutical	18%
Tobacco	15%
Cosmetics	7%
Other	17%
By Type of Input
Plastic and Paper	41%
Aluminum	38%
Paperboard	12%
Glass	7%
Steel	2%
By Region
Europe	56%
North America	37%
South America	3%
Asia	4%

Acquisition of VAW Packaging
At the close of 2002, an agreement was finalized to acquire VAW Flexible Packaging (FlexPac) from Norsk Hydro for approximately $370 million. The proposed acquisition represents an excellent platform for profitable growth and is a good example of Alcan's focus on maximizing value. It would significantly enhance Alcan's global position in packaging, expanding its footprint technologically and regionally, particularly in the developing markets of Asia. On completion, Alcan would have world-class flexible packaging operations in Europe, Asia and the Americas. FlexPac includes 14 plants in 8 countries and 5,400 employees and posted consolidated sales of $680 million in 2001 at today's exchange rates. Based upon projected earnings for 2002, the purchase price represents a multiple of approximately 6.9 times EBITDA.

Packaging Business Units
Foil and technical products continued to implement major restructuring programs in the U.K., Germany and Switzerland, which are key to maximizing shareholder value. To maintain profitability, these aggressive cost reduction programs were needed to offset declines in major markets, particularly in the construction industry.

Flexible food packaging, particularly in Europe, was the most significantly impacted by price pressure. European volumes weakened in the early months of the year, although North American volumes remained strong. EBITDA was nonetheless sustained, and in the case of North America significantly improved, both through leveraging Alcan's strong service offering to key accounts and by successes in restructuring and other cost initiatives.

Operations began in late 2001 at a new contract packaging and specialty carton facility in Pennsylvania, building on Alcan's success in another similar plant in Canada. New investments were also made to relocate one facility and include it with the construction of a dedicated plant for a major customer in Spain.

Alcan's food container business counterbalanced the general economic slowdown in Europe with its cost initiatives and, despite lower sales, recorded improved profits.

Following volume declines in pharmaceutical and cosmetics packaging in the last quarter of 2001, the recovery in 2002 has been mixed. Although flexible pharma packaging has rebounded well, product introductions by customers in plastics as well as in specialty cartons and contract packaging have been subject to delays. Aerosol can volumes did recover during the year, but pricing pressure continued due to European overcapacity. The Company's molded glass operations were sold at the end of the third quarter in 2002, as they were disadvantaged from a competitive standpoint. Included in the year were revenues of $88 million and operating losses of $6 million from these operations.

Alcan's tobacco packaging business reached a new milestone in 2002, with U.S. carton sales growing by 50% over the prior year as a result of commissioning a new plant in Richmond, Virginia during 2001. The second year of the new venture in Kazakhstan saw the achievement of additional new customer volume, establishing a strong foothold in the markets of western Asia. Inner-liner volumes also remained very buoyant throughout the year in line with the projections underpinning Alcan's new metallizing and laminating plant in Berlin, Germany, which was at an advanced stage of construction by the end of 2002.

Proposed acquisition of VAW Packaging an example of profitable growth.

Risks and Uncertainties
For further details, refer to notes 22, 23 and 24 of the financial statements.

Risk Management
As a multinational company, which is to a large degree engaged in a commodity-related business, Alcan's financial performance is heavily influenced by fluctuations in metal prices and exchange rates. In order to reduce the associated risks, the Company uses a variety of financial instruments and commodity contracts. Clearly defined policies and management controls govern all risk management activities. Transactions in financial instruments for which there is no underlying exposure to the Company are prohibited, except for a small metal trading portfolio not exceeding 10,000 tonnes.

The decision whether and when to commence a hedge, along with the duration of the hedge, can vary from period to period depending on market conditions and the relative costs of various hedging instruments. The duration of a hedge is always linked to the timing of the underlying transaction, with the connection between the two being constantly monitored to ensure effectiveness.

Sensitivities
Estimated after-tax effect on Alcan's net income of:

	Change in full	US$M	US$
	year average*		per share
Exchange rate on long-term profitability
Canadian dollar	+1 US cent	$(11)	$ (0.03)
Euro	+1 US cent	$4	$ 0.01
Exchange rate on balance sheet translation
Canadian dollar	+1 US cent	$(17)	$ (0.05)
Australian dollar	+1 US cent	$(6)	$ (0.02)
Metal price on long-term profitability
Aluminum	+US$100/t	$146	$ 0.45

* Except for balance sheet translation which is point-in-time.

Foreign Currency Exchange
Exchange rate movements, particularly between the Canadian dollar and the U.S. dollar, have an impact on Alcan's costs and therefore its net results. Because the Company has significant operating costs denominated in Canadian dollars while its reporting currency is the U.S. dollar, it benefits long-term from a weakening in the Canadian dollar, but conversely, is disadvantaged if it strengthens.

Following the algroup merger, exchange movements have a greater impact on the Company's net income as a result of translating the euro earnings into U.S. dollars. Alcan benefits from a strengthening of the euro, but conversely, is disadvantaged if it weakens.

The Company's deferred income tax liabilities and net monetary liabilities for operations in Canada and Australia are translated into U.S. dollars at current rates. The resultant exchange gains or losses are included in income and fluctuate from quarter to quarter depending on the changes in exchange rates. A decrease in the Canadian and Australian dollars results in a favourable effect, whereas an increase results in an unfavourable impact.

Aluminum Prices
Depending on market conditions and logistical considerations, Alcan may sell primary aluminum to third parties and may purchase primary aluminum and secondary aluminum, including scrap, on the open market to meet the requirements of its fabricating businesses. In addition, depending on pricing arrangements with fabricated products customers, Alcan may hedge some of its purchased metal supply in support of those sales.

Through the use of forward purchase and sale contracts and options, Alcan seeks to limit the impact of lower metal prices.

Critical Accounting Policies
The Company's significant accounting policies are presented in note 2 to the financial statements. The critical accounting policies described below are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Post-retirement Benefits
The costs of pension and other post-retirement benefits are calculated based on assumptions determined by management, with the assistance of independent actuarial firms and consultants. These assumptions include the long-term rate of return on pension assets, discount rates for pension and other post-retirement benefits obligations, expected service period, salary increases, retirement ages of employees and health care cost trend rates. If actual experience differs from the assumptions made by management, the pension and other post-retirement benefits expenses will increase or decrease in future years as a result. See note 26 - Post-retirement Benefits for additional information, including a sensitivity analysis for assumed health care cost trend rates.

Environmental Liabilities and Contingencies
Environmental expenses and contingencies are accrued on an undiscounted basis when it is probable that a liability for past events exists and the liabilities can be reasonably estimated. In determining whether a liability exists, the Company is required to make judgments as to the probability of a future event occurring. If the Company's judgments differ from those of legal or statutory authorities, the provisions for environmental expenses and contingencies could increase or decrease in future periods.

Property, Plant and Equipment
Due to changing economic and other circumstances, the Company regularly reviews and evaluates its property, plant and equipment for impairment in order to record the assets at the lower of cost or net recoverable amount. In determining whether the assets are impaired, the Company makes assumptions and estimates as to future cash flows and profitability. Actual results could differ from those estimates.

Goodwill
As reported in note 3, Accounting Changes, effective January 2002, goodwill is no longer amortized but is tested annually for impairment at the reporting unit level. Impairment is determined by comparing the fair value of the reporting unit to its carrying value. The fair value of a reporting unit and assets and liabilities within a reporting unit may be determined using alternative methods for market valuation, including quoted market prices, discounted cash flows and net realizable values.

In estimating the fair value of a reporting unit, the Company chose a valuation method developed by outside consultants and made assumptions and estimates in a number of areas, including future cash flows and discount rates. The Company regularly uses independent appraisers and consultants to perform valuations of the assets and liabilities. The use of different judgments and estimates in the test for goodwill impairment may result in significantly different results.

Income Taxes
The provision for income taxes is calculated based on the expected tax treatment of transactions recorded in the Company's consolidated financial statements. Income tax assets and liabilities, both current and deferred, are measured according to the income tax legislation that is expected to apply when the asset is realized or the liability settled. The Company regularly reviews the recognized and unrecognized deferred income tax assets to determine whether a valuation allowance is required or needs to be adjusted. In forming a conclusion about whether it is appropriate to recognize a tax asset, the Company must use judgment in assessing the potential for future recoverability while at the same time considering past experience. All available evidence is considered in determining the amount of a valuation allowance. If the Company's interpretations differ from those of tax authorities or judgments with respect to tax losses change, the income tax provision could increase or decrease in future periods.

Cautionary Statement
Statements made in this report that describe the Company's or management's objectives, projections, estimates, expectations or predictions of the future may be "forward-looking statements" within the meaning of securities laws, which can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "should", "estimates", "anticipates" or the negative thereof or other variations thereon. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and that the Company's actual actions or results could differ materially from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized. Important factors that could cause such differences include global supply and demand conditions for aluminum and other products, aluminum ingot prices and changes in raw materials' costs and availability, changes in the relative value of various currencies, cyclical demand and pricing within the principal markets for the Company's products, changes in government regulations, particularly those affecting environmental, health or safety compliance, economic developments, relationships with and financial and operating conditions of customers and suppliers, the effects of integrating acquired businesses and the ability to attain expected benefits and other factors within the countries in which the Company operates or sells its products and other factors relating to the Company's ongoing operations including, but not limited to, litigation, labour negotiations and fiscal regimes. The aluminum market overview contained in this report is based on research that includes information from sources believed to be reliable, but Alcan does not make any representation that it is accurate in every detail. The aluminum market overview represents the Company's views as of February 9, 2003.

        Responsibility for the Annual Report
Alcan's management is responsible for the preparation, integrity and fair presentation of the financial statements and other information in the Annual Report. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include, where appropriate, estimates based on the best judgment of management. A reconciliation with generally accepted accounting principles in the United States is also presented. Financial and operating data elsewhere in the Annual Report are consistent with that contained in the accompanying financial statements.

Alcan's policy is to maintain systems of internal accounting, administrative and disclosure controls of high quality consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is accurate and reliable and that Company assets are adequately accounted for and safeguarded. The Board of Directors oversees the Company's systems of internal accounting, administrative and disclosure controls through its Audit Committee, which is comprised of directors who are not employees. The Audit Committee meets regularly with representatives of the shareholders' independent auditors and management, including internal audit staff, to satisfy themselves that Alcan's policy is being followed. In addition, a Disclosure Committee of management has been established to manage disclosure of corporate information and oversee the functioning of the Company's disclosure controls and procedures.

The Audit Committee has recommended the appointment of PricewaterhouseCoopers LLP as the independent auditors, subject to approval by the shareholders.

The financial statements have been reviewed by the Audit Committee and, together with the other required information in this Annual Report, approved by the Board of Directors. In addition, the financial statements have been audited by PricewaterhouseCoopers LLP, whose report is provided on this page.

((Signature))
Travis Engen, President and Chief Executive Officer

((Signature))
Geoffery E. Merszei, Executive Vice-President and Chief Financial Officer
February 9, 2003

        OECD Guidelines
The Organization for Economic Cooperation and Development (OECD), which consists of 30 industrialized countries including Canada, has established guidelines setting out an acceptable framework of reciprocal rights and responsibilities between multinational enterprises and host governments. Alcan supports and complies with the OECD guidelines and has a Worldwide Code of Employee and Business Conduct, which is consistent with them.

        Auditors' Report
        To the Shareholders of Alcan Inc.
We have audited the consolidated balance sheets of Alcan Inc. as at December 31, 2002, 2001 and 2000 and the consolidated statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in Canada and the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002, 2001 and 2000 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting principles.

((Signature))
PricewaterhouseCoopers LLP, Chartered Accountants      Montreal, Canada, February 9, 2003

        Comments by Auditors on Canada-United States Reporting Difference
United States reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by a change in accounting principle, such as those changes described in note 3 to the consolidated financial statements. Although we conducted our audits in accordance with both Canadian and United States generally accepted auditing standards, our report to the shareholders dated February 9, 2003 is expressed in accordance with Canadian reporting standards which do not permit a reference to such changes in accounting principles in the auditors' report when the changes are properly accounted for and adequately disclosed in the financial statements.

((Signature))
PricewaterhouseCoopers LLP, Chartered Accountants      Montreal, Canada, February 9, 2003

Consolidated Financial Statements

Consolidated Statement of Income (in millions of US$, except per share amounts)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
Sales and operating revenues	12,540	12,626	9,148
Costs and expenses
Cost of sales and operating expenses	9,934	9,999	7,113
Depreciation and amortization (notes 2 and 6)	859	820	545
Selling, administrative and general expenses	577	547	405
Research and development expenses	115	135	81
Interest	203	254	78
Restructuring, impairment and other special charges(note 8)	69	657	-
Other expenses (income) - net (note 12)	116	113	51
	11,873	12,525	8,273
Income before income taxes and other items	667	101	875
Income taxes (note 9)	293	42	254
Income before other items	374	59	621
Equity income	3	3	4
Minority interests	(3)	13	1
Net income before amortization of goodwill	374	75	626
Amortization of goodwill (notes 2 and 6)	-	73	16
Net income	374	2	610
Dividends on preference shares	5	8	10
Net income (Loss) attributable to common shareholders	369	(6)	600
Net income per common share before
amortization of goodwill  - basic	1.15	0.21	2.47
Amortization of goodwill per common share	-	0.23	0.05
Net income (Loss) per common share - basic(note 4)	1.15	(0.02)	2.42
Net income (Loss) per common share - diluted(note 4)	1.14	(0.02)	2.42
Dividends per common share	0.60	0.60	0.60

Consolidated Statement of Retained Earnings (in millions of US$)

Year ended December 31	2002	2001	2000
Retained earnings - beginning of year
As previously reported	4,095	4,290	4,227
Accounting change - Unamortized exchange loss (note 3)	(21)	(18)	(10)
As restated	4,074	4,272	4,217
Accounting change - Impairment of goodwill
as at January 1, 2002 (note 3)	(748)	-	-
Net income	374	2	610
Amount related to common shares purchased
for cancellation	-	-	(400)
Dividends
- Common	(192)	(192)	(145)
- Preference	(5)	(8)	(10)
Retained earnings - end of year(note 21)	3,503	4,074	4,272

The accompanying notes are an integral part of the financial statements.

Consolidated Balance Sheet (in millions of US$)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
ASSETS
Current assets
Cash and time deposits	110	119	261
Trade receivables (net of allowances of $59 in 2002,
$52 in 2001 and $55 in 2000)(notes 2 and 11)	1,300	1,216	1,721
Other receivables	553	532	559
Inventories
- Aluminum operating segments
- Aluminum	905	875	1,034
- Raw materials	390	413	414
- Other supplies	296	269	268
	1,591	1,557	1,716
- Packaging operating segment	396	393	399
	1,987	1,950	2,115
	3,950	3,817	4,656
Deferred charges and other assets (note 13)	667	716	701
Property, plant and equipment(note 14)
Cost (excluding Construction work in progress)	17,798	16,225	14,807
Construction work in progress	573	613	1,979
Accumulated depreciation	(8,138)	(7,136)	(6,753)
	10,233	9,702	10,033
Intangible assets, net of accumulated amortization
of $56 in 2002, $27 in 2001 and $5 in 2000(note 6)	332	298	330
Goodwill (note 6)	2,356	2,925	2,669
Total assets	17,538	17,458	18,389
Liabilities and shareholders' Equity
Current liabilities
Payables and accrued liabilities	2,337	2,328	2,427
Short-term borrowings	385	555	1,080
Debt maturing within one year (note 17)	295	652	333
	3,017	3,535	3,840
Debt not maturing within one year (notes 17 and 24)	3,187	2,884	3,195
Deferred credits and other liabilities (note 16)	1,419	1,131	874
Deferred income taxes (note 9)	1,140	1,006	1,227
Minority interests	150	132	244
Shareholders' equity
Redeemable non-retractable preference shares (note 18)	160	160	160
Common shareholders' equity
Common shares(note 19)	4,703	4,687	4,597
Retained earnings (note 21)	3,503	4,074	4,272
Deferred translation adjustments (note 23)	259	(151)	(20)
	8,465	8,610	8,849
	8,625	8,770	9,009
Commitments and contingencies (note 22)
Total liabilities and shareholders' equity	17,538	17,458	18,389

The accompanying notes are an integral part of the financial statements.

Approved by the Board:

((Signature))
Travis Engen, Director
((Signature))
Guy Saint-Pierre, Director

Consolidated Statement of Cash Flows (In millions of US$)

Year ended December 31	2002	2001	2000
		(Restated - note 3)	(Restated - note 3)
Operating activities
Net income	374	2	610
Adjustments to determine cash from operating activities:
Depreciation and amortization	859	820	545
Amortization of goodwill	-	73	16
Deferred income taxes	68	(152)	52
Asset impairment provisions	33	232	-
Loss (Gain) on sales of businesses and investment - net	(27)	123	(9)
Change in operating working capital
Change in receivables	143	122	(25)
Change in inventories	93	75	(117)
Change in payables	(81)	(58)	(81)
Total change in operating working capital	155	139	(223)
Change in deferred charges, other assets,
deferred credits and other liabilities - net	149	134	36
Other - net	3	16	39
Cash from operating activities	1,614	1,387	1,066
Financing activities
New debt	848	1,852	1,586
Debt repayments	(1,138)	(1,779)	(419)
	(290)	73	1,167
Short-term borrowings - net	(207)	(479)	280
Sale of receivables	-	300	-
Common shares purchased for cancellation	-	-	(530)
Common shares issued	16	61	21
Dividends
- Alcan shareholders (including preference)	(197)	(200)	(155)
- Minority interests	(6)	(2)	(2)
Cash from (used for) financing activities	(684)	(247)	781
Investment activities
Property, plant and equipment	(728)	(1,110)	(1,491)
Business acquisitions (note 15)	(345)	(404)	(244)
	(1,073)	(1,514)	(1,735)
Net proceeds from disposal of businesses, investments
and other assets	121	239	184
Preacquisition loan to algroup to finance special payment
to algroup shareholders	-	-	(532)
Cash used for investment activities	(952)	(1,275)	(2,083)
Effect of exchange rate changes on cash and time deposits	13	(7)	2
Decrease in cash and time deposits	(9)	(142)	(234)
Cash of subsidiaries consolidated (deconsolidated) - net	-	-	180
Cash and time deposits - beginning of year	119	261	315
Cash and time deposits - end of year	110	119	261

The accompanying notes are an integral part of the financial statements.

        Notes to Consolidated Financial Statements
        (in millions of US$, except where indicated)

        Note 1. Nature of Operations
Alcan is engaged, together with subsidiaries, joint ventures and related companies, in a variety of aspects of the aluminum and packaging businesses on an international scale. Its operations include the mining and processing of bauxite, the basic aluminum ore; the refining of bauxite into alumina; the generation of electric power for use in smelting aluminum; the smelting of aluminum from alumina; the recycling of used and scrap aluminum; the fabrication of aluminum, aluminum alloys and non-aluminum materials into semi-fabricated and finished products; the producing and converting of specialty packaging and packaging products for many industries including the food, pharmaceutical, cosmetic and health sectors; the distribution and marketing of aluminum, non-aluminum and packaging products; and, in connection with its aluminum operations, the production and sale of industrial chemicals. Alcan, together with its subsidiaries, joint ventures and related companies, has bauxite holdings in five countries, produces alumina in three countries, smelts primary aluminum in seven countries, operates rolled products plants in ten countries, has engineered products plants in seventeen countries, has packaging facilities in fourteen countries and has sales outlets and maintains warehouse inventories in the larger markets of the world. Alcan also operates a global transportation network that includes the operation of bulk cargo vessels, port facilities and freight trains.

        Note 2. Summary of Significant Accounting Policies
        Generally Accepted Accounting Principles
These financial statements conform with Canadian generally accepted accounting principles (GAAP). Note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP), provides an explanation and reconciliation of differences between Canadian and U.S. GAAP.

        Use of Estimates
The preparation of financial statements in conformity with GAAP in Canada and the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        Principles of Consolidation
These consolidated financial statements include the accounts of subsidiaries that are controlled by Alcan, all of which are majority owned. Joint ventures, irrespective of percentage of ownership, are proportionately consolidated to the extent of Alcan's participation. Companies subject to significant influence are accounted for using the equity method. Under the equity method, Alcan's investment is increased or decreased by Alcan's share of the undistributed net income or loss and deferred translation adjustments since acquisition. Investments in companies in which Alcan does not have significant influence are accounted for using the cost method. Under the cost method, dividends received are recorded as income.

        Intercompany balances and transactions, including profits in inventories, are eliminated in the
        consolidated financial statements.
        All business combinations are accounted for under the purchase method.

        Foreign Currency
The financial statements of self-sustaining foreign operations (located principally in Europe and Asia) are translated into U.S. dollars at prevailing exchange rates. Revenues and expenses are translated at average exchange rates for the year while assets and liabilities are translated at exchange rates in effect at year-end. Differences arising from exchange rate changes are included in the Deferred translation adjustments (DTA) component of Common shareholders' equity. If there is a reduction in the Company's ownership in a foreign operation, the relevant portion of DTA is recognized in Other expenses (income) - net or Restructuring, impairment and other special charges at that time. All other operations, including those in Canada, are considered to be integrated foreign operations having the U.S. dollar as the functional currency. Under this method, monetary items are translated at current rates and translation gains and losses are included in income. (See note 3 - Accounting Changes; Deferred Foreign Exchange Translation Gains and Losses). Non-monetary items are translated at historical rates.

The Company has entered into foreign currency contracts and options that are designated as hedges of certain future identifiable foreign currency revenue and operating cost exposures. The exchange gains or losses are not recorded in the financial statements until the contract is settled or the designated transaction is recognized. They are then included, together with related hedging costs, in Sales and operating revenues, Cost of sales and operating expenses, Depreciation and amortization or Property, plant and equipment, as applicable, concurrently with recognition of the underlying items being hedged.

Foreign currency forward contracts and swaps are also used to hedge certain foreign currency denominated debt and intercompany foreign currency denominated loans. Unrealized currency gains or losses on these contracts are recorded in earnings concurrently with the unrealized gains or losses on the foreign currency denominated debt and intercompany foreign currency denominated loans being hedged.

Other gains and losses from foreign currency denominated items are included in Other expenses (income) - net.

        Revenue Recognition
The Company recognizes revenue when significant risks and benefits of ownership are transferred, which coincides with when the goods are shipped or services rendered.

        Commodity Contracts and Options
Virtually all of the forward metal contracts and options serve to hedge certain future identifiable aluminum price exposures. Gains or losses on these hedges are not recorded in the financial statements until early settlement or recognition of the hedged transaction. They are then included, together with related hedging costs, in Sales and operating revenues or Cost of sales and operating expenses, as applicable, concurrently with recognition of the underlying items being hedged.

Unrealized gains and losses on oil and natural gas futures contracts, swaps and options are generally not recorded in the financial statements until recognition of the hedged transactions. In circumstances where a hedging relationship cannot be demonstrated, the derivatives are recorded at fair value and the unrealized gains and losses recorded in earnings.

 In circumstances where the Company's purchase or sales contracts for a commodity contain derivative characteristics, these contracts are generally not recorded at fair value as they involve quantities that are expected to be used or sold in the normal course of business over a reasonable period of time.

        Interest Rate Swaps
Amounts receivable or payable under interest rate swaps are recorded in Interest concurrently with the interest expense on the underlying debt. Unrealized gains and losses are not recorded in the financial statements as these contracts hedge interest costs on certain debt.

        Inventories
Aluminum, raw materials, packaging products and other supplies are stated at cost (determined for the most part on the monthly average cost method) or net realizable value, whichever is lower.

        Capitalization of Interest Costs
The Company capitalizes interest costs associated with the financing of major capital expenditures up to the time the asset is ready for its intended use.

        Sale of Receivables
When the Company sells certain receivables, it retains servicing rights and provides limited recourse, which constitute retained interests in the sold receivables. No servicing asset or liability is recognized in the financial statements as the fees received by the Company reflect the fair value of the cost of servicing these receivables. The related purchase discount is included in Other expenses (income) - net.

        Property, Plant and Equipment
Property, plant and equipment is recorded at the lower of cost and net recoverable amount. Depreciation is calculated on the straight-line method using rates based on the estimated useful lives of the respective assets. The principal rates range from 2% to 10% for buildings and structures, 1% to 4% for power assets and 3% to 20% for chemical, smelter and fabricating assets.

        Goodwill
As of January 2002, goodwill is no longer amortized and is carried at the lower of carrying value and fair value. Goodwill is tested for impairment on an annual basis at the reporting unit level. Fair value is determined using discounted cash flows.

Under accounting standards in effect until December 31, 2001, goodwill was recorded at cost less accumulated amortization and was amortized over a period of 40 years using the straight-line method of amortization. Periodic assessments were made to determine whether there was permanent impairment in the remaining unamortized goodwill balance based on the undiscounted cash flows of the underlying operations. (See note 3 - Accounting Changes; Goodwill and Other Intangible Assets).

        Intangible Assets
Intangible assets are primarily trademarks and patented and non-patented technology, all of which have finite lives. Intangible assets are recorded at cost less accumulated amortization and are generally amortized over 15 years using the straight-line method of amortization.

        Environmental Costs and Liabilities
Environmental expenses are accrued on an undiscounted basis when it is probable that a liability for past events exists. Such liabilities are reviewed and adjusted as required on a regular basis to reflect current conditions. For future removal and site restoration costs, provision is made in a systematic manner by periodic charges to income, except for assets that are no longer in use, in which case full provision is charged immediately to income. Environmental expenses are normally included in Cost of sales and operating expenses except for large, unusual amounts which are included in Other expenses (income) - net. For 2001, the environmental provisions for treatment costs relating to spent potlining (SPL) in Quebec and British Columbia, Canada, and for remediation costs relating to red mud disposal at other sites in Canada and the United Kingdom were included in Restructuring, impairment and other special charges. Accruals related to environmental costs are included in Payables and accrued liabilities and Deferred credits and other liabilities.

