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

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'', "intends" 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.

The following factors, among others, could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements:

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 page 47 thereof. The text under such heading is incorporated herein by reference.

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. Alcan's website also includes the Charters of its Board of Directors and of its four Committees of the Board of Directors: the Corporate Governance, the Audit, the Human Resources and the Environment, Health & Safety Committees, as well as its Worldwide Code of Employee and Business Conduct, available in nine languages.

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

In October 2000, Alcan consummated the Algroup Combination, which valued Algroup at approximately $5.7 billion. The Algroup Combination substantially expanded Alcan's presence in Europe. In addition, the Algroup Combination, together with Alcan's strategic focus and industry trends, increased the importance of packaging to Alcan's overall business mix. The Pechiney Combination has continued Alcan's international expansion and has further increased the importance of packaging.

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

Since the beginning of 2003, Alcan reported the major events related to its business and corporate governance described below. Events related to the Pechiney Combination are described under the heading "The Acquisition of Pechiney" below.

On 29 January 2003, Alcan announced the construction of a new potlining center adjacent to the new Alma smelter, for a total investment of CAN$60 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-in-residence at the School of Management 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.

On 23 April 2003, the Company announced that it reduced total greenhouse gas ("GHG") emissions in 2001 and 2002 by an average of 1.45 million tonnes, surpassing its original goal by over one million tonnes per year, including both direct and indirect emissions. These reductions stem from Alcan's long-term emissions reduction program called TARGET, launched in 2001. Numerous GHG reduction programs such as improvements in process technology and the management of operational processes as well as energy efficiency improvements have been implemented across the Company.

On 28 April 2003, the Company announced a public offering in the U.S. of $500 million 4 1/2 % global notes, due 15 May 2013, which closed 1 May 2003. Net proceeds to the Company from the sale of the notes were used to help fund the acquisition of VAW Flexible Packaging ("FlexPac") and to refinance maturing long-term debt.

On 30 April 2003, Alcan announced that it had completed the acquisition of FlexPac from Norsk Hydro for approximately $361 million. FlexPac includes 14 high-quality flexible packaging plants in eight countries and 5,400 employees.

On 10 June 2003, Travis Engen, President and Chief Executive Officer of the Company, committed that the Company will work to ensure that all its operations, including its head office in Montreal, achieve ISO 14001, an environmental management standard, and OHSAS 18001, a health and safety management standard, certification by the end of 2004. Compliance with the two standards constitutes two components of Alcan's integrated Environment, Health and Safety management system (EHS FIRST).

On 1 July 2003, the Company announced that it had completed the acquisition of Baltek Corporation, the world's leading supplier of balsa-based structural core materials, for $35 million. This followed the approval by the Baltek shareholders. Prior to its acquisition, Baltek was a NASDAQ-listed company, headquartered in New Jersey, with operations in the United States, Ecuador and Western Europe. The company became part of the Alcan Composites business unit of the Engineered Products Business Group.

On 16 September 2003, the Company announced a CAN$25 million investment for the construction of a new manufacturing facility for the production of aluminum structural assemblies for the automotive industry in the Saguenay region of Quebec. The facility is expected to produce aluminum bumpers and side-impact beams, instrument panel supports and other weight saving structural sub-systems and will form part of the Engineered Products Business Group.

On 26 September 2003, the Company announced the appointment of Mrs. Christine Morin-Postel as Director of the Company and the departure of Mr. Clarence Chandran from the Board of Directors. Mrs. Morin-Postel serves on the Boards of Arlington Capital Europe, 3i Group plc and Pilkington plc. Until her recent retirement, she was executive vice president in charge of human resources at Suez Group and formerly CEO of Société Générale de Belgique. Mr. Chandran, a Director since 2001, elected to leave as a result of his appointment as an officer of CGI Group Inc., a significant outsourcing service provider to Alcan.

On 6 October 2003, Alcan announced that it had acquired the Uniwood/Fome-Cor Division of Nevamar for $95 million. Uniwood/Fome-Cor produces high performance foamboard materials used in the display and graphic arts market. The acquired company became part of the Alcan Composites business unit within the Engineered Products Business Group.

On 8 October 2003, the Company announced that it had increased its ownership position in the Aluminium Company of Malaysia ("ALCOM") from 36% to 59%. ALCOM is a manufacturer of light gauge aluminum products. Alcan acquired the additional shares from Nippon Light Metal in exchange for its ownership in Alcan Nikkei Siam Limited in Rangsit, Thailand. ALCOM employs 360 people at its Bukit Raja operation located near Kuala Lumpur.

On 15 October 2003, Alcan announced that it had selected the LSL Joint Venture to do a definitive feasibility study preliminary to the engineering, procurement and construction management project for the proposed expansion of Alcan's alumina refinery at Gove