Environmental expenditures of a capital nature that extend the life, increase the capacity or improve the safety of an asset or that mitigate or prevent environmental contamination that has yet to occur are included in Property, plant and equipment and are depreciated generally over the remaining useful life of the underlying asset.

        Post-retirement Benefits
The costs of pension benefits and post-retirement benefits other than pensions are recognized on an accrual basis over the working lives of employees. Post-retirement benefit obligations are actuarially calculated using management's best estimates and based on expected service period, salary increases and retirement ages of employees. Post-retirement benefit expense includes the actuarially computed cost of benefits earned during the current service period, the interest cost on accrued obligations, the expected return on plan assets based on fair market value and the straight line amortization of net actuarial gains and losses and adjustments due to plan amendments. All net actuarial gains and losses are amortized over the expected average remaining service life of the employees.

        Stock Options and Other Stock-based Compensation
The Company does not recognize compensation expense in earnings for options granted under the share option plan for employees as stock options are granted at an exercise price equal to the market price of the underlying stock on the grant date. The pro forma effect, if the Company had elected to recognize compensation expense for stock options using the fair value method, is disclosed in note 20 - Stock Options and Other Stock-Based Compensation. Stock compensation arrangements that can be settled in cash result in the recognition of compensation expense.

        Income Taxes
The Company uses the liability method for income taxes, under which deferred income tax assets and liabilities are recorded based on the temporary differences between the accounting basis and the tax basis of assets and liabilities. Deferred income tax assets and liabilities are revalued for all changes in tax rates and exchange rates. The future recoverability of recognized deferred income tax assets is assessed on a regular basis to determine whether a valuation allowance is required.

        Cash and Time Deposits
All time deposits have original maturities of 90 days or less and qualify as cash equivalents.

        Recently Issued Accounting Standards
        Hedging Relationships
The Canadian Institute of Chartered Accountants (CICA) issued an accounting guideline which establishes certain conditions regarding when hedge accounting may be applied and which is effective for the Company's fiscal year beginning January 1, 2004, with earlier application encouraged. The Company is studying the new guideline and is preparing for implementation of the hedging provisions. Each hedging relationship will be subject to an effectiveness test on a regular basis for reasonable assurance that it is and will continue to be effective. Under these rules, any derivative instrument that does not qualify for hedge accounting will be reported on a mark-to-market basis in earnings.

        Impairment of Long-lived Assets
The CICA issued Section 3063, Impairment of Long-lived Assets, which will be effective for the Company's fiscal year beginning on January 1, 2003. Under this standard, an impairment loss should be recognized when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The policies of this standard are the same as the policies contained in the recently adopted Financial Accounting Standards Board (FASB) Statement No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. (See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)).

        Disposal of Long-lived Assets and Discontinued Operations
The CICA issued Section 3475, Disposal of Long-lived Assets and Discontinued Operations, which will be effective for disposal activities initiated by the Company's commitment to a plan on or after May 1, 2003, with earlier application encouraged. Under this standard, a long-lived asset to be disposed of by sale should be measured at the lower of its carrying amount or fair value less cost to sell and should not be amortized while classified as held for sale. For a long-lived asset to be disposed of other than by sale, such as by abandonment, before the end of its previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over its shortened useful life. Also, the standard requires that the results of operations of a component of an enterprise that has been disposed of either by sale or abandonment should be reported in discontinued operations. A component of an enterprise comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the enterprise. The policies of this standard are the same as those policies contained in the recently adopted FASB Statement No.144, Accounting for the Impairment or Disposal of Long-lived Assets. (See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)).

        Note 3. Accounting Changes
        Goodwill and Other Intangible Assets
On January 1, 2002, the Company adopted the new standard of the CICA concerning goodwill and other intangible assets. Under this standard, goodwill and other intangible assets with an indefinite life are no longer amortized but are carried at the lower of carrying value and fair value. Goodwill and other intangible assets with an indefinite life are tested for impairment on an annual basis.

Goodwill is tested for impairment using a two-step test. Under the first step, the fair value of a reporting unit, based upon discounted cash flows, is compared to its net carrying amount. If the fair value is greater than the carrying amount, no impairment is deemed to exist. However, if the fair value is less than the carrying amount, a second test must be performed whereby the fair value of the reporting unit's goodwill must be estimated to determine if it is less than its carrying amount. Fair value of goodwill is estimated in the same way as goodwill is determined at the date of acquisition in a business combination, that is, the excess of the fair value of the reporting unit over the fair value of the identifiable net assets of the reporting unit.

An impairment of $748 was identified in the goodwill balance as at January 1, 2002, and was charged to opening retained earnings in 2002 upon adoption of the new accounting standard. Any further impairment arising subsequent to January 1, 2002, will be taken as a charge against income. As a result of the new standard, the Company no longer amortizes goodwill. The amount of goodwill amortization was $73 in 2001 and $16 in 2000.

        Deferred Foreign Exchange Translation Gains and Losses
As of January 1, 2002, the Company no longer amortizes the exchange gains and losses arising on the translation of long-term foreign currency denominated monetary assets and liabilities that have a fixed or ascertainable life extending beyond the end of the following fiscal year. These exchange gains and losses are now recognized in income immediately.

This standard has been applied retroactively and, consequently, prior years' financial statements have been restated. At December 31, 2001, Retained earnings have been decreased by $21 (2000: $18) and Deferred charges and other assets have been reduced by $21 (2000: $18) to reflect the recognition of the unamortized exchange losses that existed at each year-end.

Related to this accounting change, in 2002, an exchange loss of $7 (2001: $3; 2000: $8), on the translation of long-term foreign currency denominated monetary assets and liabilities, has been included in Other expenses (income) - net.

        Stock Options and Other Stock-based Compensation
On January 1, 2002, the Company adopted the new standard of the CICA relating to the measurement of stock options and other stock-based compensation. This standard is being applied to both options granted after January 1, 2002, and options granted before that date. This standard encourages but does not require that the fair value method be used for transactions with employees. In note 20 - Stock Options and Other Stock-based Compensation, pro forma net income and net income per common share - basic and diluted are presented as if the fair value based method had been applied to all stock option awards.

        Business Combinations
All business combinations initiated on or after July 1, 2001, are now required to be accounted for under the purchase method.

        Note 4. Net Income per Common Share - Basic and Diluted
Basic and diluted net income per common share are based on the weighted average number of shares outstanding during the year. The treasury stock method for calculating the dilutive impact of stock options is used. The following table outlines the calculation of basic and diluted net income per common share.

	2002	2001	2000
Numerator for basic and diluted net income per common share:
Net income (Loss) attributable to common shareholders	369	(6)	600
Denominator (number of common shares in millions):
Denominator for basic net income per common share -
weighted average of outstanding shares	321	320	248
Effect of dilutive stock options	1	1	-
Denominator for diluted net income per common share -
adjusted weighted average of outstanding shares	322	321	248
Net income (Loss) per common share - basic	1.15	(0.02)	2.42
Net income (Loss) per common share - diluted	1.14	(0.02)	2.42

Options to purchase 1,146,500 common shares (2001: 579,000; 2000: nil) at a weighted average price of CAN$60.16 per share (2001: CAN$59.35) were outstanding during the year but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average price of the common shares.

As at December 31, 2002, there are 321,470,298 common shares outstanding (2001: 320,901,748; 2000: 317,921,113).

        Note 5. Combination with Alusuisse Group Ltd
On October 17, 2000, the Company entered into a combination agreement with Alusuisse Group Ltd (algroup). At that date, the shareholders of algroup, in response to the Company's share exchange offer, tendered 6,747,707 shares, representing 99.37% of the outstanding registered algroup shares, in exchange for 115,385,790 shares of the Company valued at $30.11 per share. The Company also assumed from algroup total debt of $2,171. The combination was completed and algroup became a subsidiary of the Company on October 17, 2000. During 2001, the Company acquired the remaining shares of algroup in accordance with the provisions of Swiss law.The combination was accounted for using the purchase method of accounting and the results of operations of algroup are included in the consolidated financial statements since acquisition. At the date of acquisition, the purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

Fair value of net assets acquired at date of acquisition
Cash and time deposits	175
Other current assets	1,641
Deferred charges and other assets	162
Capital assets	2,822
Total assets	4,800
Current liabilities	2,002
Long-term debt*	1,292
Deferred credits and other liabilities	330
Deferred income taxes	401
Fair value of net assets acquired at date of acquisition	775

Determination of fair values was based on valuations performed by independent appraisers and consultants. Allocation of the purchase price involved estimates and information gathering during the months following the date of the combination. This estimation process was finalized in 2001.

Net restructuring and other costs for plant closures of $54 were recognized in the purchase price allocation. Of the total restructuring and other costs of $54, an amount of $1 was paid out in 2002 (2001: $16) relating primarily to employee severance costs.

In 2001, the fair values of certain assets and liabilities were adjusted from the amounts originally assigned at the date of combination. As a result, additional goodwill of $123 was recorded.

The difference between the total purchase price and the net fair value of all identifiable assets and liabilities acquired as at December 31, 2001, was $2,780 (2000: $2,620) and is accounted for as goodwill. Goodwill was amortized over a period of 40 years using the straight-line method of amortization until December 31, 2001. As of January 1, 2002, goodwill is no longer amortized but is carried at the lower of carrying value and fair value. Goodwill is tested for impairment on an annual basis. (See note 3 - Accounting Changes; Goodwill and Other Intangible Assets).

Consideration
Issuance of common shares on October 17, 2000 (115,385,790 common shares
without nominal or par value; average market value of $30.11 per share)	3,474
Issuance of common shares in 2001 (687,882 common shares without nominal or par value;
average market value of $44 per share)	30
Other consideration	51
Total consideration	3,555

        Supplemental pro forma information (in millions of US$, except per share amounts)
The following unaudited pro forma information for 2000 presents a summary of consolidated results of operations of the Company and algroup as if the combination had occurred on January 1, 1999. These pro forma results have been prepared for comparative purposes only.

	2000
	(unaudited)
Sales and operating revenues	13,146
Net income before amortization of goodwill	737
Net income	672
Net income per common share before amortization of goodwill	2.22
Net income per common share - basic and diluted	2.02

        Note 6. Goodwill and Intangible Assets
        Goodwill

The changes in the carrying amount of goodwill for the year ended December 31, 2002, are as follows:
	Balance				Deferred	Balance
	as at	Impairment			translation	as at
	January 1, 2002	losses	Additions	Adjustments	adjustments	December 31, 2002
Bauxite, Alumina and Specialty Chemicals	543	-	-	3	-	546
Primary Metal	426	-	33	3	49	511
Rolled Products Europe	163	(163)	-	-	-	-
Engineered Products	466	(321)	2	(5)	19	161
Packaging	1,306	(264)	-	(7)	103	1,138
Other	21	-	-	(21)	-	-
Total	2,925	(748)	35	(27)	171	2,356

Using the newly adopted accounting standard of the CICA concerning goodwill and other intangible assets (see note 3 - Accounting Changes), the Company completed a review to determine whether, at January 1, 2002, there was impairment in the goodwill balance. As a result of this review, an impairment loss of $748 was recognized as a charge to opening retained earnings in 2002. The adjustment reflects the decline in end-market conditions in the period from the algroup merger in October 2000 to January 1, 2002. The fair value of all reporting units was determined using discounted future cash flows. The annual test was completed for the year 2002 and no further impairment was identified.

A reduction in goodwill of $27 was recorded in 2002 principally relating to a decrease in the valuation allowance related to future income tax assets acquired in the combination with algroup, but which were not recognized at the date of the business combination.

Changes in the carrying amount of goodwill for the year ended December 31 were as follows:

	2001	2000
Goodwill - beginning of year	2,669	-
Issuance of common shares to complete algroup acquisition30	2,620
Adjustments to fair values of algroup assets and liabilities	123	-
Other consideration to complete algroup acquisition	7	-
Acquisition of the remaining 30% of the Gove alumina refinery	234	-
Deferred translation adjustments	(62)	65
Amortization	(73)	(16)
Amount related to disposal of a business	(3)	-
Goodwill - end of year	2,925	2,669

Amortizable intangible assets	Gross Carrying	Accumulated	Net Book
	Amount	Amortization	Value
		December 31, 2002
Trademarks	144	22	122
Patented and non-patented technology	224	33	191
Other	20	1	19
	388	56	332
		December 31, 2001
Trademarks	127	11	116
Patented and non-patented technology	198	16	182
	325	27	298
		December 31, 2000
Trademarks	131	2	129
Patented and non-patented technology	204	3	201
	335	5	330

The aggregate amortization expense for the year ended December 31, 2002, was $24. The estimated amortization expense for the five succeeding fiscal years is approximately $24 per year.

The acquisition of intangible assets amounted to $20 in the year ended December 31, 2002.

Pro forma net income and net income per common share - basic and diluted, before goodwill amortization, are presented below.

Year ended December 31	2001	2000
Reported net income	2	610
Goodwill amortization	73	16
Adjusted net income	75	626
Net income (Loss) per common share - basic and diluted
Reported net income (loss)	(0.02)	2.42
Goodwill amortization	0.23	0.05
Adjusted net income per common share - basic and diluted	0.21	2.47

        Note 7. Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP)
Significant differences between Canadian and United States GAAP are described below.

        Derivatives
Beginning in 2001, the Company was required to adopt, for U.S. GAAP reporting purposes, the FASB Statement Nos. 133 and 138, Accounting for Derivative Instruments and Hedging Activities. These standards require that all derivatives be recorded in the financial statements at fair value. However, the Company elected not to adopt the FASB's optional hedge accounting provisions. Accordingly, for U.S. GAAP reporting purposes only, beginning in 2001, unrealized gains and losses resulting from the valuation of derivatives at fair value are recognized in net income as the gains and losses arise and not concurrently with the recognition of the transactions being hedged. In its primary Canadian GAAP financial statements, the Company continues to recognize the gains and losses on derivative contracts in income concurrently with the recognition of the transactions being hedged, except for certain currency forward contracts and oil put options which are recorded at fair value.

Upon initial adoption of the FASB Statement Nos. 133 and 138 in 2001, the cumulative effect of the accounting change resulted in a decrease in net income of $12.

        Currency Translation
The difference between Deferred translation adjustments under Canadian GAAP and U.S. GAAP arises from the different treatment of exchange on long-term debt at January 1, 1983, resulting from the adoption of accounting standards on foreign currency translation.

        Comprehensive Income
U.S. GAAP requires the disclosure of Comprehensive income which, for the Company, comprises Net income under U.S. GAAP, the movement in Deferred translation adjustments under U.S. GAAP, unrealized gains or losses for the period less gains or losses realized during the period on "available-for-sale" securities and the movement in the minimum pension liability. The concept of Comprehensive income does not exist under Canadian GAAP.

        Investments
Under U.S. GAAP, certain portfolio investments, which are considered to be "available-for-sale" securities, are measured at market value, with the unrealized gains or losses included in Comprehensive income. Under Canadian GAAP, these investments are measured at cost.

        Minimum Pension Liability
Under U.S. GAAP, if the accumulated benefit obligation exceeds the market value of plan assets, a minimum pension liability for the excess is recognized to the extent that the liability recorded in the balance sheet is less than the minimum liability. Any portion of this additional liability that relates to unrecognized past service cost is recognized as an intangible asset while the remainder is charged to Comprehensive income. Canadian GAAP has no such requirement to record a minimum liability.

        Joint Ventures
Under Canadian GAAP, joint ventures are accounted for using the proportionate consolidation method, while under U.S. GAAP, joint ventures are accounted for under the equity method. Under an accommodation of the U.S. Securities and Exchange Commission, accounting for joint ventures need not be reconciled from Canadian to U.S. GAAP. The different accounting treatment affects only the display and classification of financial statement items and not net income or shareholders' equity. (See note 10 - Joint Ventures for summarized financial information about joint ventures).

        Consolidated Statement of Income
Under U.S. GAAP, separate subtotals for net income before amortization of goodwill and net income per common share before amortization of goodwill - basic would not be presented.

        Statement of Cash Flows
Under U.S. GAAP, separate subtotals within operating, financing and investment activities would not be presented.

        Recently Adopted Accounting Standards for u.s. GAAP Presentation
In 2002, the Company adopted the FASB Statement No. 141, Business Combinations, and the FASB Statement No. 142, Goodwill and Other Intangible Assets. Both statements are the same as the recently issued Canadian accounting standards except that under U.S. GAAP, goodwill impairment identified as at January 1, 2002, is charged to income as the cumulative effect of an accounting change. Under Canadian GAAP, an impairment loss of $748 was recognized as a charge to opening retained earnings in 2002. (See note 3 - Accounting Changes, for a description of the impact on the Company and see note 6 - Goodwill and Intangible Assets).

In 2002, the Company adopted the FASB Statement No. 144, Accounting for Impairment or Disposal of Long-lived Assets. This statement amends previous accounting and disclosure requirements for impairments and disposals of long-lived assets and discontinued operations.

The FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation addresses disclosure and initial recognition and initial measurement requirements for a guarantor that issues a guarantee. In 2002, the Company adopted the disclosure requirements of the Interpretation, which elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees that it has issued.

In 2002, the Company adopted the FASB Statement No. 148, Accounting for Stock-based Compensation. This statement amends transition and disclosure provisions provided in the FASB Statement No. 123, Accounting for Stock-based Compensation. (See note 2 - Summary of Significant Accounting Policies; Stock Options and Other Stock-based Compensation).

        Recently Issued Accounting Standards
The FASB has issued Statement No. 143, Accounting for Asset Retirement Obligations, which will be effective for the Company's fiscal year beginning on January 1, 2003. This statement establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The Company is studying these requirements and has not yet determined its impact.

The FASB has recently issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which will be effective for the Company's fiscal year beginning on January 1, 2003. This standard requires that a liability associated with an exit or disposal activity be recognized when the liability is incurred rather than at the date of the Company's commitment to an exit plan. The provisions of this new standard are generally to be applied prospectively.

Under the recently issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, the initial recognition and measurement provisions are to be applied on a prospective basis to guarantees issued or modified after December 31, 2002. The Company is studying the accounting requirements of this interpretation and is preparing for its implementation.

In January 2003 the FASB issued Interpretation No. 46, Consideration of Variable Interest Entities, which applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which the Company holds a variable interest that it acquired before February 1, 2003. This Interpretation requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. An entity that holds a significant variable interest but is not the primary beneficiary is subject to specific disclosure requirements. The Company is studying this Interpretation and has not yet determined its impact.

Reconciliation of Canadian and U.S. GAAP
	2002	2001	2000
Net income - as reported(restated for 2001 and 2000 - note 3)	374	2	610
Differences due to:
- Valuation of derivatives	60	(72)	-
- Other	(2)	5	(4)
- Deferred tax effect on the above	(20)	23	-
Net income (Loss) from continuing operations before cumulative effect of accounting changes
- U.S. GAAP	412	(42)	606
Cumulative effect of accounting changes
- Valuation of derivatives	-	(12)	-
- Impairment of goodwill	(748)	-	-
Net income (Loss) - U.S. GAAP	(336)	(54)	606
Dividends on preference shares	(5)	(8)	(10)
Net income (Loss) attributable to common shareholders - U.S. GAAP	(341)	(62)	596
Net income (Loss) per common share - basic and diluted - U.S. GAAP	(1.06)	(0.19)	2.40
Net income (Loss) attributable to common shareholders from continuing
operations before cumulative effect of accounting changes - U.S. GAAP	407	(50)	596
Net income (Loss) per common share - basic and diluted- U.S. GAAP	1.26	(0.16)	2.40

December 31	2002	2001		2000
	As	U.S.	As	U.S.	As	U.S.
	Reported	GAAP	Reported	GAAP	Reported	GAAP
			(Restated		(Restated
			- note 3)		- note 3)
Deferred charges and other assets	667	664	716	717	701	716
Intangible assets, net of
accumulated amortization	332	475	298	316	330	330
Payables and accrued liabilities	2,337	2,354	2,328	2,401	2,427	2,427
Deferred credits and other liabilities	1,419	2,029	1,131	1,364	874	874
Deferred income taxes	1,140	983	1,006	909	1,227	1,231
Retained earnings	3,503	3,537	4,074	4,070	4,272	4,324
Deferred translation adjustments (DTA)	259	205	(151)	(207)	(20)	(76)

Year ended December 31	2002	2001	2000
Comprehensive income (loss)
Net income (Loss)	(336)	(54)	606
Net change in deferred translation adjustments	412	(131)	56
Net change in excess of market value over book value of "available-for-sale" securities	8	(7)	(4)
Reclassification to net income on disposal of "available-for-sale" securities	(10)	-	-
Net change in minimum pension liability - net of taxes of $81 (2001: $67)	(172)	(148)	-
Comprehensive income (loss)	(98)	(340)	658
December 31	2002	2001	2000
Accumulated other comprehensive loss
Deferred translation adjustments	205	(207)	(76)
Minimum pension liability	(320)	(148)	-
Unrealized gain on "available-for-sale" securities	6	8	15
Accumulated other comprehensive loss	(109)	(347)	(61)

        Note 8. Restructuring, Impairment and Other Special Charges
Restructuring, impairment and other special charges of $657 pre-tax, which were recorded in 2001, included restructuring and asset impairment charges of $411 and other special charges of $246.

        Restructuring and Asset Impairment Charges
The provision balances and related cash payments for the restructuring and asset impairment charges consisted of:

	Asset
	Severance	Impairment
	Costs	Provisions	Other	Total
2001:
Charges	112	269	30	411
Cash payments - net	(7)	-	(7)	(14)
Non-cash charges	-	(269)	-	(269)
Provision balance as at December 31	105	-	23	128
2002:
Charges	36	26	27	89
Cash payments - net	(64)	-	(1)	(65)
Non-cash charges	(6)	(26)	(7)	(39)
Provision balance as at December 31	71	-	42	113

In 2001, the Company recorded charges of $411 pre-tax in Restructuring, impairment and other special charges as a result of a restructuring program aimed at safeguarding its competitiveness. The aim of the restructuring program was twofold: to make the businesses more competitive in the face of the current economic difficulties; and to put them in the best position to meet future industry needs. These aims are being achieved through cost reduction measures, exiting from non-core products and the consolidation of certain operations and are resulting in a series of plant sales, closures and divestments throughout the organization. The charges associated with this program consisted of severance costs of $112 related to workforce reductions of approximately 2,200 employees, impairment of long-lived assets of $269 and other exit costs related to the shutdown of facilities of $30.

The workforce reductions of 2,200 employees, which consist principally of manufacturing employees from all segments of the Company's worldwide operations, are comprised of:

• 500 employees - Primary Metal (principally Canada)
• 200 employees - Rolled Products Americas and Asia
• 400 employees - Rolled Products Europe (U.K. and Italy)
• 800 employees - Packaging (U.K., Canada, U.S. and other areas)
• 300 employees - Other operating segments

In 2002, the Company recorded charges of $69 pre-tax in Restructuring, impairment and other special charges, including restructuring and asset impairment charges of $89 and a reduction in other special charges of $20. Charges of $89 relating to the restructuring program consisted of severance costs of $36 relating to workforce reductions of approximately 960 employees, impairment of long-lived assets of $26 and other exit costs related to the shutdown of facilities of $27.

Severance charges of $36 relate primarily to the closure of the Burntisland facility, U.K. (Bauxite, Alumina and Specialty Chemicals), certain cable operations in North America (Engineered Products) and extrusion operations in Malaysia and light-gauge operations in Fairmont, West Virginia (Rolled Products Americas and Asia).

Asset impairment charges of $26 relate primarily to the extrusion operations in Pieve, Italy (Engineered Products) and the Borgofranco plant in Italy (Rolled Products Europe).

Other exit costs of $27 consist principally of closure costs of $19 for the Burntisland facility, U.K., a loss of $5 on the sale of the extrusion operations in Thailand arising from the realization of deferred translation losses (Rolled Products Americas and Asia), a loss of $4 on the sale of the rolled products circles production unit at Pieve, Italy (Rolled Products Europe), other costs of $3 and offset in part by income of $4 from the write-back of excess contract loss provisions upon settlement with a customer (Engineered Products).

The workforce reductions in 2002 of approximately 960 employees were comprised of 380 employees in Bauxite, Alumina and Specialty Chemicals, 250 employees in Rolled Products Americas and Asia, 200 employees in Engineered Products and 130 employees in Packaging.

In 2002, the Company completed the sale of certain glass packaging operations located in Park Hills, Missouri, and Mays Landing, Williamstown and Millville, New Jersey for proceeds of $15, equal to book value. As well, the Company sold its rolled product circles production unit at its Pieve plant in Italy for proceeds of $14 and its two Pharmatech rubber stopper and aluminum seals operations located in Salisbury, Maryland, U.S. for proceeds of $9 equal to book value.

As at December 31, 2002, approximately 2,900 of a total of 3,160 employees (2,200 employees in 2001 and 960 employees in 2002) had been terminated, consisting of approximately 400 employees in 2001 and 2,500 employees in 2002.

Total impairment charges of $295 consisted of a charge of $269 in 2001 ($227 for assets to be held and used and $42 for assets held for disposal) and charges of $26 in 2002 ($17 for assets to be held and used and $9 for assets to be held for disposal). These charges related principally to buildings, machinery and equipment and some previously capitalized project costs.

In the context of the Company's objective of value maximization, a detailed business portfolio review was undertaken in 2001 to identify high cost operations, excess capacity and non-core products.

The cumulative impairment charge of $244 for assets to be held and used consisted of $45 for Bauxite, Alumina and Specialty Chemicals; $22 for Primary Metal; $17 for Rolled Products Americas and Asia; $79 for Rolled Products Europe; $16 for Engineered Products; $44 for Packaging; and $21 for Other. The impairment charge arose as a result of negative projected cash flows and recurring losses. The charges principally related to the cold mill at the Rogerstone plant in the U.K. (Rolled Products Europe); the foil facilities at Glasgow, U.K. (Packaging); the specialty chemicals plant at Burntisland, U.K. (Bauxite, Alumina and Specialty Chemicals) and the engineered cast products plant in Quebec, Canada (Primary Metal). An impairment provision was recorded to the extent that the net recoverable amount, which approximates fair value based on discounted cash flows, was below the net book value.

The cumulative impairment charge of $51 for assets held for disposal consisted of $8 for Rolled Products Americas and Asia; $31 for Rolled Products Europe; and $12 for Packaging. The charges principally related to the extrusion operations in Malaysia and Thailand (Rolled Products Americas and Asia); certain rolled products and recycling operations at the Pieve and Borgofranco plants in Italy (Rolled Products Europe); and the Pharmatech rubber stopper and aluminum seals operations in the U.S. (Packaging). An impairment provision was recorded to bring the net book value to net realizable value. These assets were disposed of in 2002, except for the extrusion operations in Malaysia and the recycling operations at the Borgofranco plant in Italy. The assets held for disposal had:

• sales and operating revenues of $250 in 2001 (Rolled Products Americas and Asia - $30; Rolled Products Europe - $90; Packaging - $130) and $190 in 2002, (Rolled Products Americas and Asia - $16; Rolled Products Europe - $84; and Packaging - $90).
• net operating losses of $(10) in 2001 (Rolled Products Americas and Asia - nil; Rolled Products Europe - nil; Packaging - $(10)) and losses of $(9) in 2002 (Rolled Products Americas and Asia - $(2); Rolled Products Europe - $(1); and Packaging - $(6)).
• assets of $200 at December 2001 (Rolled Products Americas and Asia - $20; Rolled Products Europe - $100; Packaging - $80) and $15 at December 2002 (Rolled Products Americas and Asia - $10; Rolled Products Europe - $5 and Packaging - nil).
• liabilities of $110 at December 2001 (Rolled Products Americas and Asia - $10; Rolled Products Europe - $30; Packaging - $70) and $40 at December 2002 (Rolled Products Americas and Asia - $5; Rolled Products Europe - $35 and Packaging - nil).

The restructuring program was completed in 2002, with the exception of the closure of facilities at Glasgow, U.K., which is expected to be completed in mid-2003, the shut-down of one of the two cold mills at the Fairmont, West Virginia, plant in the first quarter for 2003, and the sales of the extrusion operations in Malaysia and the recycling operations at the Borgofranco plant in Italy, which are expected to be completed in 2003, as scheduled per the Company's plans. The closure plans include the orderly shutdown of facilities after existing customer requirements have been satisfied and in some situations, the transfer of production operations to other facilities. The provision balance of $113 at December 31, 2002, is expected to be largely paid out in 2003.

        Other Special Charges
In 2001, the Company increased its environmental provisions by $246 pre-tax to cover treatment costs of $150 for stored spent potlining (SPL) in Quebec and British Columbia, Canada, as well as to cover remediation costs of $96 relating to red mud disposal at other sites in Canada and the U.K. The charges were recorded in the income statement in Restructuring, impairment and other special charges and on the balance sheet in Deferred credits and other liabilities $(235) and in Payables and accrued liabilities $(11).

SPL, which is a waste material generated by the smelting process, needs to be treated in a safe and environmentally sound manner. The Company's objectives have been to find the best alternative to stockpiling SPL and various technical studies were carried out to identify treatment alternatives that are economically viable. Following these studies, which were completed in 2001, and in accordance with local laws and regulations, the Company has initiated a project to identify the best treatment technology to treat the stored SPL. The liability of $150 reflected the Company's best estimate of the cost to treat the stored SPL in Quebec and to have the SPL in British Columbia treated by a third party. The liability recorded in 2001 is being paid over a period of approximately twenty years.

The liability of $96 relating to red mud disposal reflected the Company's best estimate of the cost of rehabilitation. Red mud is the normal residue associated with extracting alumina from bauxite. The charge represents the cost to fill and seal the sites.

In 2002, the environmental provision of $150 for SPL was reduced by $4 for the recovery from a third party of a portion of the environmental provision. In addition, the environmental provision of $96 for red mud disposal was reduced by $18 due to lower remediation costs at the Burntisland facility in the U.K. The reductions in the provisions were recorded in the income statement in Restructuring, impairment and other special charges and on the balance sheet as an increase in Other receivables and a reduction in Deferred credits and other liabilities.

        Note 9. Income Taxes

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Income before income taxes and other items
Canada	(65)	(303)	431
Other countries	732	404	444
	667	101	875
Current income taxes
Canada	(9)	(48)	19
Other countries	234	242	183
	225	194	202
Deferred income taxes
Canada	56	(69)	25
Other countries	12	(83)	27
	68	(152)	52
Income tax provision	293	42	254

The composite of the applicable statutory corporate income tax rates in Canada is 39.0% (2001: 40.0%; 2000: 40.2%). The following is a reconciliation of income taxes calculated at the above composite statutory rates with the income tax provision:

                                                                                                                                                                       ; 

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Income taxes at the composite statutory rate	261	41	352
Differences attributable to:
Exchange translation items	35	3	10
Exchange revaluation of deferred income taxes	16	(26)	(18)
Effect of tax rate changes on deferred income taxes	-	(8)	(20)
Unrecorded tax benefits on losses - net	23	26	(19)
Investment and other allowances	(18)	8	(38)
Large corporations tax	7	8	6
Withholding taxes	5	8	9
Reduced rate or tax exempt items	(18)	(2)	(12)
Foreign tax rate differences	(25)	(6)	7
Prior years' tax adjustments	(3)	(14)	(40)
Other - net	10	4	17
Income tax provision	293	42	254

At December 31, the principal items included in Deferred income taxes are:

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Liabilities:
Property, plant, equipment and intangibles	1,361	1,178	1,291
Undistributed earnings (note 21)	17	24	34
Inventory valuation	66	78	80
Other - net	175	193	166
	1,619	1,473	1,571
Assets:
Tax benefit carryovers	361	297	326
Accounting provisions not currently deductible for tax	363	382	220
	724	679	546
Valuation allowance (amount not likely to be recovered)	245	212	202
	479	467	344
Net deferred income tax liability	1,140	1,006	1,227

The valuation allowance relates principally to loss carryforward benefits and tax credits where realization is not likely due to time and other limitations in the tax legislation giving rise to the potential benefits, as well as uncertain economic conditions in certain countries, principally Brazil and Korea. In 2002, $11 (2001: $4; 2000: $4) of the valuation allowance was reversed when it became more likely than not that benefits would be realized. Of that amount, $5 reduced goodwill since it related to a future income tax asset acquired in the combination with algroup in 2000, but which was not recognized at the date of the business combination.

Based on rates of exchange at December 31, 2002, tax benefits of approximately $145 relating to prior and current years' operating losses and $49 of benefits related to capital losses and tax credits carried forward will be recognized in income when it is more likely than not that such benefits will be realized. These amounts are included in the valuation allowance above. Approximately $17 of these potential tax benefits expire in 2003.

In 1997, income taxes on Canadian operations for the years 1988 to 1991 were reassessed by the Canadian tax authorities. Most of the additional taxes and interest related to transfer pricing issues and are recoverable in other countries. The process to obtain recoveries from other countries is underway. During 1999, the Canadian tax authorities indicated their intention not to proceed with the reassessments made in 1997 in respect of the years 1988 and 1989. In 2000, certain provinces decided not to proceed with the reassessments pertaining to 1988 and 1989. As a result of this and other adjustments, in 2000 the Company recorded $32 of tax recoveries. During 2002, the Canadian and U.S. tax authorities settled the majority of the transfer pricing issues related to the 1997 reassessments. As a result of this and other adjustments, in 2002 the Company recorded $4 of tax recoveries. (See note 27 - Information by Geographic Areas).

        Note 10. Joint Ventures
The activities of the Company's major joint ventures are the procurement and processing of bauxite in Australia, Brazil and Guinea, smelting operations in Norway and Canada, as well as aluminum rolling operations in Germany and the United States. In 2002, the Company acquired a 40% interest in the Aluminerie Alouette consortium in Quebec, Canada. In 2001, the Company sold its bauxite and alumina operations in Jamaica. (See note 15 - Sales and Acquisitions of Businesses and Investments).

Alcan's proportionate interest in all joint ventures is included in the consolidated financial statements. Summarized financial information relating to Alcan's share of these joint ventures is provided on the next page. Except for the Company's interest in the Aluminerie Alouette consortium, most of the activities of the Company's joint ventures result in the supplying of materials to other operations of the Company.

	2002	2001	2000
Statement of income information for the year ended December 31
Revenues	72	11	9
Expenses	60	8	6
Net income	12	3	3
Financial position at December 31
Inventories	99	72	113
Property, plant and equipment - net	945	551	768
Other assets	130	54	103
Total assets	1,174	677	984
Short-term debt	50	45	28
Debt not maturing within one year	67	82	106
Other liabilities	253	167	208
Total liabilities	370	294	342
Cash flow information for the year ended December 31
Cash from operating activities	14	3	4
Cash used for financing activities	(13)	(7)	(17)
Cash used for investment activities	(85)	(73)	(57)

        Note 11. Sales of Receivables
Under an agreement effective December 18, 2001, the Company sold to a third party an undivided interest in certain trade receivables of $330, with limited recourse. Net cash proceeds from this ongoing agreement were $300 with $30, which represents the maximum credit exposure to the Company, held in reserve by the third party. This amount has been recorded in Deferred charges and other assets. Net proceeds were used to repay commercial paper borrowings in 2001. The Company acts as a service agent and administers the collection of the receivables sold.

        Note 12. Other Expenses (Income) - Net
Other expenses (income) - net comprise the following elements:

	2002	2001	2000
Rationalization expenses	3	(1)	45
Loss (Gain) on disposal of businesses and investment - net(note 15)	(36)	123	(9)
Legal provisions	113	-	14
Interest revenue	(13)	(26)	(22)
Exchange (gains) losses	37	(8)	(5)
Other	12	25	28
	116	113	51

        Note 13. Deferred Charges and Other Assets
Deferred charges and other assets comprise the following elements:

	2002	2001	2000
		(Restated	(Restated
		- note 3)	- note 3)
Prepaid pension costs	314	344	284
Income taxes recoverable	-	51	52
Marketable securities	37	40	44
Prepaid mining expenses	56	57	60
Investments*	46	52	50
Reserve for receivables sold (note 11)	30	30	-
Net assets held for disposal	-	-	70
Premiums on currency and metal options	-	2	1
Amount receivable on currency swap of debt	-	(12)	16
Long-term notes and other receivables	106	85	60
Other	78	67	64
	667	716	701
* Investments
Companies accounted for under the equity method	18	21	19
Portfolio investments - at cost	28	31	31
	46	52	50

        Note 14. Property, Plant and Equipment

	2002	2001	2000
Cost (excluding Construction work in progress)
Land and property rights	373	301	293
Buildings	3,180	2,887	2,631
Machinery and equipment	14,245	13,037	11,883
	17,798	16,225	14,807

Accumulated depreciation relates primarily to Buildings and Machinery and equipment.

Capital expenditures are expected to be approximately $800 to $850 in 2003 of which $42 is subject to firm commitments with suppliers.

        Note 15. Sales and Acquisitions of Businesses and Investments
        2002
        Canada
In April 2002, the Company acquired the Société générale de financement (SGF) 20% joint venture interest in the Aluminerie Alouette consortium at a cost of $172 and in September 2002, the Company acquired the Corus Group plc's 20% joint venture interest at a cost of $171 giving the Company a 40% ownership in Alouette. These business combinations are accounted for using the purchase method of accounting and the results of operations are included in the consolidated financial statements since acquisition.

Determination of fair values of property, plant and equipment was based on valuations performed by independent appraisers and consultants. Allocation of the purchase price involves estimates and information gathering during the months following the date of the combination. This estimation process will be finalized in 2003. Accordingly, there may be some changes to the assigned values presented below. The total purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

	2002
Current assets	31
Deferred charges and other assets	3
Property, plant and equipment	300
Intangible assets	20
	354
Current liabilities	9
Deferred credits and other liabilities	15
Deferred income taxes	20
Fair value of net assets	310

The difference between the total purchase price of $343 and the net fair value of all identifiable assets and liabilities was $33 and is accounted for as goodwill. (See note 6 - Goodwill and Intangible Assets).

In September 2002, the five co-venturers of the Aluminerie Alouette consortium announced their final approval of the plant expansion in Sept-Îles, Quebec. Alcan's share of the cost will be approximately $350. Construction will begin in the spring of 2003.

        Japan
In 2002, the Company sold a portion of its investment in Nippon Light Metal Company, Ltd (NLM), included in the geographic area Asia and Other Pacific, for net cash proceeds of $22, reducing its holdings to an effective ownership of 2.2%. Included in Other expenses (income) - net is a gain of $36. The after-tax gain included a previously deferred gain of $8 related to the sale in 1996 of Toyo Aluminium K.K. to NLM.

        Germany, Other Europe and Asia and Other Pacific
In December 2002, the Company announced that it signed a definitive agreement with Norsk Hydro to purchase VAW Packaging (FlexPac) for approximately €345 million (approximately $370). FlexPac includes 14 plants in 8 countries and has 5,400 employees. FlexPac comprises a set of custom manufacturing businesses producing high-quality flexible packaging products for a wide variety of end-use customers and manufacturers of consumer goods, including those in the food, dairy and pharmaceutical industries. The transaction is expected to be completed in the first half of 2003 subject to the necessary regulatory approvals.

        2001
        Australia
In 2001, the Company acquired the remaining 30% of the Gove alumina refinery and related bauxite mine for a cash consideration of $379 subject to certain post-closing adjustments. As a result of this transaction, the Company owns 100% of these assets. The acquisition was accounted for using the purchase method of accounting. The purchase price was allocated based on the assigned fair values of the assets acquired and liabilities assumed as follows:

Fair value of net assets acquired	2001
Working capital	15
Property, plant and equipment	172
	187
Other liabilities - net	41
Long-term debt	1
	42
Fair value of net assets	145

The difference between the total purchase price and the net fair value of all identifiable assets and liabilities acquired was $234 and is accounted for as goodwill, which, until December 31, 2001, was being amortized over a period of 40 years using the straight-line method of amortization. (See note 3 - Accounting Changes).

        Jamaica
In 2001, the Company completed the sale of its Jamaican operations, included in the geographic area All other. Proceeds from the sale were $153. The total pre-tax loss on the sale was $123, which was recorded in Other expenses (income) - net.

        United Kingdom, Germany and Other Europe
The following transactions were completed in 2001 as part of the divestment requirements imposed by the European Commission as a condition to its approval of the merger between Alcan and algroup in October 2000.

• The Company sold its alumina specialties production plant, Martinswerk, located in Bergheim, Germany.
• The Company sold a number of foil container manufacturing assets in Spain and Germany.
• The Company sold certain assets at its lithographic sheet production plant, Star Litho, located in Bridgnorth, U.K.

        The Company received proceeds of approximately $54 from these sales.

        Korea
In 2001, the Company's subsidiary Alcan Taihan Aluminum Limited (ATA) acquired the remaining 5% of Aluminium of Korea Limited (Koralu), included in the geographic area Asia and Other Pacific, for $21. As a result of the transaction, the Company's ownership of ATA was reduced to 66% from 68%.

        2000
        Korea
In 2000, ATA acquired a 95% interest in Koralu for $200 in cash and the assumption of $114 of debt.

Included in the Company's balance sheet at the date of acquisition in 2000 were the following assets and liabilities:

Fair value of net assets acquired	2000
Working capital	(2)
Property, plant and equipment	347
	345
Other liabilities - net	4
Long-term debt	77
Minority interest	64
Fair value of net assets	200

        India
In 2000, the Company sold its 54.6% interest in Indian Aluminium Company, Limited, included in the geographic area Asia and Other Pacific, to Hindalco Industries Limited. Net proceeds from the sale were $162 resulting in a gain of $3, included in Other expenses (income) - net.

        Note 16. Deferred Credits and Other Liabilities
Deferred credits and other liabilities comprise the following elements:

	2002	2001	2000
Post-retirement and post-employment benefits	640	562	539
Environmental liabilities	327	327	91
Rationalization costs	27	41	23
Claims	206	37	43
Fair value of foreign currency forward contracts	25	(12)	41
Long-term payables	77	70	35
Other	117	106	102
	1,419	1,131	874

        Note 17. Debt Not Maturing Within One Year

	2002	2001	2000
Alcan Inc.
Commercial paper - CAN$ (a)	390	585	897
Commercial paper - US$ (a)	246	166	578
Long-term credit facilities (a)	-	-	250
Bank loans, due 2003/2005 (€87 million) (b)	91	105	142
5.375% Swiss franc bonds, due 2003 (c)	129	105	109
5.5% Euro note, due 2006 (€600 million)	629	528	-
4.875% Global notes, due 2012	500	-	-
CARIFA loan (d)	-	-	60
6.25% Debentures, due 2008	200	200	200
6.45% Debentures, due 2011	400	400	-
7.25% Debentures, due 2031	400	400	-
8.875% Debentures, due 2022 (e)	-	150	150
7.25% Debentures, due 2028	100	100	100
Other debt	-	7	7
Alcan Deutschland GmbH and subsidiary companies
5.65% Bank loans	-	-	7
5.06% Bank loans	-	-	12
Bank loans, due 2008/2013 (€7 million) (b)	7	7	8
Queensland Alumina Limited
Bank loans, due 2003/2006 (b)	52	84	77
Alcan Holdings Switzerland AG
6.75% Swiss franc bond	-	-	92
4.5% Bank loan (CHF 100 million)	-	59	61
Alcan Finance Jersey Limited
Euro Medium Term Note Program (EMTN)
EMTN, (€400 million) (f)	-	352	372
EMTN, due 2008 (€13 million) (f)	14	11	12
EMTN, due 2008 (€8 million) (f)	8	7	8
ALA (Nevada) Inc.
Bank loan, due 2005 (b)	60	60	60
EMTN	-	-	33
Alcan Packaging Canada Limited
5.69% Bank loan, due 2003	35	35	35
6.24% Bank loan, due 2004	30	30	30
Swiss Aluminium Australia Limited
Bank loans (b)	-	-	62
Other
Bank loans, due 2003/2011 (b)	138	84	86
4% Eurodollar, due 2003 (g)	14	14	14
Other debt, due 2003/2024	39	47	66
	3,482	3,536	3,528
Debt maturing within one year included in current liabilities	(295)	(652)	(333)
	3,187	2,884	3,195

(a)   The Company has two long-term, global, multi-year and multi-currency facilities with a syndicate of major international banks each amounting to $1,000 (2001: $1,000 and $1,000; 2000: $1,000 and $1,750). One of the facilities expires in tranches in 2005 and 2006 while the other facility is renewed annually. These facilities are also available as back-up for commercial paper issued by the Company in Canada and the U.S. At December 31, 2000, the $250 borrowed under these facilities was classified as Debt not maturing within one year since the Company had both the intent and ability to refinance the borrowings on a long-term basis.

At December 31, 2002, 2001 and 2000, the entire amount of commercial paper borrowings has been classified as Debt not maturing within one year since the Company had both the intent and ability, through its long term credit facilities, to refinance the borrowings on a long-term basis.

In 2002, 2001 and 2000, commercial paper borrowings of principal amounts of CAN$616 million, CAN$940 million and CAN$1,368 million, respectively, were swapped for $391, $599 and $894, respectively, through the use of forward exchange contracts. In 2001 and 2000, commercial paper borrowings of principal amounts of $307 and $518, respectively, with a rate tied to U.S. LIBOR had been swapped for CHF505 million and CHF920 million, respectively, with a rate tied to CHF LIBOR for the period to May 2002.

(b)     Interest rates fluctuate principally with the lender's prime commercial rate, the commercial bank bill rate, or are tied to LIBOR rates.

(c)     The Swiss franc bonds were issued as CHF178 million and were swapped for $105 at an effective interest rate of 8.98%.

(d)     The Caribbean Basin Projects Financing Authority (CARIFA) loan was repaid at par.

(e)   The 8.875% debentures were redeemed in January 2002 at a price of 104.15%. The loss on redemption of $6 pre-tax is included in Other expenses (income) - net.

                In 2000, $18 of the 9.625% debentures were redeemed at face value. The 9.5% debentures were redeemed in January 2000 at a price of 104.64%. The loss on redemption of $3 pre-tax was included in Other expenses (income) - net in 2000.

(f)    The Euro Medium Term Note Program (EMTN) notes of principal amounts of €13 million and €8 million with rates tied to EURIBOR or LIBOR were swapped for £9 million and £5 million, respectively.

(g)   Debenture holders are entitled to receive at their option 1,772 common shares held by the Company in NLM, a portfolio investment, in exchange for each ten thousand dollar principal amount of debentures. The Company can redeem the debentures at 100% of the principal.

The Company has swapped, to 2003, the interest payments on $3 (2001: $59; 2000: $61) of its floating rate debt in exchange for fixed interest payments. Also, the interest payments on $9 of its fixed rate debt have been swapped to 2004 in exchange for floating rate payments.

Based on rates of exchange at year-end, debt repayment requirements over the next five years amount to $295 in 2003, $135 in 2004, $98 in 2005, $658 in 2006 and $8 in 2007.

        Note 18. Preference Shares
        Authorized
An unlimited number of preference shares issuable in series. All shares are without nominal or par value.

        Authorized and Outstanding
In each of the years 2002, 2001 and 2000, there were authorized and outstanding 5,700,000 series C and 3,000,000 series E redeemable non-retractable preference shares with stated values of $106 and $54, respectively.

Preference shares, series C and E are eligible for quarterly dividends based on an amount related to the average of the Canadian prime interest rates quoted by two major Canadian banks for stated periods. The dividends on series C and E preference shares are cumulative.

Preference shares, series C and E may be called for redemption at the option of the Company on 30 days' notice at CAN$25.00 per share.

Any partial redemption of preference shares must be made on a pro rata basis or by lot.

        Note 19. Common Shares
The authorized common share capital is an unlimited number of common shares without nominal or par value. Changes in outstanding common shares are summarized below:

	Number (in thousands)			Stated Value
	2002	2001	2000	2002	2001	2000
Outstanding - beginning of year	320,902	317,921	218,315	4,687	4,597	1,230
Issued for cash:
Executive share option plan	292	2,158	521	7	55	13
Dividend reinvestment and share
purchase plans	276	135	237	9	5	8
Issued in exchange for tendered
algroup shares	-	688)*	115,446)**	-	30	3,476
Purchased for cancellation	-	-	(16,598)	-	-	(130)
Outstanding - end of year	321,470	320,902	317,921	4,703	4,687	4,597

* The 688 common shares were issued to acquire the remaining algroup shares in accordance with the provisions of Swiss law.
* * 115,386 common shares were issued in accordance with the Company's share exchange offer; 60 common shares were issued after the Company's share exchange offer.

In June 2000, the Company obtained authorization, which terminated on June 18, 2001, to repurchase up to 21,800,000 common shares under a normal course issuer bid. In 2001, no common shares were purchased under this authorization and in 2000, 16,598,100 common shares were purchased and cancelled at a cost of $530.

        Shareholder Rights Plan
In 1990, shareholders approved a plan whereby each common share of the Company carries one right to purchase additional common shares. The plan, with certain amendments, was reconfirmed at the 1995 Annual Meeting and further amendments were approved at the 1999 Annual Meeting. The plan was reconfirmed at the 2002 Annual Meeting with no amendments. The rights under the plan are not currently exercisable but may become so upon the acquisition by a person or group of affiliated or associated persons ("Acquiring Person") of beneficial ownership of 20% or more of the Company's outstanding voting shares or upon the commencement of a takeover bid. Holders of rights, with the exception of an Acquiring Person, in such circumstances will be entitled to purchase from the Company, upon payment of the exercise price (currently $100.00), such number of additional common shares as can be purchased for twice the exercise price based on the market value of the Company's common shares at the time the rights become exercisable.

The plan has a permitted bid feature which allows a takeover bid to proceed without the rights under the plan becoming exercisable, provided that it meets certain minimum specified standards of fairness and disclosure, even if the Board does not support the bid.

The plan expires in 2008, subject to reconfirmation at the Annual Meeting of Shareholders in 2005 but may be redeemed earlier by the Board, with the prior consent of the holders of rights or common shares, for $0.01 per right. In addition, should a person or group of persons acquire outstanding voting shares pursuant to a permitted bid or a share acquisition in respect of which the Board has waived the application of the plan, the Board shall be deemed to have elected to redeem the rights at $0.01 per right.

        Note 20. Stock Options and Other Stock-based Compensation
Under the executive share option plan, certain employees may purchase common shares at an exercise price that is based on the market value of the shares on the date of the grant of each option. The vesting period for options granted beginning in 1998 is linked to Alcan's share price performance, but does not exceed nine years. Options granted before 1998 vest generally over a fixed period of four years from the grant date and expire at various dates during the next 10 years. Changes in the number of shares under option as well as the average exercise price are summarized below:

	Number of Options (in thousands)			Weighted Average Exercise Price (CAN$)
	2002	2001	2000	2002	2001	2000
Outstanding - beginning of year	7,108	7,326	5,472	46.34	43.20	40.91
Granted	1,937	1,945	2,422	44.19	50.96	46.52
Exercised	(292)	(2,158)	(521)	39.69	39.85	35.75
Forfeited	(66)	(5)	(42)	46.53	39.08	32.42
Expired	-	-	(5)	-	-	22.56
Outstanding - end of year	8,687	7,108	7,326	46.08	46.34	43.20
Exercisable - end of year	5,007	4,665	4,913	45.47	44.91	41.56

Options Outstanding at December 31, 2002

			Weighted
		Weighted	Average
Number of	Range of	Average	Remaining
Options	Exercise Price	Exercise Price	Contractual Life
(in thousands)	(CAN$)	(CAN$)	(Years)
73	23.31-34.00	29.37	0.91
1,957	34.01-40.00	37.92	8.24
1,251	40.01-46.00	44.07	4.51
4,259	46.01-52.00	46.93	5.12
1,147	52.01-64.25	60.16	8.62
8,687

Options Exercisable at December 31, 2002

		Weighted
Number of	Range of	Average
Options	Exercise Price	Exercise Price
(in thousands)	(CAN$)	(CAN$)
73	23.31-34.00	29.37
470	34.01-40.00	35.07
1,236	40.01-46.00	44.07
2,975	46.01-52.00	47.00
253	52.01-64.25	58.23
5,007

Upon consummation of the combination with Alusuisse Group Ltd, described in note 5 - Combination with Alusuisse Group Ltd, all options granted under the Company's executive share option plan prior to the consummation were vested.

At December 31, 2002, the Company had reserved for issue under the executive share option plan 15,408,702 shares.

Stock options are generally granted at an exercise price equal to the market price on the grant date. The weighted average fair value of stock options granted in 2002 is $8.69 (2001: $12.00; 2000: $10.87).

To compute the pro forma compensation expense, the Black-Scholes valuation model was used to determine the fair value of the options granted. Using the model, the fair value of options averages approximately 27% to 41% of the exercise price. (See note 2 - Summary of Significant Accounting Policies; Stock Options and Other Stock-based Compensation).

The fair value of each option grant is estimated on the date of grant with the following weighted average assumptions used for the option grants:

	2002	2001	2000
Dividend yield (%)	1.65	1.93	2.11
Expected volatility (%)	35.73	30.83	33.10
Risk-free interest rate (%)	3.50	5.57	5.75
Expected life (years)	6	10	10

For pro forma income purposes, the fair value of options granted is being amortized over their respective vesting periods.

Pro forma net income and net income per common share - basic and diluted, as if the fair value method had been applied to all stock option awards, are presented below.

	2002	2001	2000
Net income as reported	374	2	610
Compensation expense if the fair value method was used	(11)	(24)	(27)
Pro forma net income (Loss)	363	(22)	583
Net income (Loss) per common share - basic - as reported	1.15	(0.02)	2.42
Pro forma net income (loss) per common share - basic	1.12	(0.10)	2.31
Net income (Loss) per common share - diluted - as reported	1.14	(0.02)	2.42
Pro forma net income (loss) per common share - diluted	1.11	(0.10)	2.31

        Compensation To Be Settled in Cash
In addition, a small number of employees are entitled to receive stock price appreciation units whereby they are entitled to receive cash in an amount equal to the excess of the market value of a share on the date of exercise over the market value of a share as of the date of grant of such units. In 2002, 275,600 units (2001: 311,060 units) were granted of which 214,635 units (2001: nil units) were vested. The vesting period is linked to Alcan's share price performance, but does not exceed nine years. At December 31, 2002, 580,305 units (2001: 311,060 units) were outstanding.

A number of employees are entitled to receive cash awards under a cash incentive plan which provides performance awards to eligible employees based on the relative performance of the Company's share value and share dividend yield compared to other corporations included in the Standard & Poor's Industrials Index measured over a 3-year period commencing on October 1, 2002. If the performance results for the shares is below the 30th percentile compared to all companies in the Standard & Poor's Industrials Index, the employee will not receive an award. At or above the 75th percentile rank, the employee will be paid the maximum award, which is equal to 300% of the target set for the period. The actual amount of the award (if any) will be prorated between the percentile rankings. In 2002, a total target cash award of $12 was granted to specific key employees.

Under the Executive Deferred Share Unit Plan, executive officers based in Canada may elect, prior to the beginning of any particular year, to receive Executive Deferred Share Units (EDSUs) with a value equal to either 50% or 100% of their Executive Performance Award in respect of that year, instead of a cash payment. The number of EDSUs is determined by dividing the amount so elected by the average price of a share on the Toronto and New York stock exchanges at the end of the preceding year. Additional EDSUs are credited to each holder thereof corresponding to dividends declared on shares. The EDSUs are redeemable only upon termination of employment (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of EDSUs by the average price of a share on the said exchanges at the time of redemption. In 2002, 9,771 units (2001: 36,214 units; 2000: 70,673 units) were granted and 939 units (2001: 12,467 units; 2000: nil units) were redeemed. At December 31, 2002, 224,869 units (2001: 216,037 units; 2000: 192,290 units) were outstanding.

Under the Non-Executive Directors Deferred Share Unit Plan, non-executive directors receive 50% of compensation payable in the form of Directors' Deferred Share Units (DDSUs) and 50% in the form of either cash or additional DDSUs at the election of each non-executive director. The number of DDSUs is determined by dividing the quarterly amount so elected by the average price of a share on the Toronto and New York stock exchanges on the last five trading days of each quarter. Additional DDSUs are credited to each holder thereof corresponding to dividends declared on shares. The DDSUs are redeemable only upon termination (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of DDSUs by the average price of a share on the said exchanges at the time of redemption. In 2002, 25,913 units (2001: 15,859 units; 2000: 5,777 units) were granted and 8,876 units (2001: 5,905 units; 2000: 921 units) were redeemed. At December 31, 2002, 48,212 units (2001: 31,175 units; 2000: 21,221 units) were outstanding.

The compensation cost for stock-based employee compensation awards that can be settled in cash, which is based on the change in the share price during the year, is recognized in income. Total compensation cost for such awards was $2 in 2002 (2001: $4; 2000: $1).

        Note 21. Retained Earnings
Consolidated retained earnings at December 31, 2002, include $3,146 (2001: $3,243; 2000: $3,118) of undistributed earnings of subsidiaries and joint ventures, some part of which may be subject to certain taxes and other restrictions on distribution to the parent company. No provision is made for such taxes as these earnings are considered to be permanently reinvested in the businesses.

        Note 22. Commitments and Contingencies
In 1997, as part of the claim settlement arrangements related to the British Columbia Government's cancellation of the Kemano Completion Project, the Company obtained the right to transfer a portion of a power supply contract with BC Hydro to a third party. The Company sold the right to supply this portion to Enron Power Marketing Inc. (EPMI), a subsidiary of Enron Corporation (Enron) for cash consideration. In order to obtain the consent of BC Hydro to this sale, the Company was required to retain a residual obligation for EPMI's performance of the power supply contract in the event that EPMI became unable to perform. This contingent obligation is contractually subject to a maximum aggregate amount of $100, with mitigation and subrogation rights. On December 2, 2001, EPMI and Enron filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Powerex Corporation (Powerex), the BC Hydro affiliate which now holds the rights to the portion of the power supply contract transferred to EPMI, maintains that it has terminated the power supply contract and as a result filed a claim for $100 against Enron on March 15, 2002. Neither Enron nor EPMI responded to that claim and the Company received, on March 22, 2002, a demand for payment in the amount of $100 from Powerex. The Company disputed its obligation to pay on the demand by Powerex and the matter was submitted to arbitration in accordance with applicable contractual requirements. The arbitration hearings took place in December and on January 17, 2003, the decision was issued confirming Powerex's claim for $100. The decision will become enforceable after the expiry of the delays to apply for judicial review and the completion by Powerex of the necessary filing process before the appropriate Court. Under the circumstances the Company has recorded a pre-tax charge of $100 in Other expenses (income) - net in the fourth quarter of 2002.

The Company has guaranteed the repayment of approximately $3 of indebtedness by third parties. Alcan believes that none of these guarantees is likely to be invoked. Commitments with third parties and certain related companies for supplies of goods and services are estimated at $140 in 2003, $131 in 2004, $109 in 2005, $109 in 2006, $97 in 2007 and $988 thereafter. Total payments to these entities were $50 in 2002, $36 in 2001 and $106 in 2000, excluding $218 and $749 in 2001 and 2000, respectively, in relation to the Alma smelter.

Minimum rental obligations are estimated at $58 in 2003, $48 in 2004, $43 in 2005, $35 in 2006, $31 in 2007 and $133 thereafter. Total rental expenses amounted to $82 in 2002, $72 in 2001 and $58 in 2000.

Alcan, in the course of its operations, is subject to environmental and other claims, lawsuits and contingencies. The Company has environmental contingencies relating to approximately 29 existing and former Alcan sites and third-party sites. Accruals have been made in specific instances where it is probable that liabilities will be incurred and where such liabilities can be reasonably estimated. Environmental provisions were recorded in 2002 and 2001 for treatment costs relating to spent potlining in Canada and for remediation costs relating to red mud disposal at other sites in Canada and the U.K.

Although it is possible that liabilities may arise in other instances for which no accruals have been made, the Company does not believe that such an outcome will significantly impair its operations or have a material adverse effect on its financial position.

In addition, see reference to income taxes in note 9, capital expenditures in note 14, debt repayments in note 17 and financial instruments and commodity contracts in note 24.

        Note 23. Currency Gains and Losses
The following are the amounts recognized in the financial statements:

	2002	2001	2000
Currency gains (losses) excluding realized deferred translation adjustments:
Gains (Losses) realized and unrealized on exchange derivatives	(146)	15	34
Gains (Losses) on translation of monetary assets and liabilities	106	(23)	(2)
	(40)	(8)	32

Deferred translation adjustments - beginning of year	(151)	(20)	(76)
Effect of exchange rate changes	463	(129)	9
Losses (Gains) realized*	(11)	2	47
Debt designated as an equity hedge of foreign subsidiaries	(42)	(4)	-
Balance - end of year	259	(151)	(20)

* The gain realized in 2002 relates to a gain on the partial sale of the Company's investment in Nippon Light Metal Company, Ltd., which was offset in part by a loss on the sale of Alcan Nikkei Thai Limited. The loss realized in 2000 related principally to the sale of the Company's investment in Indian Aluminium Company, Limited.

In 2001, $6 (2000: $26) of exchange losses relates to hedging of Canadian dollar construction costs of the new smelter at Alma, Quebec. In 2002 and 2001, these costs are included in Property, plant and equipment - cost and in 2000, were included in Construction work in progress. (See note 9 - Income Taxes for amounts of exchange gains and losses included in income taxes).

        Note 24. Financial Instruments and Commodity Contracts
In conducting its business, the Company uses various derivative and non-derivative instruments, including forward contracts, swaps and options, to manage the risks arising from fluctuations in exchange rates, interest rates, aluminum prices and other commodity prices. Generally, such instruments are used for risk management purposes only.

        Derivatives - Currency
The Company enters into forward currency contracts and options that are designated as hedges of certain identifiable foreign currency revenue and operating cost exposures. Foreign currency forward contracts and swaps are also used to hedge certain foreign currency denominated debt and intercompany foreign currency denominated loans.

Outstanding at December 31		2002		2001		2000
Financial		Notional	Fair	Notional	Fair	Notional	Fair
Instrument	Hedge	Amount	Value	Amount	Value	Amount	Value
Forward exchange	Future firm net operating cash flows (1)	876	(16)	933	(16)	2,248	14
contracts
Currency options	Future firm operating cost commitments (1)	163	6	220	(1)	58	(2)
Cross currency	To swap CAN$ commercial	391	-	599	(9)	894	17
interest swap	paper borrowings to US$ (2)
Forward exchange	Intercompany foreign	797	(34)	415	(7)	193	(3)
contracts	currency denominated loans (3)
Cross currency	To swap 5.375% CHF178 million	105	24	105	-	105	4
interest swap	bonds to US$ (4)
Cross currency	To swap US$ third party	271	(5)	-	-	-	-
interest swap and	borrowings to KRW (5)
forward exchange
contracts
Cross currency	To swap €400 million medium term	-	-	360	(8)	373	1
interest swap	notes to CHF608 million (6)
Cross currency	To swap  €21 million medium	23	(1)	20	(2)	21	-
interest swap	term notes to £14 million (6)
Forward exchange	Future commitments (7)	-	-	20	-	212	-
contracts
Cross currency	To swap US$ commercial	-	-	307	3	518	(48)
interest swap	paper borrowings for CHF (8)

(1)   Included in Deferred charges and other assets and Other receivables is an amount of $1 (2001: nil; 2000: $1) consisting of net losses on terminated forward exchange contracts and options, as well as the net cost of outstanding options, used to hedge future costs. These deferred charges will be included in the cost of the underlying transactions being hedged upon their recognition. Included in Payables and accrued liabilities is an amount of $1 which offsets the revaluation of the underlying items being hedged.

(2)   An amount of nil (2001: liability of $12; 2000: asset of $12) related to the swap of the principal has been recorded in Deferred charges and other assets. The CAN$616 million swap, outstanding at December 31, 2002, matures at various dates in 2003. The CAN$940 million swap, outstanding at December 31, 2001, matured in 2002. The CAN$1,368 million swap, outstanding at December 31, 2000, matured in 2001.

(3)   A net liability of $34, which is recorded in the balance sheet, offsets the revaluation of the underlying intercompany foreign currency denominated loans being hedged.

(4)   The 5.375% Swiss franc bonds of principal amount of CHF178 million have been swapped for $105 at an effective interest rate of 8.98%. An asset of $24 related to the swap of the principal (2001: nil; 2000: asset of $4) has been recorded in Other receivables (2000: Deferred charges and other assets). The swap matures in April 2003.

(5)   A liability of $4 which is recorded in Payables and accrued liabilities, offsets the revaluation of the underlying third party borrowings being hedged.

(6)   Part of the EMTN Program, whereby an amount of nil (2001: liability of $8; 2000: asset of $1) has been recorded in the balance sheet.

(7)   Mainly Canadian dollar, principally for the construction of the smelter at Alma, Quebec.

(8)   An amount of nil (2001: asset of $8; 2000: liability of $48) has been recorded in the balance sheet. Because the swap is hedging an intercompany CHF loan, it has no net income impact. The CHF920 million swap, outstanding at December 31, 2000, matured in February 2001. The CHF505 million swap, outstanding at December 31, 2001, matured in May 2002.

        Derivatives - Interest Rates
The Company sometimes enters into interest rate swaps to manage funding costs as well as the volatility of interest rates.

If all interest rate swap agreements had been closed out on December 31, 2002, the Company would have paid nil (2001: paid $1; 2000: received $2).

        Derivatives and Commodity Contracts - Metal

Depending on supply and market conditions, as well as for logistical reasons, the Company may sell primary metal to third parties and may purchase primary and secondary aluminum on the open market to meet its fabricated products requirements. In addition, the Company may hedge certain commitments arising from pricing arrangements with some of its customers.

Through the use of forward purchase and sales contracts and options, the Company seeks to limit the negative impact of low metal prices.

Outstanding at December 31	2002	2001	2000
Financial Instrument
Forward contracts (principally forward purchase contracts)
Tonnes covered	556,051	650,400	410,650
Maturing principally in years	2003 to 2004	2002 to 2004	2001 to 2003
Call options purchased
Number of tonnes	88,050	379,925	175,650
Maturing principally in years	2003	2002 to 2003	2001 to 2002
Put options purchased
Number of tonnes	-	42,000	151,000
Maturing principally in years	-	2002	2001 to 2003
Fair value	15	(25)	10

Included in Other receivables or Deferred charges and other assets is $4 (2001: $12; 2000: $23) representing the net cost of outstanding options. Also included in Other receivables is an amount of $5 consisting of net losses on terminated forward metal contracts used to hedge future costs. These deferred charges will be included in the cost of the items being hedged at the same time as the underlying transactions being hedged are recognized.

        Derivatives - Oil
As a hedge of future oil purchases, the Company had outstanding as at December 31:

	2002	2001	2000
Futures, swaps and options
Number of barrels (in millions)	14.0	17.1	18.1
Maturing at various times in the years	2003 to 2006	2002 to 2006	2001 to 2006
Fair value	9	(12)	(7)

In 2002, a net liability of $4 (2001: $10) relating to the oil derivatives is recorded in the balance sheet.

        Derivatives - Natural gas
As a hedge of future natural gas purchases, the Company had outstanding as at December 31:

	2002	2001	2000
Swaps
Number of decatherms (in millions)	1.5	-	-
Options
Number of decatherms (in millions)	0.4	-	-
Fixed price contracts
Number of decatherms (in millions)	0.8	5.3	-
Maturing in various times throughout	2003	2002	-
Fair value	2	(4)	-

        Counterparty Risk
As exchange rates, interest rates, metal, oil and natural gas prices fluctuate, the above contracts will generate gains and losses that will be offset by changes in the value of the underlying items being hedged. The Company may be exposed to losses in the future if the counterparties to the above contracts fail to perform. However, the Company is satisfied that the risk of such non-performance is remote, due to its monitoring of credit exposures.

        Financial Instruments - Fair Value
On December 31, 2002, the fair value of the Company's long-term debt totalling $3,482 (2001: $3,536; 2000: $3,528) was $3,700 (2001: $3,579; 2000: $3,516), based on market prices for the Company's fixed rate securities and the book value of variable rate debt.

At December 31, 2002, the quoted market value of the Company's portfolio investments having a book value of $28 (2001 and 2000: $31) was $34 (2001: $39; 2000: $46).

At December 31, 2002, the fair value of the Company's preference shares having a book value of $160 (2001 and 2000: $160) was $131 (2001: $128; 2000: $139).

The fair values of all other financial assets and liabilities are approximately equal to their carrying values.

        Note 25. Supplementary Information

	2002	2001	2000
Income statement
Interest on long-term debt	158	218	123
Capitalized interest	(1)	(30)	(81)
Balance sheet
Payables and accrued liabilities include the following:
Income and other taxes	159	203	170
Accrued employment costs	281	242	288
At December 31, 2002, the weighted average interest rate on short-term borrowings was 4.1% (2001: 4.9%; 2000: 6.5%).
Statement of cash flows
Interest paid	205	265	161
Income taxes paid	187	213	203

        Note 26. Post-retirement Benefits
Alcan, its subsidiaries and joint ventures have established pension plans in the principal countries where they operate, generally open to all employees. Most plans provide pension benefits that are based on the employee's highest average eligible compensation before retirement. Pension payments are periodically adjusted for cost of living increases, either by Company practice, collective agreement or statutory requirement. Plan assets consist primarily of listed stocks and bonds.

Alcan's funding policy is to contribute the amount required to provide for benefits attributed to service to date, with projection of salaries to retirement, and to amortize unfunded actuarial liabilities for the most part over periods of 15 years or less. All actuarial gains and losses are amortized over the expected average remaining service life of the employees which is 12 years in 2002 (2001 and 2000: 13 years).

The Company provides life insurance benefits under some of its retirement plans. Certain early retirement arrangements also provide for medical benefits, generally only until the age of 65. These plans are generally not funded.

	Pension Benefits			Other Benefits
	2002	2001	2000	2002	2001	2000
Change in benefit obligation
Benefit obligation at January 1	6,514	6,317	4,047	217	201	186
Service cost	126	120	83	5	5	5
Interest cost	405	376	255	15	15	12
Members' contributions	27	26	21	-	-	-
Benefits paid	(388)	(346)	(217)	(14)	(12)	(10)
Amendments	111	153	435	1	-	(1)
Acquisitions/divestitures	(6)	(71)	2,047	(2)	-	27
Actuarial (gains) losses	(38)	23	(263)	19	8	(18)
Currency (gains) losses	447	(84)	(91)	-	-	-
Benefit obligation at December 31	7,198	6,514	6,317	241	217	201
Change in market value of plan assets (Assets)
Assets at January 1	6,047	7,014	4,917	4	5	-
Actual return on assets	(349)	(537)	250	-	-	-
Members' contributions	27	26	21	-	-	-
Benefits paid	(388)	(346)	(217)	(1)	(2)	-
Company contributions	128	80	44	-	1	-
Acquisitions/divestitures	(4)	(117)	2,087	-	-	5
Currency gains (losses)	316	(73)	(88)	-	-	-
Assets at December 31	5,777	6,047	7,014	3	4	5
Assets in excess of (less than)
benefit obligation	(1,421)	(467)	697	(238)	(213)	(196)
Unamortized
- actuarial (gains) losses	656	(193)	(1,311)	(9)	(24)	(39)
- prior service cost	687	653	590	1	1	1
Net liability in balance sheet	(78)	(7)	(24)	(246)	(236)	(234)

For certain plans, the accumulated benefit obligation (ABO) exceeds the market value of the assets. For these plans, the projected benefit obligation is $3,862 (2001: $2,495; 2000: $657), the ABO is $3,576 (2001: $2,414; 2000: $588) while the market value of the assets is $2,608 (2001: $1,882; 2000: $308).

	Pension Benefits			Other Benefits
	2002	2001	2000	2002	2001	2000
Components of net periodic benefit cost
Service cost	126	120	83	5	5	5
Interest cost	405	376	255	15	15	12
Expected return on assets	(437)	(480)	(345)	-	(1)	-
Amortization
- actuarial (gains) losses	9	(47)	(102)	(2)	(1)	(2)
- prior service cost	69	89	89	-	-	-
Curtailment/settlement (gains) losses	9	40	-	(2)	-	-
Net periodic benefit cost	181	98	(20)	16	18	15
Weighted average assumptions at December 31
Discount rate (%)	5.8	6.1	6.3	6.5	6.9	7.3
Average compensation growth (%)	3.3	3.6	3.7	3.9	4.4	4.5
Expected return on assets (%)	7.1	7.3	7.0	8.5	8.5	n/a

The assumed health care cost trend rate used for measurement purposes is 8.9% for 2003, decreasing gradually to 4.6% in 2008 and remaining at that level thereafter. A one percentage point change in assumed health care cost trend rates would have the following effects:

	Other Benefits
	1%	1%
	Increase	Decrease
Sensitivity Analysis
Effect on service and interest costs	1	(1)
Effect on benefit obligation	12	(10)

        Note 27. Information by Geographic Areas

	Location	2002	2001	2000
Sales and operating revenues	Canada	708	585	625
- third parties (by destination)	United States	4,574	4,598	3,665
	Brazil	395	470	465
	United Kingdom	1,030	1,065	600
	Germany	1,431	1,388	756
	Switzerland	202	194	65
	Other Europe	2,329	2,347	1,475
	Australia	103	39	131
	Asia and Other Pacific	1,648	1,710	1,228
	All other	120	230	138
	Total	12,540	12,626	9,148
Sales and operating revenues	Canada	2,354	2,127	2,042
- intercompany (by origin)	United States	602	541	563
	Brazil	54	64	44
	United Kingdom	385	408	373
	Germany	319	242	181
	Switzerland	770	676	237
	Other Europe	626	612	151
	Australia	299	288	114
	Asia and Other Pacific	13	5	9
	All other	97	190	322
	Sub-total	5,519	5,153	4,036
	Consolidation eliminations	(5,519)	(5,153)	(4,036)
	Total	-	-	-

 

Sales to subsidiary companies are made at fair market prices recognizing volume, continuity of supply and other factors.
	Location	2002	2001	2000
Sales and operating revenues	Canada	999	1,045	915
- third parties (by origin)	United States	4,389	4,355	3,713
	Brazil	420	424	443
	United Kingdom	912	913	565
	Germany	2,028	2,022	1,401
	Switzerland	1,371	1,436	414
	Other Europe	1,168	1,100	599
	Australia	183	208	137
	Asia and Other Pacific	972	1,014	857
	All other	98	109	104
	Total	12,540	12,626	9,148
Net income (Loss) (*) (**)	Canada	94	(57)	287
	United States	74	137	155
	Brazil	38	29	34
	United Kingdom	9	(139)	10
	Germany	36	19	43
	Switzerland	8	(14)	1
	Other Europe	15	(4)	25
	Australia	68	87	59
	Asia and Other Pacific	3	(30)	(22)
	All other	24	(38)	48
	Consolidation eliminations	5	12	(30)
	Total	374	2	610

(*)     In 2002, net income includes after-tax non-recurring charges (income) pertaining to restructuring and other special charges, revisions to environmental provisions, impairment provisions and business and investment disposal gains and losses of $85 for Canada, $20 for the United States, $(2) for Brazil, $12 for the United Kingdom, $(5) for Germany, $2 for Switzerland, $26 for Other Europe, $(16) for Asia and Other Pacific and $(5) for All other.

In 2001, net income included after-tax non-recurring charges (income) pertaining to restructuring and merger integration costs, revisions to environmental provisions, impairment provisions, business disposal loss and a prior year's tax adjustment of $200 for Canada, $23 for the United States, $2 for Brazil, $163 for the United Kingdom, $(3) for Germany, $11 for Switzerland, $42 for Other Europe, $1 for Australia, $4 for Asia and Other Pacific and $90 for All other. (See note 8 - Restructuring, Impairment and Other Special Charges).

In 2002, net income includes income (charges) for transfer pricing adjustments of $69 for Canada, $(70) for the United States and $5 for the United Kingdom. (See note 9 - Income Taxes).

(**)   If presented to reflect the effect of prior years' income tax reassessments described in note 9, in 2000, net income in Canada would be increased by $25 and decreased by $14 in the United States, $5 in the United Kingdom and $6 in Germany.

Location		2002	2001	2000
Property, plant and equipment,	Canada	4,317	4,114	4,002
Intangible assets and Goodwill at	United States	1,500	1,689	1,579
December 31 (*) (**)	Brazil	743	731	736
	United Kingdom	880	826	1,047
	Germany	1,108	1,166	1,322
	Switzerland	645	718	752
	Other Europe	1,821	1,794	1,713
	Australia	1,215	1,199	959
	Asia and Other Pacific	627	607	626
	All other	65	81	296
	Total	12,921	12,925	13,032
Cash paid for capital expenditures	Canada	477	399	1,097
and business acquisitions	United States	96	196	113
	Brazil	78	61	42
	United Kingdom	77	94	49
	Germany	85	73	55
	Switzerland	43	45	18
	Other Europe	113	124	79
	Australia	58	416	12
	Asia and Other Pacific	33	79	239
	All other	13	27	31
	Total	1,073	1,514	1,735
Average number of employees	Canada	12	12	11
(in thousands - unaudited)	United States	9	10	5
	Brazil	3	3	3
	United Kingdom	5	6	3
	Germany	8	8	4
	Switzerland	3	4	1
	Other Europe	6	6	2
	Australia	1	1	-
	Asia and Other Pacific	2	2	5
	All other	1	1	3
	Total	50	53	37

(*)     In 2002, Property, plant and equipment, Intangible assets and Goodwill - net includes goodwill impairment charges of $9 for Canada, $130 for the United States, $34 for the United Kingdom, $208 for Germany, $172 for Switzerland and $195 for Other Europe.

(**)   In 2001, Property, plant and equipment, Intangible assets and Goodwill - net included asset write-offs of $31 for Canada, $33 for the United States, $1 for Brazil, $127 for the United Kingdom, $8 for Germany, $4 for Switzerland, $7 for Other Europe and $11 for Asia and Other Pacific.

        Note 28. Information by Operating Segments
The following presents selected information by operating segment, viewed on a stand-alone basis. Effective January 1, 2002, a new operating management structure comprised of six operating segments was put in place. The six operating segments are Bauxite, Alumina and Specialty Chemicals; Primary Metal; Rolled Products Americas and Asia; Rolled Products Europe; Engineered Products; and Packaging. Prior to 2002, there were four operating segments: Primary Metal; Aluminum Fabrication, Americas and Asia; Aluminum Fabrication, Europe; and Packaging. Comparative information has been restated to conform to the 2002 organizational structure. Transactions between operating segments are conducted on an arm's-length basis and reflect market prices. Thus, earnings from the Primary Metal group represent mainly profit on metal produced by the Company, whether sold to third parties or used in the Company's Rolled Products, Engineered Products and Packaging groups. Earnings from the Rolled Products, Engineered Products and Packaging groups represent only the fabricating profit on their respective products. The accounting principles used to prepare the information by operating segment are the same as those used to prepare the consolidated financial statements of the Company except that the pension costs for the operating segments are based on the normal current service cost with all actuarial gains, losses and other adjustments being included in Intersegment and other. Some corporate office and certain other costs have been allocated to the respective operating segments. The operating segments are described below.

        Bauxite, Alumina and Specialty Chemicals
This segment, which consists of a network of bauxite mines/deposits in five countries and alumina refineries and specialty chemical plants in three countries, supplies the primary metal operations and third-party sales of alumina and specialty chemicals.

        Primary Metal
This segment produces primary aluminum in seven countries. The alumina is sourced primarily from the Bauxite, Alumina and Specialty Chemicals segment and the ingot produced is used by the Company's fabricating businesses as well as sold to third-parties. The segment produces value-added products in the form of sheet ingot, extrusion billet, cable rods and foundry ingot for end-use markets in consumer goods, transportation, building and construction and other industrial applications.

        Rolled Products Americas and Asia
This segment, which has an extensive network of 16 rolled products facilities in North and South America and Asia, manufactures sheet and light-gauge products, including can stock, automotive sheet and industrial products. In addition, the segment has a well-established used beverage can recycling capability in North and South America.

        Rolled Products Europe
This segment has 11 rolled products plants and serves a number of European markets with advanced value-added sheet products, including automotive sheet, lithographic sheet, industrial sheet, can sheet and foil stock.

        Engineered Products
This segment, which has 47 engineered products plants in 17 countries, develops, manufactures and sells value-added engineered products for a variety of applications, including extrusions, composites, systems and components for mass transportation and automotive applications and electrical cables.

        Packaging
This segment has 76 plants in 14 countries and is focused on serving specific end-use markets: food, pharmaceutical and personal care, and tobacco packaging.

        Intersegment and other
This classification includes the deferral or realization of profits on intersegment sales of aluminum and alumina as well as other non-operating items.

Sales and operating revenues	Intersegment			Third parties
	2002	2001	2000	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	757	771	536	435	477	470
Primary Metal	2,205	2,117	1,674	2,447	2,546	1,655
Rolled Products Americas and Asia	185	173	71	3,327	3,316	3,391
Rolled Products Europe	333	338	319	1,814	1,735	1,666
Engineered Products	17	22	18	1,645	1,661	724
Packaging	21	60	58	2,812	2,861	1,216
Other	(3,518)	(3,481)	(2,676)	60	30	26
	-	-	-	12,540	12,626	9,148

 

EBITDA (Earnings before interest, taxes, depreciation and amortization)	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	249	301	265
Primary Metal	858	818	729
Rolled Products Americas and Asia	367	296	261
Rolled Products Europe	132	83	144
Engineered Products	96	103	55
Packaging	347	352	73
EBITDA from operating segments	2,049	1,953	1,527
Depreciation and amortization	(859)	(820)	(545)
Restructuring, impairment and other special charges	(69)	(657)	-
Intersegment and other	(152)	(43)	24
Corporate office	(96)	(75)	(49)
Interest	(203)	(254)	(78)
Income taxes	(293)	(42)	(254)
Minority interests	(3)	13	1
Net income before amortization of goodwill	374	75	626
Net income after amortization of goodwill	374	2	610

Included in 2002 EBITDA for Bauxite, Alumina & Specialty Chemicals is a gain of $5 related to the sale of fixed assets.

Restructuring, impairment and other special charges for 2002 includes $14 for Bauxite, Alumina & Specialty Chemicals , $(6) for Primary Metal, $15 for Rolled Products Americas and Asia, $13 for Rolled Products Europe, $10 for Engineered Products, $8 for Packaging and $15 for Intersegment and other.

Included in 2002 Intersegment and other are net charges of $84 relating principally to a provision of $100 for the ruling on a contract dispute with Powerex (a subsidiary of BC Hydro), an increase of $9 to legal provisions, a loss of $6 on redemption of debt, and partially offset by a gain of $36 on the sale of a portfolio investment.

Included in 2001 EBITDA for Primary Metal and Packaging were $1 and $(5) related to rationalization costs (write-back of provision), respectively.

Restructuring, impairment and other special charges for 2001 included $149 for Bauxite, Alumina & Specialty Chemicals, $201 for Primary Metal, $16 for Rolled Products Americas and Asia, $148 for Rolled Products Europe, $7 for Engineered Products, $95 for Packaging and $41 for Intersegment and other.

Included in 2001 Intersegment and other is a loss on the sale of Jamaican bauxite and alumina operations of $123.

Included in 2000 EBITDA for Bauxite, Alumina & Specialty Chemicals, Primary Metal and Packaging are $3, $15 and $26 related to rationalization costs, respectively.

Total assets at December 31	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	2,073	2,164	2,176
Primary Metal	6,316	5,889	5,682
Rolled Products Americas and Asia	2,496	2,522	2,709
Rolled Products Europe	1,620	1,638	2,139
Engineered Products	1,373	1,490	1,438
Packaging	3,561	3,533	3,712
Other	99	222	533
	17,538	17,458	18,389

	Depreciation and amortization			Cash paid for capital expenditures and business acquisitions
	2002	2001	2000	2002	2001	2000
Bauxite, Alumina and Specialty Chemicals	83	93	77	104	479	105
Primary Metal	295	260	167	556	462	1,009
Rolled Products Americas and Asia	146	146	143	73	149	355
Rolled Products Europe	77	82	65	63	73	89
Engineered Products	69	60	21	63	61	30
Packaging	178	166	62	205	266	97
Other	11	13	10	9	24	50
	859	820	545	1,073	1,514	1,735

        Note 29. Prior Year Amounts
Certain prior year amounts have been reclassified to conform with the 2002 presentation.

        Quarterly Financial Data
        (in millions of US$, except where indicated)

(unaudited)	First	Second	Third	Fourth	Year
2002
Revenues	2,937	3,199	3,224	3,180	12,540
Cost of sales and operating expenses	2,331	2,520	2,546	2,537	9,934
Depreciation and amortization	205	217	213	224	859
Income taxes	78	122	63	30	293
Other items	237	269	211	363	1,080
Net income (1)	86	71	191	26	374
Dividends on preference shares	1	1	1	2	5
Net income attributable to common shareholders	85	70	190	24	369
Net income per common share (basic) (in US$) (2)	0.26	0.22	0.59	0.08	1.15
Net income per common share (diluted) (in US$) (2)	0.26	0.22	0.59	0.08	1.14
Net income (Loss) under U.S. GAAP (3)	(595)	58	160	41	(336)

 

(unaudited)	First	Second	Third	Fourth	Year
2001(Restated - note 3)
Revenues	3,270	3,162	3,157	3,037	12,626
Cost of sales and operating expenses	2,577	2,474	2,484	2,464	9,999
Depreciation and amortization	196	204	204	216	820
Income taxes	58	101	67	(184)	42
Other items	286	291	234	879	1,690
Net income (Loss) before amortization of goodwill	153	92	168	(338)	75
Amortization of goodwill	18	18	19	18	73
Net income (Loss) (1)	135	74	149	(356)	2
Dividends on preference shares	2	2	2	2	8
Net income (Loss) attributable to common shareholders	133	72	147	(358)	(6)
Net income (Loss) per common share before amortization
of goodwill (basic) (in US$) (2)	0.48	0.28	0.52	(1.05)	0.21
Amortization of goodwill per common share (in US$) (2)	0.06	0.05	0.06	0.06	0.23
Net income (Loss) per common share (basic) (in US$) (2)	0.42	0.23	0.46	(1.11)	(0.02)
Net income (Loss) per common share (diluted) (in US$) (2)	0.41	0.22	0.46	(1.11)	(0.02)
Net income (Loss) under U.S. GAAP (3)	74	94	104	(326)	(54)

(unaudited)	First	Second	Third	Fourth	Year
2000(Restated - note 3)
Revenues	1,962	2,025	1,979	3,182	9,148
Cost of sales and operating expenses	1,454	1,560	1,530	2,569	7,113
Depreciation and amortization	116	114	120	195	545
Income taxes	104	88	34	28	254
Other items	117	111	116	266	610
Net income before amortization of goodwill	171	152	179	124	626
Amortization of goodwill	-	-	-	16	16
Net income (1)	171	152	179	108	610
Dividends on preference shares	2	3	2	3	10
Net income attributable to common shareholders	169	149	177	105	600
Net income per common share before amortization of goodwill
(basic) (in US$) (2)	0.77	0.69	0.84	0.38	2.47
Amortization of goodwill per common share (in US$) (2)	-	-	-	0.05	0.05
Net income per common share (basic) (in US$) (2)	0.77	0.69	0.84	0.33	2.42
Net income per common share (diluted) (in US$) (2)	0.77	0.68	0.84	0.33	2.42
Net income under U.S. GAAP (3)	171	152	179	104	606

(1) The first quarter of 2002 includes net after-tax charges of $7 relating mainly to the restructuring program announced in 2001. The charges include a fixed asset impairment charge of $9 relating to the recycling operations at the Borgofranco plant in Italy and a loss of $5 on the sale of extrusion operations in Thailand. The second quarter of 2002 includes net after-tax charges of $8 relating mainly to the restructuring program announced in 2001. The charges include severance and pension costs of $7 relating to the closure of the Bracebridge cable plant in Ontario, Canada. The third quarter of 2002 includes net after-tax charges of $16 relating mainly to the restructuring program in 2001 and increases to legal provisions. The restructuring program net charges include fixed asset impairment charges of $12 relating principally to the extrusion operations in Pieve, Italy, severance costs of $4 for the extrusion operations in Malaysia, light-gauge operations in Fairmont, West Virginia, and certain cable operations in North America and income of $8, primarily for the write-back of excess contract loss provisions. The fourth quarter of 2002 includes net after-tax charges of $86 relating mainly to a provision of $68 for the ruling on a contract dispute with Powerex (a subsidiary of BC Hydro) and charges of $20 for the closures of the specialty chemicals plant at Burntisland, U.K. and the Banbury, U.K. R&D facilities. These charges are partially offset by a gain of $26 on the sale of a portfolio investment.

The first quarter of 2001 included after-tax charges for the impairment in value of fixed assets of $70 for Jamaica and rationalization costs of $1. The second quarter of 2001 included an after-tax charge of $20 for post-closing adjustments relating to the divestment of Jamaica, partly offset by a write-back of rationalization costs of $4 in the U.K. The results for the fourth quarter of 2001 included a net non-recurring after-tax charge of $446. This included a $166 charge related to the restructuring program announced on October 17, 2001, and a $37 charge related to the synergy program announced in the fourth quarter of 2000 in relation to the merger with algroup. Also included are impairment provisions of $88 in relation to certain assets and capitalized project costs, a $167 charge related to environmental provisions, and a favourable prior year's tax adjustment of $12.

The second quarter of 2000 included an after-tax gain of $6 from disposal of property and a gain of $10 from the demutualization of the Company's life insurance providers. This was offset in part by a non-operating exceptional provision of $9 in the U.S., merger costs of $4 and rationalization costs of $2. The third quarter of 2000 included favourable tax adjustments of $43, partially offset by asset write-offs of $12. The fourth quarter of 2000 included non-cash merger charges related to the merger with algroup of $25, rationalization charges in respect of the closure of foil operations at Rogerstone in the U.K. of $18, asset write-offs of $6, partially offset by favourable tax adjustments of $14.

(2) Net income per common share calculations are based on the average number of common shares outstanding in each period. (See note 4 - Net Income per Common Share - Basic and Diluted).

(3) See note 7 - Differences between Canadian and United States Generally Accepted Accounting Principles (GAAP) for explanation of differences between Canadian and U.S. GAAP.

EX-21

EXHIBIT NO. 21:  SUBSIDIARIES, RELATED COMPANIES, ETC.

With the exception of a number of subsidiaries which, considered in the aggregate, would not constitute a significant Subsidiary, the Subsidiaries of Alcan, as of 1 March 2003, are listed below.  All subsidiaries and joint ventures named below are consolidated or proportionally consolidated to the extent owned in the financial statements incorporated by reference in this report.  The list also includes several Related Companies for which Alcan reports its interest in the net income or loss of such companies. Alcan is the direct owner of the stock of each Subsidiary or Related Company, except where the name is indented.  Indentation signifies that the principal ownership by Alcan is through the company under which the indentation is made; where there is additional ownership through another company also listed below, that additional ownership is described in the end-note on page 6.

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
3712001 CANADA INC.	Canada	100.00
4033531 CANADA INC.	Canada	100.00
9118-5074 QUÉBEC INC.	Quebec	100.00
9121-5988 QUÉBEC INC.	Quebec	100.00
ALCAN ALUMINIUM QUEBEC AND COMPANY, LIMITED PARTNERSHIP	Quebec	99.00 (2)
9121-5996 QUÉBEC INC.	Quebec	100.00
ALCAN-SPROSTONS LIMITED	Jamaica	100.00
ALCAN ADMINCO (2000) INC.	Canada	100.00
ALCAN ALLUMINIO S.p.A.	Italy	100.00
ALCAN ALUMINIO (AMÉRICA LATINA) INC.	Canada	100.00
ALCAN ALUMINIUM BETEILIGUNGSGESELLSCHAFT mbH	Germany	100.00
ALCAN ALUMINUM CORPORATION	Ohio	100.00
ALCAN ALUMINUM EXPORT, INC.	Georgia	100.00
ALCAN CONNECTICUT, INC.	Connecticut	100.00
ALCAN DE MEXICO, S.A. DE C.V.	Mexico	100.00
ALCAN MANAGEMENT SERVICES USA INC.	Ohio	100.00
ALCAN POWER MARKETING, INC.	Ohio	100.00
LOGAN ALUMINUM INC.	Delaware	40.00
ALCAN ASIA PACIFIC LIMITED	Canada	100.00
ALCAN EMPREENDIMENTOS LTDA.	Brazil	100.00
ALCAN ALUMÍNIO DO BRASIL LTDA.	Brazil	100.00
ALCAN COMPOSITES BRASIL S.A.	Brazil	70.00
ALCAN PACKAGING DO BRASIL LTDA.	Brazil	83.00 (9)
MINERAÇÃO RIO DO NORTE S.A.	Brazil	12.50
PETROCOQUE S.A. - INDÚSTRIA E COMÉRCIO	Brazil	25.00
CONSÓRCIO CANDONGA - (Unincorporated)	Brazil	50.00
ALCAN EUROPE LIMITED	England	100.00
ALCAN FINANCES B.V.	The Netherlands	100.00
ALCAN FINANCES (Bda) LTD.	Bermuda	100.00
ALCAN ASIA LIMITED	Hong Kong	100.00
ALCAN NIKKEI ASIA HOLDINGS LTD.	Bermuda	60.00
ALCAN NIKKEI SIAM LIMITED	Thailand	100.00
ALCOM NIKKEI SPECIALTY COATINGS SDN. BHD.	Malaysia	49.00 (10)
ALUMINIUM COMPANY OF MALAYSIA BERHAD	Malaysia	49.15 (12)
AL DOTCOM SDN. BHD.	Malaysia	100.00
ALCOM ALUMINIUM SERVICES SDN.BHD.	Malaysia	100.00
JEN WU MACHINERY SDN. BHD.	Malaysia	100.00
ALCOM EXTRUSION SDN.BHD.	Malaysia	100.00
NIPPON LIGHT METAL COMPANY, LTD.	Japan	3.61
NONFEMET INTERNATIONAL (China-Canada-Japan) ALUMINIUM COMPANY LIMITED	China	45.00
ALCAN NIKKEI CHINA LIMITED	Hong Kong	49.00

1

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALCAN (BERMUDA) LIMITED	Bermuda	100.00
ALCAN SHIPPING (BERMUDA) LIMITED	Bermuda	100.00
CHAMPLAIN INSURANCE COMPANY LTD.	Bermuda	100.00
HALCO (MINING) INC.	Delaware	33.00
COMPAGNIE DES BAUXITES DE GUINÉE	Delaware	51.00
QUADREM INTERNATIONAL HOLDINGS,  LTD.	Bermuda	9.00
WHEATON PUERTO RICO INC.	New Jersey	100.00
ALCAN FINANCES (IRELAND) LIMITED	Canada	100.00
3088405 CANADA INC.	Canada	100.00
ALCAN FINANCES (IRELAND) COMPANY	Ireland	100.00
ALCAN SOUTH PACIFIC PTY LTD	Australia	100.00
ALCAN GOVE DEVELOPMENT PTY LIMITED	Australia	100.00
ALCAN NORTHERN TERRITORY ALUMINA PTY LIMITED	Australia	100.00
GOVE ALUMINIUM LIMITED	Australia	100.00
ALCAN GOVE PTY LIMITED	Australia	50.00 (5)
ALCAN QUEENSLAND SMELTER PTY LTD	Australia	100.00
NABALCO PTY LIMITED	Australia	100.00
QUEENSLAND ALUMINA LIMITED	Australia	21.39
QUEENSLAND ALUMINA SECURITY CORPORATION	Delaware	20.00
ALCAN ALUMINIUM AG	Switzerland	100.00
ALCAN RORSCHACH AG	Switzerland	100.00
ALCAN FINANCES (U.K.)	England	100.00
ALCAN HOLDINGS IRELAND CO.	Ireland	100.00
ALCAN DEUTSCHLAND HOLDINGS GmbH & Co. KG	Germany	99.99
ALCAN DEUTSCHLAND GmbH	Germany	90.00 (4)
ALUMINIUM NORF GmbH	Germany	50.00
DEUTSCHE ALUMINIUM VERPACKUNG RECYCLING GmbH	Germany	16.70 (15)
FRANCE ALUMINIUM RECYCLAGE SA	France	20.00 (16)
ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)	Switzerland	100.00
AL HOLDING  USA LLC	Delaware	100.00
ALA (NEVADA) INC.	Nevada	62.50 (1)
ALCAN COMPOSITES USA INC.	Missouri	100.00
ALUSUISSE ALUMINUM USA INC.	Delaware	100.00
LAWSON MARDON THERMAPLATE CORPORATION	New Jersey	100.00
LAWSON MARDON USA INC.	Delaware	100.00
PHARMA CENTER SHELBYVILLE INC.	Delaware	100.00
WHEATON USA INC.	New Jersey	100.00
HBE FERMENTATION SYSTEMS INC.	California	10.00
INTERNATIONAL GLASS EQUIPMENT LTD.	Bahamas	100.00
POLAR MATERIALS INC.	Pennsylvania	86.21
PC MATERIALS INC.	Pennsylvania	50.00
POLYPLASMA INC.	Canada	100.00
WHEATON PACIFIC LIMITED	Hong Kong	99.80
ALCAN AIREX AG	Switzerland	100.00
ALCAN ALESA ENGINEERING AG	Switzerland	100.00
ALCAN ALESA TECHNOLOGIES LTD.	Canada	100.00
ALCAN ALLEGA AG	Switzerland	100.00
ALCAN ALUCOBOND (FAR EAST) PTE LTD.	Singapore	100.00
ALCAN ALUMINIO ESPAÑA, S.A.	Spain	100.00
ALUSUISSE PORTUGAL LDA.	Portugal	98.00
ALCAN ALUMINIUM VALAIS SA	Switzerland	100.00
ALCAN AUSTRIA GmbH	Austria	100.00
ALCAN ALPE ADRIA D.O.O.	Slovenia	100.00

2

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALCAN HUNGARIA Kft.	Hungary	100.00
ALCAN CAPITAL JERSEY LIMITED	The Island of Jersey	100.00
ALCAN FINANCE JERSEY LIMITED	The Island of Jersey	100.00
ALCAN CAPITAL MARKET LTD.	Switzerland	100.00
ALCAN DÉCIN EXTRUSIONS s.r.o.	Czech Republic	100.00
ALCAN HOLDINGS EUROPE B.V.	The Netherlands	72.73 (6)
A-L FINANCIAL PRODUCTS LTD.	England	100.00
ALCAN DISTRIBUZIONE srl	Italy	100.00
ALCAN HOLDINGS FRANCE S.A.	France	99.99
ALCAN CMIC SAS	France	100.00
ALCAN FRANCE EXTRUSIONS SAS	France	100.00
ALCAN LAMINÉS FRANCE	France	70.00 (8)
ALCAN PACKAGING FRANCE SAS	France	100.00
BOXAL (FRANCE) SAS	France	100.00
CHARMETTES SAS	France	100.00
CIVILE IMMOBILIÈRE CELI	France	99.50 (14)
COPAL SNC	France	49.00
TECHPION RECHERCHE G.I.E.	France	100.00
LAWSON MARDON MORIN SAS	France	100.00
LAWSON MARDON TRENTESAUX SA	France	99.99
WHEATON FRANCE SAS	France	100.00
ALCAN HOLDINGS GERMANY GmbH	Germany	99.24 (7)
ALCAN BDW BETEILIGUNGS GmbH	Germany	100.00
ALCAN BDW GmbH & CO. KG	Germany	100.00
ALCAN COMPOSITES LTD, SHANGHAI	China	100.00
ALCAN KAPA GmbH	Germany	100.00
ALCAN SINGEN GmbH	Germany	100.00
ALCAN TOMOS d.o.o.	Slovenia	66.67
LAWSON MARDON HANSE-DRUCK GmbH	Germany	100.00
LAWSON MARDON SINGEN GmbH	Germany	99.90 (20)
ALCAN HOLDINGS NEDERLAND B.V.	The Netherlands	100.00
ALCAN NEDERLAND B.V.	The Netherlands	100.00
S.A. ALCAN BELGIUM N.V.	Belgium	99.37 (21)
ALU-VASTGOED B.V.	The Netherlands	100.00
ALUMINIUM & CHEMIE ROTTERDAM B.V.	The Netherlands	65.82 (13)
BOXAL NETHERLANDS B.V.	The Netherlands	100.00
BOXAL SALES GmbH	Germany	100.00
LAWSON MARDON AMSTERDAM B.V.	The Netherlands	100.00
LAWSON MARDON BRABANT B.V.	The Netherlands	100.00
LAWSON MARDON PICOPAC B.V.	The Netherlands	100.00
ALCAN HOLDINGS UK LIMITED	England	100.00
ALCAN PACKAGING BRIDGNORTH LTD	England	100.00
ALCAN PRODUCTS UK LTD.	England	100.00
LAWSON MARDON PACKAGING LTD.	England	100.00
ALCAN PACKAGING PENSION TRUST LTD.	England	100.00
FLEATHAM ESTATES LIMITED	England	100.00
FORMAN MARSHALL LIMITED	England	100.00
HEADLEY (READING) LIMITED	England	100.00
CELLOGLAS HOLDINGS LTD.	England	100.00
ALCAN PRINT FINISHERS LTD.	England	100.00
FIVE STAR CORPORATION LIMITED	England	100.00
PROTECTA PRINT LIMITED	England	100.00
QUALICOAT LIMITED	England	100.00

3

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
UNIVERSAL COATINGS LIMITED	England	100.00
WEST MIDLANDS FOIL BLOCKING LIMITED	England	100.00
LUSTRETEX LTD.	England	100.00
THE UV COMPANY LIMITED	England	100.00
UVIPAK (FINISHING) LIMITED	England	100.00
HEADLEY TRUSTEES LIMITED	England	100.00
LAWSON MARDON GROUP INTERNATIONAL LIMITED	England	100.00
LAWSON MARDON IZMIR GRAVUR BASKILI KARTON SANAYI VE TICARET A.S.	Turkey	100.00
LAWSON MARDON KAZAKHSTAN LIMITED LIABILITY PARTNERSHIP	Kazakhstan	100.00
LAWSON MARDON SELEPRINT s.r.l.	Italy	75.00 (19)
LAWSON MARDON LIMITED	England	100.00
LAWSON MARDON PACKAGING UK LTD.	England	100.00
KOTERS (LIVERPOOL) LIMITED	England	100.00
LAWSON MARDON FIBRENYLE LTD.	England	100.00
FIBRENYLE (CORBY) LIMITED	England	100.00
LAWSON MARDON FLEXIBLE LIMITED	England	100.00
MARDON FLEXIBLE PACKAGING (KENTON) LIMITED	England	100.00
LAWSON MARDON SMITH BROTHERS LTD.	England	100.00
LAWSON MARDON SUTTON LTD.	England	100.00
MARDON PELOREX LIMITED	England	100.00
LMG IRIDON LIMITED	England	100.00
LAWSON MARDON THERMOPLASTICS LTD.	England	100.00
WHEATON UK LTD.	England	100.00
LAWSON MARDON NORTHERN LIMITED	England	100.00
LAWSON MARDON READING LTD.	England	100.00
STALCON PLASTICS LIMITED	England	100.00
LAWSON MARDON SUNER SA	Spain	100.00
LAWSON MARDON THYNE LTD.	Scotland	100.00
LAWSON MARDON (WITHAM) LIMITED	England	100.00
LMG FINANCE LIMITED	England	100.00
LMG LLOYDS LIMITED	England	100.00
MARDON COMPOSITES LIMITED	England	100.00
MARDON WRAPPINGS LIMITED	England	100.00
PRONTOSEAL LIMITED	Scotland	100.00
WILLIAM THYNE (PLASTICS) LIMITED	Scotland	100.00
WILLIAM THYNE (SECURITIES) LIMITED	Scotland	100.00
LAWSON MARDON PACKAGING SALES LTD.	England	100.00
PHARMAFLEX LTD.	England	100.00
ALCAN JAPAN LTD.	Japan	100.00
ALCAN PRODOTTI SPECIALI spa	Italy	100.00
LMG (IRELAND) LIMITED	Ireland	100.00
LAWSON MARDON SUPERIOR LTD.	Ireland	100.00
WCL FLEXIBLE PACKAGING LIMITED	Ireland	100.00
WAXED CARTONS (EXPORT) LIMITED	Ireland	100.00
ZITELI LIMITED	Ireland	100.00
ALCAN ICELAND LTD.	Iceland	100.00
ENDURVINNSLAN LTD.	ICELAND	7.00
ALCAN PACKAGING CANADA LIMITED	Ontario	100.00
LAWSON MARDON PACKAGING OVERSEAS (BRISTOL) LIMITED	England	99.00 (18)
ALCAN PACKAGING SERVICES LTD.	Switzerland	100.00
ALCAN TECHNOLOGY & MANAGEMENT LTD.	Switzerland	100.00
ALCAN TRADING AG	Switzerland	100.00
ALUFLUOR AB	Sweden	50.00

4

ALCAN INC.
Subsidiaries, Related Companies, Etc.	Organized Under the Laws of	% of Voting Shares Held by Immediate Owner
ALUSUISSE-LONZA CSFR s.r.o.	Czech Republic	100.00
ALUSUISSE OF AUSTRALIA LIMITED	Australia	100.00
ALCAN ENGINEERING PTY LIMITED	Australia	100.00
SWISS ALUMINIUM AUSTRALIA LIMITED	Australia	100.00
GOVE JOINT VENTURE (THE)	Australia	70.00 (17)
BOXAL (SUISSE) S.A.	Switzerland	100.00
LAWSON MARDON NEHER AG	Switzerland	100.00
METALLICA S.A.	Switzerland	35.00
METALLWERKE REFONDA AG	Switzerland	100.00
SOCIÉTÉ MINIÈRE ET DE PARTICIPATIONS GUINÉE-ALUSUISSE	Guinea	50.00
SOR-NORGE ALUMINIUM AS	Norway	50.00
ALCAN INTERNATIONAL LIMITED	Canada	100.00
ALCAN IRELAND LIMITED	Ireland	100.00
ALCAN MANAGEMENT SERVICES CANADA LIMITED	Canada	100.00
ALCAN NIKKEI ASIA COMPANY LTD.	Bermuda	60.00
ALCAN NIKKEI ASIA CORPORATION SDN. BHD	Malaysia	60.00
ALCAN PRIMARY METAL LIMITED	Canada	100.00
ALCAN REALTY LIMITED	Canada	100.00
ALCAN SHANNON COMPANY	Ireland	100.00
ALCAN SHIPPING SERVICES LIMITED	Canada	100.00
ALCAN SMELTERS AND CHEMICALS LIMITED	Canada	100.00
ALCAN TAIHAN ALUMINUM LIMITED	Korea	67.91
ALUMINERIE ALOUETTE INC.	Quebec	20.00 (11)
ALUMINUM COMPANY OF CANADA LIMITED	Canada	100.00
BRITISH ALCAN ALUMINIUM plc	England	100.00
ALCAN AUTOMOTIVE STRUCTURES (UK) LIMITED	England	100.00
ALCAN CHEMICALS EUROPE LIMITED	England	100.00
ALCAN CHEMICALS LIMITED	England	100.00
ALCAN COLWICK HOLDINGS LIMITED	England	100.00
ALCAN COLWICK LIMITED	England	100.00
ALCAN FARMS LIMITED	England	100.00
ALCAN SWINTON LIMITED	England	100.00
BA METALS LIMITED	England	100.00
PEARHOUSE LIMITED	England	100.00
TBAC LIMITED	England	100.00
ALCAN ALUMINIUM UK LIMITED	England	85.00 (3)
BRITISH ALCAN OVERSEAS INVESTMENTS LIMITED	England	100.00
SARATOGA RESOURCES N.V.	Netherland Antilles	20.00
VIGELAND METAL REFINERY A/S	Norway	50.00
GHANA BAUXITE COMPANY LIMITED	Ghana	80.00
KINLOCHLEVEN ROAD TRANSPORT COMPANY LIMITED	Scotland	25.00
VENESTA FOILS LIMITED	England	100.00
VIGELANDS BRUG A/S	Norway	100.00
THE BOWLING BACK LAND COMPANY LIMITED	England	50.00
N.V. ALCAN ALUMINIUM PRODUCTS BENELUX S.A.	Belgium	100.00
SOCIÉTÉ DES ALUMINES ET BAUXITES DE PROVENCE SARL	France	100.00
THE ROBERVAL AND SAGUENAY RAILWAY COMPANY	Quebec	100.00
UTKAL ALUMINA INTERNATIONAL LIMITED	India	35.00

5

END-NOTE:  ADDITIONAL OWNERSHIP [%] THROUGH THE FOLLOWING SUBSIDIARIES:

(1) WHEATON USA INC.  (37.50)
(2) 9121-5996 QUÉBEC INC.  (1.00)
(3) BRITISH ALCAN ALUMINIUM plc  (15.00)
(4) ALCAN INC.  (10.00)
(5) SWISS ALUMINIUM AUSTRALIA LIMITED  (50.00)
(6) ALCAN HOLDINGS UK LIMITED  (27.27)
(7) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (0.76)
(8) ALCAN ALLUMINIO S.p.A.  (30.00)
(9) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (17.00)
(10) ALUMINIUM COMPANY OF MALAYSIA BERHAD  (51.00)
(11) ALCAN ALUMINIUM QUEBEC AND COMPANY, LIMITED PARTNERSHIP  (20.00)
(12) ALCAN NIKKEI SIAM LIMITED  (10.00)
(13) SOR-NORGE ALUMINIUM AS  (13.00)
(14) ALCAN HOLDINGS FRANCE S.A.  (0.50)
(15) ALCAN HOLDINGS GERMANY GmbH  (16.67)
(16) ALCAN HOLDINGS FRANCE S.A.  (20.00)
(17) GOVE ALUMINIUM LIMITED  (30.00)
(18) LAWSON MARDON PACKAGING LTD.  (1.00)
(19) LAWSON MARDON PACKAGING UK LTD.  (25.00)
(20) ALCAN SINGEN GmbH  (0.10)
(21) ALCAN HOLDINGS SWITZERLAND AG (SA/LTD.)  (0.62)

6

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Roland Berger
                                                                          Name:         Roland Berger
                                                                          Title:            Director

 

EX-24.2

Exhibit 24.2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ L. Yves Fortier
                                                                          Name:         L. Yves Fortier
                                                                          Title:            Director

EX-24.3

Exhibit 24.3

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Brian M. Levitt
                                                                          Name:         Brian M. Levitt
                                                                          Title:            Director 

EX-24.4

Exhibit 24.4

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:    /s/ William R. Loomis Jr.
                                                                          Name:     William R. Loomis Jr.
                                                                          Title:        Director

EX-24.5

Exhibit 24.5

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ J. E. Newall
                                                                          Name:         J.E. Newall
                                                                          Title:            Director

EX-24.6

Exhibit 24.6

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Guy Saint-Pierre
                                                                          Name:         Guy Saint-Pierre
                                                                          Title:            Director

EX-24.7

Exhibit 24.7

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS

              WHEREAS, ALCAN INC., a Canadian corporation (the "Company"), proposes shortly to file with the Securities and Exchange Commission, under the provisions of the Securities Act of 1934 as amended (the "Act"), the Annual Report on Form 10-K pursuant to Section 13 or 15 (d) of the Act.

              WHEREAS, the undersigned is an Officer and/or a Director of the Company as indicated below;

              NOW, THEREFORE, the undersigned hereby constitutes and appoints R. Millington, D. McAusland and P. Chenard and each of them, as attorneys for the undersigned and in the undersigned's name, place and stead, and in each of the undersigned's offices and capacities as an Officer and/or a Director of the Company, to execute and file such Annual Report on Form 10-K, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

              IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March 2003.

                                                                          Signed:        /s/ Gerhard Schulmeyer
                                                                          Name: Gerhard Schulmeyer
                                                                          Title:    Director

EX-99.2

Alcan Inc. A

Notice of Annual Meeting

of Shareholders

24 April 2003

Management Proxy Circular

A

Dear Shareholder:

You are cordially invited to attend the 101^st Annual Meeting of Shareholders of Alcan Inc., which will take place on Thursday, 24 April 2003, in the Assembly Hall of the International Civil Aviation Organization, 999 University Street, Montreal, Quebec, Canada at 10:00 a.m.

At the Meeting, the Shareholders will be asked to consider the matters set out in the enclosed Notice of Annual Meeting.

Your vote is important. Please complete, sign and date the form of proxy and return it in the enclosed envelope, whether or not you plan to attend the Meeting. Returning the proxy will not limit your right to vote in person if you attend the Meeting.

The Meeting will be webcast on Alcan's web site (www.alcan.com)

If you have any questions regarding the matters to be dealt with at the Meeting or require additional copies of this material, please call Alcan's transfer agent, CIBC Mellon Trust Company, at

1-800-387-0825 (toll free) or collect at 416-643-5500.

Yours sincerely,

L. Yves Fortier
Chairman of the Board of Alcan Inc.
5 March 2003

(i)

What's Inside:

Notice of Annual Meeting of Shareholders of Alcan Inc.	1
Management Proxy Circular	2
Definitions	2
Q & A on Voting and Proxies	3
Business to be Transacted at the Meeting	6
Nominees for Election as Directors	7
Corporate Governance Practices	9
Report of the Audit Committee	13
Auditors	14
Performance Graph	15
Report on Executive Compensation	16
Executive Officers' Compensation	20
Employment Agreements	26
Directors' Remuneration	26
Indebtedness of Directors and Executive Officers	27
Directors and Officers' Liability Insurance	28
Approval of the Board of Directors	28

La version française du présent document ainsi que la formule de procuration qui l'accompagne seront envoyées aux actionnaires sur demande. Veuillez communiquer avec la Compagnie Trust CIBC Mellon, en appelant au 1-800-387-0825 (sans frais) ou à frais virés au 416-643-5500.

(ii)

A

Notice of Annual Meeting of Shareholders of Alcan Inc.

The 101^st Annual Meeting of the holders of the Common Shares of Alcan Inc. will be held on Thursday, 24 April 2003 at 10:00 a.m. in the Assembly Hall, International Civil Aviation Organization, 999 University Street (Atrium entrance), Montreal, Quebec, Canada, for the following purposes:

1. receiving the financial statements and the Auditors' Report for the year ended 31 December 2002,

2. electing Directors, and

3. appointing Auditors and authorizing the Directors to fix their remuneration.

Shareholders who cannot attend the Annual Meeting may submit their proxies in accordance with the procedures set out in the attached Management Proxy Circular.

By order of the Board of Directors,

Roy Millington
Corporate Secretary

Montreal, Canada
5 March 2003

1

A

Management Proxy Circular
(As of 14 February 2003, except as otherwise provided)

This Management Proxy Circular is furnished in connection with the solicitation of proxies by the Board of Directors and management of Alcan Inc. for use at the Annual Meeting of Shareholders to be held in Montreal on 24 April 2003 (and at any adjournment thereof) for the purposes set out in the attached Notice of Annual Meeting.

Definitions

Unless stated otherwise, the following expressions used in this Management Proxy Circular have the meanings indicated:

"Alcan" or "Company" means Alcan Inc.,

"Algroup" means Alusuisse Group Ltd. (now Alcan Holdings Switzerland Ltd.), a Subsidiary of Alcan following the Combination,

"Auditors" means Alcan's external auditors, currently PricewaterhouseCoopers LLP,

"Board" or "Board of Directors" means the board of directors of Alcan,

"CBCA" means the Canada Business Corporations Act,

"Chairman" means the Chairman of the Board of Directors of Alcan,

"CEO" means the Chief Executive Officer of Alcan,

"CIBC Mellon" means CIBC Mellon Trust Company,

"Circular" means this management proxy circular prepared in connection with the Meeting,

"Combination" means the process by which Algroup became a Subsidiary of Alcan on 17 October 2000, through the completion of a share exchange offer by Alcan for the shares of Algroup,

"Director" means a director of Alcan,

"Executive Officers" means the President and Chief Executive Officer, the Executive Vice Presidents, the Senior Vice Presidents, the Vice Presidents, the Treasurer, the Controller and the Secretary of Alcan,

"Meeting" means the Annual Meeting of Shareholders to be held on 24 April 2003 and any adjournment thereof,

"Non-Executive Director" means a Director of Alcan who is not an employee of Alcan or its Subsidiaries or related companies,

"Notice" means the attached Notice of Annual Meeting,

"Option Plan" means the Alcan Executive Share Option Plan described on page 21,

"Share" or "Common Share" means a common share in the capital of Alcan,

"Shareholder" means a holder of the Shares,

"Subsidiary" means a company controlled, directly or indirectly, by Alcan, and

"$" means U.S. Dollars.

2

Questions & Answers on Voting and Proxies

If you are not a registered Shareholder, please refer to page 5 for a description of the procedure to be followed to vote your Shares.

Q: Who is soliciting my proxy?

A: This Circular is furnished in connection with the solicitation by Alcan's management of proxies to be used at the Meeting to vote your Shares. The solicitation of proxies will be made primarily by mail, but may also be made by electronic means, by telephone or in person. The cost of soliciting proxies will be borne by Alcan. Georgeson Shareholder and Morrow & Co., Inc. have been retained by Alcan in Canada and the United States, respectively, to assist in the solicitation of proxies from Shareholders. For these services, Georgeson Shareholder and Morrow & Co., Inc. are expected to receive, from Alcan, fees of approximately Can. $25,000 and $10,000, respectively, plus reimbursement of reasonable expenses. In addition, employees of Alcan may solicit proxies without compensation. CIBC Mellon is responsible for the tabulation of proxies.

Q: What am I voting on?

A: Shareholders will be voting on the:

• Election of Directors; and

• Appointment of PricewaterhouseCoopers LLP as the Auditors and authorization given to the Directors to fix the Auditors' remuneration

Q: What documents are sent to shareholders?

A: Shareholders will receive a package of the usual annual corporate documents (i.e., Alcan's 2002 Annual Report, this Circular and the form of proxy). Registered Shareholders will also receive a consent form for electronic delivery of documents.

Copies of Alcan's annual report on Form 10-K and audited consolidated financial statements filed with the Canadian and U.S. securities regulators may be obtained, without charge, on request from the Corporate Secretary of Alcan, 1188 Sherbrooke St. West, Montreal, Quebec, Canada, H3A 3G2.

Q: Who is entitled to vote?

A: On 5 March 2003, 321,512,436 Shares were outstanding. Shareholders of record as of the close of business on that date (the "Record Date") are entitled to receive notice of the Meeting and they or their duly appointed proxyholder will be entitled to attend the Meeting and vote.

Each holder of Shares is entitled to one (1) vote at the Meeting for each Share registered in his or her name at the close of business on the Record Date.

Q: How do I vote?

A: There are three ways that you can vote your Shares if you are a registered Shareholder.

(1) You may vote in person at the Meeting,

(2) you may complete and sign the enclosed form of proxy appointing the named persons or another person you choose to represent you and to vote your Shares at the Meeting, or

(3) you may vote electronically.

Completing, signing and returning your form of proxy does not preclude you from attending the Meeting in person. If you do not wish to attend the Meeting or do not wish to vote in person, your proxy will be voted or be withheld from voting, in accordance with your wishes as specified on your proxy, on any ballot that may be called at the Meeting. If the Shareholder is a body corporate or association, the form of proxy must be signed by a person duly authorized by that body corporate or association.

To vote electronically, you must go to the following website: www.proxyvoting.com/alcan and enter your personalized e-voting control number located on your form of proxy and follow the instructions.

If your Shares are registered in the name of a nominee, please see "Voting by Non-Registered Shareholders" on page 5.

Q: What if I plan to attend the meeting and vote in person?

A: If you plan to attend the Meeting on 24 April 2003 and wish to vote your Shares in person at the Meeting, it is not necessary for you to complete or return the form of proxy. Your vote will be taken and counted at the Meeting. Please register with the transfer agent, CIBC Mellon, upon arrival at the Meeting. Non-registered Shareholders wishing to attend the Meeting should refer to "Voting by Non-Registered Shareholders" on page 5.

3

Q: What happens when I sign and return the form of proxy?

A: Signing the enclosed proxy gives authority to the named proxyholders on the form, or to another person you have appointed, to vote your Shares at the Meeting in accordance with the voting instructions you provide.

Q: Can I appoint someone other than the named proxyholders to vote my shares?

A: Yes. Write the name of your chosen person, who need not be a Shareholder, in the blank space provided in the form of proxy. It is important to ensure that any other person you appoint is attending the Meeting and is aware that his or her appointment has been made to vote your Shares. Proxyholders should, at the Meeting, present themselves to a representative of CIBC Mellon. Please note that if you choose to vote electronically, only the named proxyholders may be appointed.

Q: What do I do with my completed form of proxy?

A: Return it to the transfer agent, CIBC Mellon, in the envelope provided, or forward it by telecopier to (416) 368-2502, so that it arrives no later than 5:00 p.m. EDT on 23 April 2003. All Shares represented by a properly executed proxy received by CIBC Mellon prior to such time will be voted or be withheld from voting, in accordance with your instructions as specified in the proxy, on any ballot that may be called at the Meeting.

Q: How will my shares be voted if I return my proxy?

A: The persons named in the form of proxy will vote or withhold from voting your Shares in accordance with your instructions. In the absence of such instructions, however, your Shares will be voted FOR the election of the Directors and FOR the appointment of the Auditors.

Q: If I change my mind, can I take back my proxy once I have given it?

A: Yes. A Shareholder who has given a proxy may revoke it with an instrument in, writing which includes another proxy with a later date, executed by the Shareholder or by the Shareholder's attorney authorized in writing and delivered to CIBC Mellon, 200 Queen's Quay East, Unit 6, Toronto, Ontario, M5A 4K9, Canada or by telecopier at (416) 368-2502, no later than 5:00 p.m. EDT on 23 April 2003 or to the chairman of the Meeting on the day of the Meeting or any adjournment thereof. It should be noted that the participation in person by a Shareholder in a vote by ballot at the Meeting would automatically revoke any proxy that has been previously given by the Shareholder in respect of business covered by that vote.

Q: What if amendments are made to these matters or if other matters are brought before the meeting?

A: The persons named in the form of proxy will have discretionary authority with respect to amendments or variations to matters identified in the Notice of Annual Meeting and to other matters which may properly come before the Meeting. As of the date of this Circular, the management of Alcan knows of no such amendment, variation or other matter expected to come before the Meeting. If any other matters properly come before the Meeting, the persons named in the form of proxy will vote on them in accordance with their best judgment.

Q: How can I contact the transfer agent?

A: You can contact the transfer agent at:

                CIBC Mellon Trust Company
                320 Bay Street, 3^rd floor
                Toronto, Ontario, Canada M5H 4A6
                Telephone: (416) 643-5500
                                    1-800-387-0825
                (toll free throughout Canada and the U.S.)
                Telecopier: (416) 643-5501

Q: What is the final date to submit a shareholder proposal for the 2004 annual meeting?

A: The final date for submitting Shareholder proposals to Alcan is 5 December 2003.

Q: Who are the principal shareholders of the company?

A: To the knowledge of the Directors and Executive Officers of the Company, no person or company beneficially owns or exercises control or direction over more than 10% of the outstanding Shares of the Company.

4

Voting by non-registered shareholders

Q: If my shares are not registered in my name but are held in the name of an intermediary (a bank, trust company, securities broker, trustee, etc.), how do I vote my shares?

A: Non-registered or beneficial Shareholders are not personally listed in Alcan's Share register. Their Shares are held in the name of an intermediary or a "nominee", which is usually a trust company, securities broker or other financial institution. If you are a non-registered Shareholder, there are two ways that you can vote your Shares held in the name of your nominee:

     1)    By providing voting instructions to your nominee

Applicable securities laws require your nominee to seek voting instructions from you in advance of the Meeting. Accordingly, you will receive or have already received from your nominee either a request for voting instructions or a form of proxy for the number of Shares you hold. Every nominee has its own mailing procedures and provides its own signing and return instructions, which should be carefully followed by non-registered Shareholders to ensure that their Shares are voted at the Meeting.

      2)     By attending the Meeting in person

The Company generally does not have access to the names of its non-registered Shareholders. Therefore, if you attend the Meeting, the Company will have no record of your shareholdings or of your entitlement to vote unless your nominee has appointed you as proxyholder.

If you wish to vote in person at the Meeting, insert your own name in the space provided on the request for voting instructions or form of proxy to appoint yourself as proxyholder. Non-registered Shareholders who instruct their nominee to appoint themselves as proxyholders should, at the Meeting, present themselves to a representative of CIBC Mellon.

5

Business to be transacted at the Meeting
(See Notice of Annual Meeting of Shareholders of Alcan Inc.)

1.     Presentation of Financial Statements

The consolidated financial statements for the year ended 31 December 2002 and the Auditors' Report for 2002 will be submitted to Shareholders at the Meeting, but no vote with respect thereto is required or proposed to be taken. The consolidated financial statements are included in the Alcan 2002 Annual Report that is being mailed to Shareholders with the Notice of Annual Meeting and this Circular.

2.     Election of Directors

Eleven Directors are to be elected to serve until the close of the next annual meeting of the Company or until they cease to hold office as such. The Board of Directors and management recommend the election of the nominees listed on pages 7 and 8.

3.     Appointment of Auditors

Auditors are to be appointed to serve until the close of the next annual meeting of the Company, and the Directors are to be authorized to fix the remuneration of the Auditors so appointed.

The Board of Directors and management, on the advice of the Audit Committee, recommend that PricewaterhouseCoopers LLP, Montreal, Canada, be appointed as Auditors.

A representative of PricewaterhouseCoopers LLP will be present at the Meeting and will have the opportunity to make a statement should he desire to do so. He will also be available to answer questions.

6

Nominees for Election as Directors

Roland Berger	65, Director since 2002	Travis Engen	58, Director since 1996
	Mr. Berger is chairman and global managing partner of Munich-based Roland Berger Strategy Consultants, one of the leading global strategy consultancies. He is a member of various supervisory boards and consultant groups, pursues extensive commitments in the public sector and is an expert on corporate management and general economic and social issues. (1), (3), (4) 1,287 Deferred Share Units		Mr. Engen has been President and CEO of Alcan since March 2001. He is a member of the U.S. Government's Defense Business Practice Implementation Board. He is a director of Lyondell Chemical Company, the International Aluminium Institute and the Canadian Council of Chief Executives. 225,500 Common Shares 1,848 Deferred Share Units 932,000 Options to purchase Shares
Clarence J. Chandran	53, Director since 2001	L. Yves Fortier, c.c., q.c.	67, Director since 2002
	Mr. Chandran is chairman of the Chandran Family Foundation Inc., chairman of Conros Corporation and of InfoClarus Inc., and president of Le Pages Inc. (U.S.A.). He retired as chief operating officer of Nortel Networks Corporation in 2001. Mr. Chandran is also a director of MDS Inc., and Sirific Wireless Corp., a member of the board of visitors of the Kenan-Flagler Business School, University of North Carolina and a trustee of the America-India Foundation. (1), (3), (4) 4,000 Common Shares 4,808 Deferred Share Units		Mr. Fortier is Chairman of the Board of Alcan and is chairman and a senior partner of the law firm Ogilvy Renault in Montreal. From 1988 to 1992, he was Ambassador and Permanent Representative of Canada to the United Nations. He is also governor of Hudson's Bay Company and a director of DuPont Canada Inc., Groupe TVA Inc., Nortel Networks Corporation, NOVA Chemicals Corporation and the Royal Bank of Canada. Mr. Fortier is a trustee of the International Accounting Standards Committee and a member of the advisory council of Mercer Management Consulting. (1*), (2), (3), (4) 1,000 Common Shares 3,540 Deferred Share Units
L. Denis Desautels, o.c., f.c.a.	60, Nominated in 2003	William R. Loomis, Jr.	54, Director since 2002
	Mr. Desautels is executive director of the University of Ottawa Centre on Governance. He was Auditor General of Canada from 1991 to 2001, prior to which he had been a senior partner of the accounting firm of Ernst & Young LLP. Mr. Desautels is chairman of the Laurentian Bank of Canada, a director of The Jean Coutu Group (PJC) Inc. and of Bombardier Inc. and a member of the Accounting Standards Oversight Council of the Canadian Institute of Chartered Accountants.		Mr. Loomis is in the graduate PhD. Program at the University of California, Santa Barbara. He is limited managing director of Lazard LLC, where he was formerly chief executive officer. He is a director of Ripplewood Holdings LLC and Terra Industries Inc. (1) 10,000 Common Shares 846 Deferred Share Units

7

J.E. Newall, o.c.	67, Director since 1985	Paul M. Tellier, p.c., c.c., q.c.	63, Director since 1998
	Mr. Newall is chairman of NOVA Chemicals Corporation and of Canadian Pacific Railway Limited; he was vice-chairman and chief executive officer of NOVA Corporation from 1991 to 1998. He is a director of BCE Inc., Bell Canada, Maple Leaf Foods Inc. and the Royal Bank of Canada. (1), (3*), (4) 8,454 Common Shares 6,793 Deferred Share Units		Mr. Tellier is president and chief executive officer and a director of Bombardier Inc. From 1992 to 2002, he was president and chief executive officer of the Canadian National Railway Company. He is a director of McCain Foods, Bell Canada and BCE Inc. He is vice-chairman of the Canadian Council of Chief Executives and former chairman of the Conference Board of Canada (1), (2), (4*) 1,938 Common Shares 5,842 Deferred Share Units
Guy Saint-Pierre, c.c.	68, Director since 1994	Milton K. Wong, c.m.	64, Nominated in 2003
	Mr. Saint-Pierre is chairman of the Royal Bank of Canada. He was president and chief executive officer of SNC-Lavalin Group Inc. from 1989 to 1996 and chairman from 1996 to 2002. Mr. Saint-Pierre is a director of BCE Inc., Bell Canada, General Motors of Canada and Telesat Canada. (1), (2*), (3) 13,814 Common Shares 4,446 Deferred Share Units		Mr. Wong is chairman of HSBC Asset Management (Canada) Limited and Chancellor of Simon Fraser University in British Columbia. He serves as a director on the boards of the Aga Kahn Foundation Canada, the Canada-U.S. Fulbright Program, The Canadiana Fund, The Canadian Institute for Advanced Research, Genome BC, Mr. and Mrs. P.A. Woodward's Foundation, the Pierre Elliott Trudeau Foundation and Stem Cell Network. He is the founder and past-chairman of the Laurier Institution, a non-profit organization for advancing knowledge of the economics of cultural diversity.
Gerhard Schulmeyer	64, Director since 1996
	Mr. Schulmeyer is professor of practice at the MIT Sloan School of Business. Until 2001, he was president and chief executive officer of Siemens Corporation. He serves on the boards of Thyssen-Bornemisza Holding N.V., Zurich Financial Services, Ingram Micro Inc., and Korn/Ferry as well as the international advisory board of Banco Santander Central Hispano. (1), (2) 1,928 Common Shares 4,305Deferred Share Units	Committee Memberships 1. Corporate Governance 2. Audit 3. Personnel 4. Environment, Health & Safety * Committee Chairman

8

Corporate Governance Practices

Alcan is committed to the highest levels of corporate governance practices, which are essential to the success of the Company and to the enhancement of Shareholder value. The Common Shares are listed on the Toronto, New York, London and Swiss stock exchanges and Alcan, in addition to making the required filings with Canadian securities regulators, files periodic and current reports with the United States Securities and Exchange Commission. Accordingly, Alcan is subject to a variety of corporate governance and disclosure requirements. Alcan's corporate governance practices meet or exceed the Toronto Stock Exchange Corporate Governance Guidelines (the "TSX Guidelines") and other applicable stock exchange and regulatory requirements and ensure transparency and effective governance of the Company. Alcan's Board has been reviewing its corporate governance practices in light of the Sarbanes-Oxley Act of 2002, as well as proposed revisions to the TSX Guidelines and to the rules of t he New York Stock Exchange relating to corporate governance. As these new provisions come into effect, the Board will reassess its corporate governance practices and implement changes where appropriate.

The following is an overview of Alcan's corporate governance practices with footnotes referencing the TSX Guidelines.

The Board of Directors

The Board has the responsibility for the stewardship of the Company, including the responsibility to ensure that it is managed in the interest of its Shareholders as a whole, while taking into account the interests of other stakeholders.¹

The Board supervises the management of the business and affairs of the Company and discharges its duties and obligations in accordance with the provisions of (a) the CBCA, (b) the Company's articles of incorporation and by-laws, (c) the Worldwide Code of Employee and Business Conduct, (d) the charters of the Board and Board Committees, and (e) other applicable legislation and Company policies.

The charter of the Board of Directors, the Committee charters and the Worldwide Code of Employee and Business Conduct are posted on Alcan's Internet site at www.alcan.com

The Company's corporate governance practices require that, in addition to its statutory duties, the following matters be subject to Board approval: (1) capital expenditure budgets and significant investments and divestments, (2) the Company's strategic and value-maximizing plans², (3) the number of Directors within the limits provided in the Company's articles of incorporation, and (4) any matter which may have the potential for important impact on the Company.

Composition and Independence of the Board

A committee of unrelated Directors (see Corporate Governance Committee below) recommends candidates for election to the Board. Nominees are selected as potential representatives of Shareholders as a whole and not as representatives of any particular Shareholder or group of Shareholders. Alcan does not have a significant or controlling Shareholder.

Care is taken to ensure that the Board of Directors is constituted of a substantial majority of individuals who qualify as Directors who are unrelated to and independent of management, in accordance with stock exchange requirements.³

The present Board is composed of ten Directors. Travis Engen is President and CEO of Alcan. Except for Mr. Engen, all Directors are unrelated. In particular, Messrs. Berger, Chandran, Fortier, Levitt, Loomis, Newall, Saint-Pierre, Schulmeyer and Tellier are (i) "unrelated" Directors within the meaning of the TSX Guidelines and (ii) "independent" Directors within the meaning of the rules of the New York Stock Exchange, owing to their having no material relationship with Alcan, either directly or as a partner, shareholder or officer of a company that has a relationship with Alcan and no interest or relationship which could reasonably be perceived to interfere with their ability to act with a view to the best interests of Alcan.⁴ References herein to "unrelated Directors" include the criteria relating to "independent Directors" referred to above.

9

The Board has a non-executive Chairman (L. Y. Fortier) who is not a member of Alcan's management; this structure contributes to allowing the Board to function independently of management.⁵

The Board is satisfied that its number of Directors enables effective decision-making.⁶

According to their mandates as set out in their charters, the Board and each of its Committees may engage outside advisors.⁷

Committees

The Board has appointed four Committees, each of which is constituted by its own charter, by which the Board delegates certain of its functions as hereinafter set out. Each Committee is made up solely of Directors who are unrelated to management as aforesaid.⁸

The Committee charters are reviewed and assessed on an annual basis.

The Committees of the Board are: the Corporate Governance Committee, the Audit Committee, the Personnel Committee and the Environment, Health & Safety Committee.

Corporate Governance Committee

The Corporate Governance Committee has the broad responsibility of regularly reviewing corporate governance practices in general within Alcan.⁹

One of the Committee's main duties is to maintain an overview of the composition and size of the Board. A sub-committee of the Corporate Governance Committee, composed entirely of unrelated Directors, reviews candidates for nomination as Directors and proposes them to the Board.¹⁰ The Committee develops position descriptions for the Board of Directors and the CEO and approves the latter's corporate objectives.¹¹

The Corporate Governance Committee assesses and ensures the effectiveness of the Board as a whole, of each Committee of the Board and of the contribution of individual Directors, including the CEO.¹² The Committee also assesses the Board's relationship with management and recommends, where necessary, limits on management's authority to act without explicit Board approval.

The Committee's mandate also includes recommending levels of Directors' compensation. To this end, the Committee considers recommendations from the Personnel Committee and considers factors such as time commitment, risks and responsibilities.¹³

Audit Committee

This Committee is established in accordance with the requirements of the CBCA, stock exchange rules and applicable securities laws and regulations. Its roles and responsibilities are set out in its charter. The Audit Committee's main objective is to provide an effective overview of the Company's financial reporting process and internal control functions, and to review financial statements and proposals for issues of securities.¹⁴ It does this by assisting the Board in fulfilling its functions relating to corporate accounting and reporting practices, as well as overseeing financial and accounting controls. The Committee also identifies the principal risks of the Company's business and oversees the implementation of appropriate systems to manage such risks.¹⁵

With respect to compliance and disclosure matters, the Committee ensures that the Company makes timely disclosure of activities that would materially impact its financial statements, that all potential material claims against the Company have been properly evaluated, accounted for and disclosed, and that regular updates are received regarding certain policies and practices of the Company.¹⁶

The Committee reviews financial information prepared in accordance with generally accepted accounting principles ("GAAP") and non-GAAP financial information in its various forms, including earnings releases, quarterly reports and annual reports. It reviews major accounting issues that arise and expected changes in accounting standards and processes that may impact the Company.

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The Committee has direct communication with the Company's Auditors and internal auditors and meets privately on a regular basis with each of the Auditors, internal auditors and senior members of the Company's financial management. The Audit Committee approves the recommendation of the Auditors for appointment by the Shareholders, reviews their degree of independence and requires regular reports. The Chairman of the Committee signs the Auditor's audit engagement letter. The Committee also discusses with the Auditors the quality and not just the acceptability of the Company's accounting principles and obtains their assurance that the audit was conducted in a manner consistent with applicable laws and regulations.¹⁷

The Board determines each Audit Committee member's financial literacy and whether he or she has accounting or related financial expertise. All members of the Audit Committee have been determined to have the requisite level of financial literacy, being the ability to fully understand balance sheets, income statements, cash flow statements and related notes to financial statements.

The Audit Committee ensures that its process for monitoring compliance and dealing with violations of Alcan's Worldwide Code of Employee and Business Conduct is established and updated. In particular, the Audit Committee has established procedures in relation to complaints or concerns received by the Company involving accounting or audit matters, including the anonymous handling thereof.

(See Report of the Audit Committee on page 13)

Personnel Committee

The Personnel Committee has the broad responsibility to review any and all personnel policy and employee relations matters and to make recommendations with respect to such matters to the Board or the CEO, as appropriate. Its specific roles and responsibilities are set out in its charter. The Committee will periodically review the effectiveness of the Company's overall management organization structure and proposals for succession planning¹⁸, review recommendations for the appointment of Executive Officers, and consider and make recommendations to the Board based on trends and developments in the area of human resource management.

The Committee establishes the Company's general compensation philosophy and oversees the development and implementation of compensation policies and programs. It also reviews and approves the level of and/or changes in the compensation of individual Executive Officers, taking into consideration individual performance and competitive compensation practices. (See Report on Executive Compensation on page 16).

Environment, Health & Safety Committee

This Committee has the broad responsibility to review the policy, management practices and performance of Alcan in environmental, health and safety matters and make recommendations to the Board on such matters in light of current and changing requirements. The Committee also reviews, assesses and provides advice to the Board on worldwide policy and legal, regulatory and consumer trends and developments related to the environment, as they impact the Company, its employees, businesses, processes and products.

Meetings of the Board and Committees

The Board and the Committees meet at pre-set times throughout the year and as needed.

The Board held 11 meetings during 2002, three of which were held by telephone conference. Attendance by Directors at Board and Committee meetings averaged 94%.

The Board and the Committees regularly invite members of management to attend meetings to report on relevant subjects and facilitate communication between the Board and Company management.

In 2002, the Corporate Governance Committee met six times, the Audit Committee met six times, the Personnel Committee met four times and the Environment, Health & Safety Committee met twice. There is no executive committee of the Board. At the next Board meeting following each meeting of a Committee, the chairman of the Committee reports to the Board on the Committee's activities. Minutes of Committee meetings are provided to all Directors.

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At every meeting of the Board, the unrelated Directors meet in executive session, presided by the Chairman, without management present.

Information to the Board

Alcan's Secretary prepares a Directors' Manual which includes information on Company policies and Director responsibilities and liabilities, which is updated as necessary. Detailed current information on the Company, its finances and its operations are sent on a monthly basis to the Directors. Particularly important information requiring urgent attention is conveyed immediately. In addition, new Directors spend time with members of senior management, including those involved in Alcan's business operations, so that they can become rapidly familiar with the Company, its issues, business and operations. Care is taken to ensure that new Directors understand the roles and responsibilities of the Board and its Committees, as well as the commitment level that Alcan expects of its Directors. Director visits to Alcan's plants and business locations are organized to give additional insight into Alcan's business and operations.¹⁹

Code of Conduct

Alcan has a Worldwide Code of Employee and Business Conduct that governs all employees of Alcan, as well as the Directors and senior management. A copy of the Code is posted on the Company's Internet site (www.alcan.com) to emphasize the importance the Company places on adherence to the highest ethical standards. Alcan will promptly disclose any future amendments to the Code on its Internet site.

Role of management

The Board is not involved in the day-to-day management and functioning of the Company. It gives senior management this responsibility, subject to the Board's overall stewardship responsibilities.

Alcan management is responsible for conducting the business and operations of the Company in accordance with a business strategy approved by the Board. Management's authority to act in certain matters that may have the potential for important impact on the Company, including decisions by the CEO, is subject to prior Board approval as described above. Before being submitted to the Board, certain matters such as dividends, securities issues, annual reports and significant investment/divestment proposals are prepared and reviewed by management with external professional advice, as necessary.

Shareholder/Investor Communications

In order to respond to Shareholders' questions and concerns, Alcan maintains an experienced investor relations staff whose responsibility is to provide accurate, timely and non-selective information and analysis to the investing community in accordance with Alcan's disclosure policy. This policy has been established in compliance with applicable legal disclosure requirements in Canada and in the United States and is regularly reviewed. The investor relations staff meets periodically with investors and analysts and is accessible to Shareholders by telephone during business hours. These services facilitate the receiving of Shareholder comments.

Note 1: refers to TSX Guideline 1.
Note 2: refers to TSX Guideline 1(a).
Note 3: refers to TSX Guideline 2.
Note 4: refers to TSX Guideline 3. Yves Fortier is a senior partner of Ogilvy Renault, one of a number of law firms that provide legal services for the Company. Roland Berger is chairman of Roland Berger Strategy Consultants, a consulting firm that is providing services to the Company in connection with a specific matter. The Board has determined that the services rendered in each case are not material to the Company or to the service provider in question and accordingly Messrs. Fortier and Berger are considered to be unrelated Directors.
Note 5: refers to TSX Guideline 12.
Note 6: refers to TSX Guideline 7.
Note 7: refers to TSX Guideline 14.
Note 8: refers to TSX Guideline 9.
Note 9: refers to TSX Guideline 10.
Note 10: refers to TSX Guideline 4.
Note 11: refers to TSX Guideline 11.
Note 12: refers to TSX Guideline 5.
Note 13: refers to TSX Guideline 8.
Note 14: refers to TSX Guideline 1(e).
Note 15: refers to TSX Guideline 1(b).
Note 16: refers to TSX Guideline 1(d).
Note 17: refers to TSX Guideline 13.
Note 18: refers to TSX Guideline 1(c).
Note 19: refers to TSX Guideline 6.

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Report of the Audit Committee

In accordance with its charter, the Audit Committee of the Board is responsible for providing an effective overview of Alcan's financial reporting process and internal control functions.

Management has the primary responsibility for the financial reporting process and the system of internal controls. The Auditors have the responsibility to express an opinion on the financial statements based on their audit in accordance with generally accepted auditing standards. The Audit Committee has the responsibility to monitor and oversee the foregoing.

In carrying out its responsibilities, the Audit Committee has recommended to the Board that it, in turn, recommend to the Shareholders that PricewaterhouseCoopers LLP, Montreal, Canada be appointed as Auditors at the Meeting.

The Auditors discuss with the Audit Committee and provide written disclosures on (1) the independence of the Auditors from Alcan; (2) all critical accounting policies and practices used in the audit; (3) all alternative treatments of financial information within GAAP; (4) the quality and not just the acceptability of the Company's accounts; and (5) the matters required to be communicated under generally accepted auditing standards.

The Audit Committee has reviewed and approved the fees paid for audit services and fees paid to the Auditors for other services (see Auditors on page 14) and has considered whether the fees paid for such other services are compatible with maintaining the Auditors' independence.

The Audit Committee regularly meets separately with the Auditors and with Alcan's chief internal auditor, without management present, to review the results of their audits, their evaluation of internal controls, the quality of Alcan's accounting and financial reporting and other appropriate matters.

The Audit Committee has reviewed the Company's audited financial statements, has discussed them with management and has recommended to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K.

The Audit Committee,

Guy Saint-Pierre, Chairman of the Committee
L. Yves Fortier
Brian M. Levitt
Gerhard Schulmeyer
Paul M. Tellier

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Auditors

PricewaterhouseCoopers LLP and its predecessor (Price Waterhouse) have been Alcan's Auditors since 1936.

In addition to performing the audit of Alcan's consolidated financial statements, PricewaterhouseCoopers LLP provided other services to the Company and its Subsidiaries.

Fees by category for each of 2001 and 2002 are:

	2001 ($'000)	2002 ($'000)
Audit Fees	6,168	7,338
Audit-Related Fees	410	390
Tax Fees	1,528	1,979
All other Fees	928	817
Total	9,034	10,524

"Audit-related fees" include fees for financial due diligence and the audit of the Company's pension benefit plans. "Tax fees" include tax compliance services and tax advisory and planning services. "All other fees" include principally valuation services for tax purposes in Australia, consultation services in Canada related to various procurement initiatives and transfer pricing studies.

All services by the Auditor will be subject to pre-approval by the Audit Committee through established procedures. Management will make regular updates to the Committee of the services rendered by the Auditors.

The Audit Committee reviewed with the Auditors and Alcan's chief internal auditor the overall scope and specific plans for their audits of the Company and its Subsidiaries.

The Auditors, the Audit Committee and management maintain regular and open communication in relation to the audit of the Company's financial statements. There were no disagreements between the Auditors, the Audit Committee and Management and on matters affecting the audit of the Company's financial statements.

In addition, the Auditors reviewed and discussed Alcan's unaudited 2002 quarterly financial statements and earnings releases with management and members of the Audit Committee.

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Performance Graph

The following graph compares the cumulative total Shareholder return on Can. $100 invested in Shares with the cumulative total return of the S&P/TSX Composite Index, assuming reinvestment of all dividends. Additional comparisons are provided with respect to two U.S. Dollar-based indices, the Standard & Poor's 500 Index and the Standard & Poor's Diversified Metals & Mining Index. The Company intends to replace the Standard & Poor's 500 Index with the Standard & Poor's Industrial Composite Index, because the former is a very

broad index encompassing varying industries and markets, while the latter more closely resembles the Company's industry. In accordance with statutory requirements, both of these indices are included this year. The Board believes the comparisons with the additional indices are appropriate.

In May 2002, The Toronto Stock Exchange announced the discontinuance of the TSE 300 Stock Index and its replacement by the S&P/TSX Composite Index.

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Report on Executive Compensation

General

During the 12 months following the Combination with Algroup, the Personnel Committee of the Board (the "Committee") conducted a comprehensive review of the way it determines the compensation of its executives around the world and the effectiveness of its policies to meet the needs of the combined company. The Committee was assisted by an independent consultant in a study of other global companies based in North America and Europe. As a result of this study and the comparative data collected by the consultant, a number of modifications were made to the compensation policies and programs in 2002.

The Committee concluded that for certain Executive Officers, the home country should be regarded as being of secondary importance in setting remuneration levels. Therefore, in order to ensure greater equity among these Executive Officers, compensation will be set against U.S. competitive compensation practices, irrespective of the countries in which the Executive Officers work.

Changes made during 2002

The Total Direct Compensation policy, which covers base salary, annual incentives (bonus) and long-term incentives, was aligned with prevalent U.S. competitive median compensation practices of a 14 - company peer group. These companies are comparable in size, are involved in cyclical industries, are capital intensive, and have a global presence.

More importantly, both the short-term and long-term incentive plans were modified to be more aligned with the Company's governing objective to maximize value over time. The details of the new incentive programs, which came into effect in 2002, are outlined hereunder.

Compensation of the executive officers

Total direct compensation levels are set to reflect both the responsibility of each position (internal equity) and competitive market levels (external competitiveness). The total compensation policy is set at the median of the compensation peer group.

Base Salary

The target salary is the mid-point of a salary range for an Executive Officer and reflects the competitive level of similar positions in the compensation peer group. Actual base salaries for Executive Officers reflect the individual's performance and contribution to the Company. Base salaries of Executive Officers are therefore reviewed annually and any proposed changes are approved by the Committee before implementation.

Short-Term (Annual) Incentive Plan

The Company's short-term incentive plan, known as the Executive Performance Award ("EPA") Plan, is administered by the Committee, and has two components, each based on a different aspect of performance: (1) the profitability of the Company as measured by Economic Value Added ("EVA" - a registered trademark of Stern Stewart & Co.) and (2) the performance of the Company relative to key strategic objectives. For each position a target award is set (expressed as "percent of target base salary") reflecting both the responsibilities of the position and the competitive compensation levels. These components are described below.

1. 75% of the incentive compensation opportunity of an executive is based on the overall profitability of the Company as measured against the quantifiable financial metric EVA. The incentive compensation for Executive Officers who are part of corporate head office is contingent upon performance versus the pre-established EVA target for the Company, while the incentive compensation for Executive Officers who are responsible for a business group is contingent on meeting the pre-established EVA objectives of their respective business group.

2. 25% of the incentive compensation opportunity of an executive is based on the achievement of key strategic objectives as measured against pre-established operating objectives critical to the success of the business. These strategic objectives include safety, environment, operating efficiencies, reduction of costs, etc. and are set by the Committee for the CEO and are applied in turn to Executive Officers.

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The overall award paid is a function of the combined achieved results of EVA and strategic objectives, and the individual performance and contribution to the Company. The award paid may vary from zero when the results achieved are less than the minimum threshold set by the Committee, to 250% of the target award when the results achieved are at or exceed the maximum level which was set by the Committee. For 2002, the Committee approved EPA awards for Executive Officers that were generally above the target amounts.

Under the terms of the Executive Deferred Share Unit Plan, Executive Officers based in Canada may elect, prior to the beginning of any particular year, to receive Executive Deferred Share Units ("EDSUs") with a value equal to either 50% or 100% of their EPA for that year, instead of a cash payment. The number of EDSUs is determined by dividing the amount elected by the average share price on the Toronto and New York stock exchanges at the end of the preceding year. Additional EDSUs, which correspond to dividends declared on Shares are credited to each holder. The EDSUs are redeemable only upon termination of employment (retirement, resignation or death). The amount to be paid by the Company upon redemption will be calculated by multiplying the accumulated balance of EDSUs by the average share price on the said exchanges at the time of redemption.

Under the terms of the Non-Qualified Deferred Compensation Plan, Executive Officers based in the U.S. may elect, prior to the beginning of any particular year, to defer up to 75% of their base salary and up to 90% of their EPA for that year, instead of receiving a cash payment.

Long-Term Incentive Plan

The long-term incentive compensation value for the most senior executives is provided through (1) The Alcan Total Shareholder Return Performance Plan ("TSR Plan") and (2) The Alcan Executive Share Option Plan ("Option Plan"). Beginning in 2002 certain Executive Officers receive half of their target long-term incentive compensation value from each of these two plans. The details for the two plans are described below.

The Company's TSR Plan aligns the interests of executives with those of Shareholders by rewarding the former for maximizing value over time through relative Share price increases.

1.  The TSR Plan is a cash incentive plan that provides performance awards to eligible employees based on the Company's Share price and cumulative dividend yield performance relative to the performance of the companies included in the S&P Industrials Index over a three-year period (the "Performance Period"). The initial Performance Period commenced on 1 October 2002.

The award amount, if any, is based on the Company's relative Total Shareholder Return performance, as defined in the TSR Plan, and ranking against the other companies in the S&P Industrials Index at the end of the Performance Period. If the Company's Total Shareholder Return performance ranks below the 30^th percentile, the employee will not receive any award for that Performance Period. At the 30^th percentile rank, the employee will be paid an award equal to 60% of the target for that Performance Period. At the 50^th percentile rank, the employee will earn a payout of 100% of the target, and at or above the 75^th percentile rank, the employee will earn a payout of 300% (i.e. the maximum payout). The actual amount of award (if any) will be prorated between the percentile rankings. In 2002, a total target cash award of $12,156,200 was granted to 76 key employees around the world. The amount of the award is expensed th roughout the three-year period through an accounting accrual.

2. The Option Plan also encourages key employees to align their interests with those of Shareholders by providing an incentive to further the Company's growth and development and to assist in retaining and attracting executives critical to the success of the Company.

The Option Plan provides for the granting of Options to key employees of the Company and its Subsidiaries to purchase Common Shares. The Committee, which administers the Option Plan, may determine at its sole discretion which employees of the Company and its Subsidiaries are eligible to be granted Options. The number of Options granted is related to the salary grade midpoint but not to the amount of outstanding Options or SARs (see page 21). The exercise price per Option is set at 100% of the market value of the Share at time of grant with each Option exercisable in whole or in part over a 10-year period. For more details on the different Options granted, see pages 21 and 22.

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Certain Executive Officers participated in the Alcan Stock Price Appreciation Unit Plan ("SPAU Plan") instead of the Option Plan due to certain local conditions of their country of residence (see description on page 24).

Compensation of the chief executive officer

The CEO's annual compensation is administered by the Board, based on recommendations from the Committee according to the policies described above. Mr. Engen became CEO on 12 March 2001. Mr. Engen entered into a five-year employment agreement, which can be renewed annually thereafter. The Board of Directors sets his compensation on a competitive level with other U.S. chief executive officers of global companies of similar size and also provides Mr. Engen with comparable levels of compensation to that received from his previous employer. Decisions pertaining to the CEO's compensation are based on the Board evaluation of the CEO's performance against pre-determined financial and strategic objectives. These objectives are set and approved annually at the beginning of the year.

Given the quality of the leadership provided as well as the progress made on the strategic direction of the Company, the Committee recommended to the Board to set the CEO's Total Direct Compensation (base salary, target annual incentives and target long-term incentives) level between the 50^th and the 75^th percentile of the U.S. market. The profitability objective as measured by EVA was surpassed in spite of challenging economic conditions. Furthermore, very good progress was made on the strategic objectives which were established for 2002. The overall performance was reflected in establishing the compensation of the CEO.

In 2002, Mr. Engen's base salary was increased to $1,300,000 per year from $1,200,000 effective October 2002. An annual EPA award based on an established target and on performance objectives will be paid. For 2002, the target was 100% of the base salary. The actual amount paid was $1,605,000 given that results exceeded the pre-established performance objectives.

Mr. Engen received 353,000 C Options (see page 22) as part of his annual compensation. These Options were granted on 1 March 2002 at an exercise price of Can. $64.25 per Share. These Options will remain outstanding and exercisable for the full 10-year period. He also received a TSR Plan target cash award of $2,500,000 payable at the end of the three-year Performance Period (30 September 2005) under the terms and conditions of the TSR Plan (see page 24).

Mr. Engen's employment agreement provides for a retirement adjustment program under which he will be entitled to the same level of retirement benefits he would have received had he remained employed with his previous employer. Under this program, the monthly pension is calculated by multiplying $6,432 by the number of years of service from 1 April 2001 for a maximum of five years.

The portion of Mr. Engen's compensation attributable to services rendered in Canada is adjusted so that his net income after taxes is the same as it would have been in the United States.

Mr. Engen is eligible for a termination payment in the event his employment is terminated by the Company without cause or by him for defined reasons. Mr. Engen would receive an amount equal to three times the sum of his highest annualized base salary and target bonus. Mr. Engen would also be entitled to the acceleration of vesting of all Options and would be entitled to continuation of employee benefits and additional service credits to bring him to five years.

On 1 August 2002, the Company renewed a change of control agreement with Mr. Engen, which expires on 30 April 2005. The terms of change of control agreements are effective upon the occurrence of two events: (1) a change of control of the Company, and (2) the termination of employment either by the Company without cause or by him for defined reasons. In such cases, Mr. Engen would be entitled to an amount equal to 36 times the sum of his (a) monthly base salary on the date of termination, (b) EPA guideline amount in effect at the date of termination, and (c) other applicable incentive plan guideline amounts at the date of termination.

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Approval of this Report on Executive Compensation

The Committee, whose members are set forth below, has approved the issue of this Report and its inclusion in this Circular.

J.E. Newall, Chairman of the Committee
Roland Berger
Clarence J. Chandran
L. Yves Fortier
Guy Saint-Pierre

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Executive Officers' Compensation

The following table sets out the compensation for the CEO and the four other most highly compensated Executive Officers (collectively, the "Named Executive Officers") for the year ended 31 December 2002 and each of the two preceding years.

Summary Compensation Table
Name and Principal Position	Year	Annual Compensation					Long-term Compensation (1)				All Other Compensation (3) ($)
							Awards
		Salary ($)	Bonus (Executive Performance Award) (2) ($)		Other Annual Compensation (3) ($)		Shares Under Options Granted (4) (#)		Restricted Share Units (5) (6) (#)
Travis Engen President and Chief Executive Officer	2002 2001 2000	1,225,000 968,182 __	1,605,000 1,200,000 __	(7)	17,592 46,990 __	(9)	353,000 579,000 __	(8) (8)(10)	0 0 __		52,217 29,565 __	(9)
Richard B. Evans Executive Vice President	2002 2001 2000	575,000   520,000 451,250	297,500 125,770 316,800	(11)	520,000 643,954 104,125	(12)	84,900 0 51,000	(8) (8)	8,337 75,000 2,899 0	(11) (13) (14)	13,160 31,208 34,427	(9)
Brian W. Sturgell Executive Vice President	2002 2001 2000	575,000   465,000   432,500	595,000 153,975 307,500		219,182 26,007 38,275		84,900 75,000 32,100	(8) (8) (8)	0 2,899	(14)	56,055 29,677 26,952	(9)
Geoffery E. Merszei Executive Vice President and Chief Financial Officer	2002 2001 2000	485,000   158,333 __	490,000 150,000 __		238,891 57,213 __		62,700 180,000 __	(8)	0 0 __		19,502 263,518 __	(16)
Cynthia Carroll President, Primary Metal	2002 2001 2000	425,000   350,000   267,079	751,433 152,270 177,761		48,667 46,915 92,083		48,700 20,100 16,500	(8)	0 0 0		11,442 8,379 15,513

1. There are no long-term compensation payouts.
2. See page 16 for description of the Executive Performance Award Plan.
3. See Other Compensation on page 21.
4. See page 21 for description of the Alcan Executive Share Option Plan.
5. See page 17 for description of the Executive Deferred Share Unit Plan.
6. See page 24 for description of the Stock Price Appreciation Unit Plan.
7. See Compensation of Chief Executive Officer on page 18.
8. Granted as C Options (see page 22 for description).

9. Company matching payments in excess of U.S. savings plan earnings limit: T. Engen $35,918, R. B. Evans $8,536 and B. W. Sturgell $44,841.

10. Tax equalization, a tax adjustment so that net income after taxes is not less than it would have been in the U.S., is restated for 2001 (see page 18). Upon review, the 2001 payment had been overestimated by $18,423 and Mr. Engen subsequently refunded this amount to Alcan, such that his tax equalization payment for 2001 was restated from $59,621 to $41,198. His total other annual compensation, which includes other items, was restated from $65,414 to $46,990.

11. At the time of exercise of these Options, an adjustment of Can. $3.52 per Share will be paid in the form of Deferred Share Units.

12. Received 50% of the EPA in cash ($297,500) and 50% in the form of 8,337 Deferred Share Units, based on the Share price ($35.68) at the end of 2001.

13. Tax equalization, a tax adjustment so that net income after taxes is not less than it would have been in the U.S., is restated for 2001. Upon review, the 2001 payment had been underestimated by $276,593 relative to U.S./Swiss tax equalization payments after consolidation of 2001 tax returns. Alcan subsequently paid Mr. Evans this amount, such that his tax equalization payment for 2001 was restated from $3,466 to $280,059 and his total other annual compensation, which includes other items, was restated from $367,361 to $643,954.

14. Granted as SPAUs.
15. Granted as Deferred Share Units, based on the share price ($34.50) at the end of 2000.
16. Includes $232,858 of bonus compensation he would have received had he remained with his previous employer.

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Executive Performance Award

The Executive Performance Award Plan and the related Executive Deferred Share Unit Plan are described on pages 16 and 17.

Other Compensation

Compensation benefits made available to senior employees under various plans included those under (a) the Executive Performance Award Plan mentioned above, (b) the Alcan Executive Share Option Plan described below, (c) the Stock Price Appreciation Unit Plan described below, (d) the TSR Plan described below, (e) retirement benefit plans, (f) life insurance plans, (g) savings plans, (h) plans for the use of automobiles, (i) plans for professional financial advice and for club membership fees, and (j) in applicable cases, expatriate benefits, tax equalization payments, housing assistance and directors' fees from subsidiaries and related companies.

In the Summary Compensation Table on page 20, the amounts indicated for the year 2002 under the column titled Other Annual Compensation include benefits paid to the Named Executive Officers under these plans: automobile usage (T. Engen, $15,890; C. Carroll, $13,702), housing assistance (B.W. Sturgell, $59,769), tax equalization payments (R.B. Evans, $195,829; G. Merszei,$118,701; C. Carroll, $27,636), and relocation costs (R.B. Evans, $157,613; B.W. Sturgell, $133,604; G. Merszei, $82,021).

Alcan Executive Share Option Plan

The Option Plan provides for the granting to senior employees of non-transferable options ("Options") to purchase Shares (see also Report on Executive Compensation - Compensation of the Executive Officers on page 16). The Option Plan is administered by a sub-committee of the Personnel Committee.

A Options

Prior to 22 April 1993, the Option Plan provided for the granting of Options hereinafter referred to as "A Options". No further A Options have been, or may be, issued after that date. The exercise price per Share under A Options was initially set in 1981 at not less than 90% of themarket value of the Share on the effective date of each grant of an A Option, but all A Options granted after 1985 were set at 100% of the market value of the Share on their effective dates. The effective date was fixed at the time of each grant. Each A Option is exercisable in whole or in part during a period commencing not less than three months after the effective date and ending not later than 10 years after that date. In the event of retirement or death of the employee, any remainder of this 10-year period in excess of five years is reduced to five years. Each A Option has connected therewith stock appreciation rights ("SARs") in respect of one-half of the Shares covered by the A Op tion. Each SAR entitles the optionee to surrender unexercised the right to subscribe for one Share in return for a cash payment in an amount equal to the excess of the market value of such Share at the time of surrender over the subscription price.

As at September 2002 all A Options had been exercised or had expired.

B Options

Beginning on 22 April 1993, the Option Plan provides for Options hereinafter referred to as "B Options".

The exerciseprice per Share under B Options is set at not less than 100% of the market value of the Share on the effective date of the grant of each B Option. The effective date is fixed at the time of the grant. Each B Option is exercisable (not less than three months after the effective date) in respect of 25%, 50%, 75% or 100% of the grant after a Waiting Period (as defined in the Option Plan) of 12, 24, 36 and 48 months, respectively, following the effective date. The Options expire 10 years after the effective date; in the event of retirement or death of the employee, any remainder of this 10-year period in excess of five years is reduced to five years. The B Options do not have connected SARs.

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C Options

Beginning on 23 September 1998, the Option Plan provides for Options hereinafter referred to as "C Options".

The exercise price per Share under C Options is set at not less than 100% of the market value of the Share on the effective date of the grant of each C Option. The effective date is fixed at the time of the grant. Each C Option is exercisable (not less than three months after the effective date) in respect of one-third of the grant when the market value of the Share has increased by 20% over the exercise price, two-thirds of the grant when the market value of the Share has so increased by 40% and the entire amount of the grant when the market value of the Share has so increased by 60%. The said market values must exceed those thresholds for at least 21 consecutive trading days. The said thresholds are waived 12 months prior to the expiry date, which is 10 years after the effective date. In the event of death or retirement, any remainder of this 10-year period in excess of five years is reduced to five years, and the said thresholds are waived. The C Options do not have connected SARs .

D Options

In respect of B and C Options granted to certain senior executives in 1996, 1997 and 1998, Alcan has granted further Options, hereinafter referred to as "D Options", which grant shall become effective upon the exercise of associated B or C Options and upon the executive placing at least one-half of the Shares resulting from the exercise of the B or C Option, as the case may be, in trust with an agency named by Alcan for a minimum period of five years. The exercise price per Share of each D Option is set at not less than 100% of the market value of the Share on the exercise date of the associated B or C Options. D Options are exercisable in the same manner as the associated B or C Option. The option period for the D Option will terminate on the same date as the associated B or C Options. In the event of death or retirement, any remainder of this Option period in excess of five years is reduced to five years. The vesting provisions of the D Options are identical to those of th e associated B or C Option. The D Options do not have connected SARs.

E Options

Options granted under the share option plan of Algroup, a Subsidiary of Alcan as a result of the Combination, were converted into Options for Shares of Alcan. These Options are hereinafter referred to as "E Options". The exercise price per Share was originally set at 110% of market price and the right to purchase one share of Algroup was converted into the right to purchase 21.66 Shares of Alcan. Each E Option is exercisable in whole or in part during a period commencing not less than three years after the date of grant and ending not later than five years after that date. In the event of death or disability, the three year waiting period is waived. As this was a transitional measure related to the Combination, no further E Options will be issued.

Limits on Grants of B, C and D Options

As stated above, no further A or E Options may be issued.

Alcan may issue in any year B, C or D Options in respect of a Yearly Allotment, as defined in the Option Plan, in aggregate not exceeding 0.75% of the Shares outstanding as at the end of the previous calendar year. In addition, the unused portion of any previous Yearly Allotment may be carried forward. The cumulative maximum number of Shares which can be issued under the Option Plan after 31 December 1995 is 20,500,000.

Options Exercisable

The Personnel Committee had determined that upon the completion of the Combination, all Options granted prior thereto became immediately exercisable in accordance with the terms of the Option Plan.

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The following table provides information pertaining to Options granted to the Named Executive Officers during 2002:

Option Grants during 2002

Name	Shares Under Options Granted (#) (1)	Percent of Total Options Granted To Employees in 2002	Exercise Price and  Market Value on Date of Grant (Can. $/Share)	Expiration Date
T. Engen	353,000	18.2	64.25	28 Feb. 2012
R. B. Evans	84,900	4.4	38.82	24 Sept. 2012
B. W. Sturgell	84,900	4.4	38.82	24 Sept. 2012
G. E. Merszei	62,700	3.2	38.82	24 Sept. 2012
C. Carroll	48,700	2.5	38.82	24 Sept. 2012

(1) C Option grant.

The following table summarizes, for each of the Named Executive Officers, (a) the number of Shares acquired by Options exercised during 2002, (b) the aggregate value realized upon exercise, which is the difference between the market value of the underlying Shares on the exercise date and the exercise price of the Option, (c) the total number of unexercised Options held at 31 December 2002 and (d) the aggregate value of unexercised in-the-money Options at 31 December 2002, which is the difference between the exercise price of the Options and the market value of the Shares on 31 December 2002, which was Can. $46.54 per Share. The aggregate values indicated with respect to unexercised in-the-money Options at financial year-end have not been, and may never be, realized. These Options have not been, and may never be exercised, and actual gains, if any, on exercise will depend on the value of the Shares on the date of exercise. There can be no assurance that these values will be realized.

Aggregated Option Exercises during 2002 and Year-End Option Values

Name	Shares Acquired on Exercise (#)	Aggregate Value Realized (Can. $)	Shares Underlying Unexercised Options at 31 Dec. 2002 (1) (#)		Value of Unexercised In-the-Money Options at 31 Dec. 2002 (1) (Can. $)
T. Engen	0	0	E: U:	193,000 739,000	E: U:	0 0
R. B. Evans	0	0	E: U:	110,000 101,900	E: U:	239,650 658,148
B. W. Sturgell	0	0	E: U:	111,850 145,600	E: U:	164,029 657,140
G. E. Merszei	0	0	E: U:	60,000 182,700	E: U:	0 484,044
C. Carroll	0	0	E: U:	55,666 67,600	E: U:	137,169 376,844

(1)   E: Exercisable      U: Unexercisable

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Alcan Stock Price Appreciation Unit Plan

The Alcan Stock Price Appreciation Unit Plan ("SPAU Plan") also provides for the granting to senior employees of non-transferable Stock Price Appreciation Units ("SPAU"). The purpose of the SPAU Plan is to attract and retain employees and to encourage an increased proprietary interest in the Company. The SPAU Plan is administered by the Personnel Committee and was approved on 26 September 2001.

A SPAU is a right to receive cash in an amount equal to the excess of the market value of a Share on the date of exercise of a SPAU over the market value of a Share as of the date of grant of such SPAU. The exercise price per SPAU is set at not less than 100% of the market value of the Share on the effective date of the grant of each SPAU. The effective date is fixed at the time of the grant. Each SPAU is exercisable (not less than three months after the effective date) in respect of one-third of the grant when the market value of the Share has increased by 20% over the exercise price, two-thirds of the grant when the market value of the Share has so increased by 40% and the entire amount of the grant when the market value of the Share has so increased by 60%. The said market values must exceed those thresholds for at least 21 consecutive trading days. The said thresholds are waived 12 months prior to the expiry date which is 10 years after the effective date. In the event of death or retirement, any remainder of this 10-year period in excess of five years is reduced to five years, and the said thresholds are waived.

Grants are made under the SPAU Plan instead of under the Option Plan due to certain local conditions of countries of the employees' residence.

Total Shareholder Return Performance Plan

The TSR Plan, described on page 17, is a cash incentive plan that provides performance awards to eligible employees based on the Company's Share price and cumulative dividend yield performance relative to the performance of the companies included in the Standard & Poor's Industrials Index over a three-year period.

The following table summarizes target cash performance award incentives under the TSR Plan for each of the Named Executive Officers.

TSR Plan Awards during 2002

Name	Securities, Units or other Rights (#) (1)	Performance Period	Estimated Future Payouts
			Threshold ($)	Target ($)	Maximum ($)
T. Engen	0	1 Oct. 2002 __ 30 Sept. 2005	0	2,500,000	7,500,000
R. B. Evans	0	1 Oct. 2002 __ 30 Sept. 2005	0	975,000	2,925,000
B. W. Sturgell	0	1 Oct. 2002 __ 30 Sept. 2005	0	975,000	2,925,000
G. E. Merszei	0	1 Oct. 2002 __ 30 Sept. 2005	0	719,900	2,159,700
C. Carroll	0	1 Oct. 2002 __ 30 Sept. 2005	0	559,600	1,678,800

(1) The TSR Plan provides for a grant of a target cash award - no securities, units or other rights were awarded.

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Retirement Benefits

U.S. Plan

During 2002, C. Carroll, R.B. Evans and B.W. Sturgell participated in an Alcan-sponsored pension plan in the U.S. which, together with supplemental arrangements for payment directly by Alcan of pensions in excess of statutory limits, is herein referred to as the "U.S. Plan".

The U.S. Plan provides for pensions calculated on service of up to 35 years and eligible earnings which consist of the average annual salary and EPA up to its guideline amount during the 36 consecutive months when they were the greatest. Eligible earnings are subject to a maximum, which is set with reference to the position of each Named Executive Officer at 31December 2001.

The following table shows estimated retirement benefits, expressed as a percentage of eligible earnings, payable upon normal retirement at age 65 to persons in the indicated earnings and service classifications.

Pension Plan Table

Eligible Earnings	Years of Service
	10	15	20	25	30	35
$500,000	17%	25%	34%	42%	50%	59%
$600,000 __ $900,000	17%	25%	34%	42%	51%	59%

The normal form of payment of pensions is a lifetime annuity with either a guaranteed minimum of 60 monthly payments or a 50% lifetime pension to the surviving spouse.

The 2002 eligible earnings and estimated service upon normal retirement age of 65 were as follows: C. Carroll, $577,000 and 33 years; R.B. Evans, $701,000 and 16 years; B.W. Sturgell, $729,000 and 26 years.

Pension Plan for Officers

The three aforementioned Named Executive Officers also participated in the Alcan Pension Plan for Officers. Participants are designated by the Personnel Committee. This plan provides for pensions calculated on service up to 20 years as an Officer and eligible earnings which consist of the excess of the average annual salary and EPA at its guideline level during the 60 consecutive months when they were the greatest over eligible earnings in the U.S. Plan. The following table shows the percentage of eligible earnings, payable upon normal retirement age after 60 according to years of service as Officer.

Years as Officer

5	10	15	20
20%	30%	40%	50%

The normal form of payment of pensions is a lifetime annuity. Pensions are not subject to any deduction for social security or other offset amounts.

The 2002 salary and EPA at its guideline amount and estimated service as an Officer upon retirement age of 65 were as follows: C. Carroll, $756,000 and 24 years; R.B. Evans, $1,016,000 and 16 years, B.W. Sturgell, $1,016,000 and 18 years.

Individual Pension Undertakings

During 2002, G. E. Merszei participated in the Alcan Pension Plan (Canada) which provides for annual pensions up to a statutory limit of $1,100 per year of service. In addition, he will receive from the Company a supplemental pension equal to the excess of a base amount, varying from $240,000 per year at a retirement age of 55 to $430,000 at a retirement age of 65, over the sum of his pension from the Alcan Pension Plan (Canada) and the pension equivalent of the lump sum settlement of his pension rights from his previous employer.

Mr. Engen does not participate in any of the pension plans sponsored by the Company. (See Compensation of the Chief Executive Officer on page 18)

Retiring allowances

Upon his retirement, R. B. Evans will be paid a retiring allowance equal to $38,700 increased by 7% per annum from 31 December 1999.

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Employment Agreements

On 31 December 2001, Alcan has entered into employment agreements with certain Named Executive Officers including C. Carroll, R. B. Evans and B.W. Sturgell, setting out the terms and conditions of their employment. Each of these Named Executive Officers is entitled to base salary, annual bonus, Option grants, awards under the TSR Plan, pension plan participation and customary perquisites, as described herein. The portions of the Named Executive Officers' compensation attributable to services rendered in Canada is adjusted so that their income after taxes is the same as it would have been in the United States. They are also eligible for a termination payment equal to 24 months of their base salary and EPA at the guideline amount if they are terminated without cause.

Mr. Merszei entered into an employment agreement with Alcan on 13 June 2001. The terms of his employment agreement are similar to those of the other above Named Executive Officers. Upon joining Alcan, Mr. Merszei received Options for 80,000 Shares to compensate him for leaving his previous employer and Options for 50,000 Shares as an employment incentive. These Options will vest at the rate of 33.33% per year over a three-year period. In addition, Mr. Merszei will be entitled to receive 15,000 Shares on the third anniversary date of employment with Alcan.

During 2002, the Company renewed change of control agreements with certain Executive Officers, including all Named Executive Officers except Mr. Engen. These agreements expire on 30 April 2005. The terms of change of control agreements are effective upon the occurrence of two events: (1) a change of control of the Company, and (2) the termination of the Executive Officer's employment with the Company either by the Company without cause or by the Executive Officer himself for defined reasons. In such cases, the Executive Officer will be entitled to an amount equal to either 24 or 36 months of their base salary and EPA at the guideline amount and other applicable incentive plan guideline amounts.

For information relating to Mr. Engen, see Compensation of the Chief Executive Officer on page 18.

Directors' Remuneration

Each Non-Executive Director is entitled to receive compensation equal to $100,000 per annum, payable quarterly, regardless of membership on Committees of the Board. The Chairman is entitled to receive additional compensation equal to $150,000 per annum, payable quarterly over and above the $100,000 referred to herein. 50% of the compensation is payable in the form of Director's Deferred Share Units ("DDSUs") (see below) and 50% in the form of either cash or additional DDSUs at the election of each Non-Executive Director.

Non-Executive Directors are reimbursed for transportation and other expenses incurred in attending Board and Committee meetings.

Non-Executive Directors who are not Canadian residents are entitled to paid tax advice.

During 2002, Gerhard Schulmeyer was reimbursed $3,000 for this purpose.

Director's Deferred Share Unit Plan

The number of DDSUs to be credited each quarter is determined by dividing the quarterly amount payable by the average price of a Share on the Toronto and New York stock exchanges on the last five trading days of the quarter. Additional DDSUs are credited to each Non-Executive Director corresponding to dividends declared on Shares. The DDSUs are redeemable only upon termination (retirement, resignation or death). The amount to be paid by Alcan upon redemption will be calculated by multiplying the accumulated balance of DDSUs by the average price of a Share on the said exchanges at the time of redemption.

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Share Investment Plan for Directors

Non-Executive Directors may invest all or part of the cash portion of their fees (if applicable) in Shares through the Share Investment Plan for Directors. This plan is similar to the Share Investment Plan available to all Alcan Shareholders. It allows for purchases of Shares up to a maximum of $15,000 per quarter year and for dividends to be invested in additional Shares.

The Shares are purchased and held by a custodian.

Board Fees

An employee of Alcan who is a Director is not entitled to receive fees for serving on the Board.

Indebtedness of Directors and Officers

Non-Executive Directors

Non-Executive Directors and former Non-Executive Directors are not indebted to Alcan.

Loans to Executive Officers

The required details with regard to loans given to Executive Officers in connection with the exercise of A Options ("Option Loans") is shown in the following table. The aggregate indebtedness of 43 Executive Officers and employees and former Executive Officers and employees of Alcan and its Subsidiaries (including the Named Executive Officers) to Alcan in respect of Option Loans at 14 February 2003 was $1,119,800. The largest Option Loan outstanding on that date was $86,921.

No further Option Loans will be given to Executive Officers under the Option Plan.

Table of Indebtedness of Executive Officers under Option Plan

Name and Principal Position	Involvement of Alcan	Largest Amount Outstanding During 2002 ($)	Amount Outstanding as at 14 February 2003 ($)	Financially Assisted Share Purchases During 2002 (1) (#)	Security for Indebtedness
R. L. Ball Former Executive Vice President	Lender	56,449	49,202	0	(2)
E. P. Leblanc Former Executive Vice President	Lender	40,834	38,217	0	(2)
G. Ouellet Senior Vice President	Lender	43,336	40,628	0	(2)
G. R. Lucas Vice President and Treasurer	Lender	33,076	29,456	0	(2)

(1) In respect of A Options only.

(2) Security for the indebtedness is provided by the deposit of the certificates representing the relevant Shares with CIBC Mellon, as trustee, which holds the certificates registered in its name until full repayment of the particular Option Loan has been made to Alcan.

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As of 14 February 2003, there was no outstanding indebtedness (other than "routine indebtedness" as defined under applicable Canadian securities laws) of officers, directors and employees and former officers, directors and employees of the Company and its Subsidiaries other than under the Option Plan.

Directors' and Officers' Liability Insurance

Alcan carries insurance covering liability, including defence costs, of directors and officers of Alcan and its Subsidiaries, incurred as a result of their acting as such, except in the case of failure to act honestly and in good faith. The policy provides coverage against certain risks in situations where Alcan may be prohibited by law from indemnifying the directors or officers. The policy also reimburses Alcan for certain indemnity payments made by Alcan to such director or officer, subject to a $10 million deductible in respect of each insured loss.

The premium paid by Alcan for coverage in 2002 was $438,000 and the limit of insurance is $125 million per occurrence and in the aggregate per year.

Approval of the Board of Directors

The Board of Directors has approved the contents of this Circular and its issue to Shareholders.

Roy Millington
Corporate Secretary

A

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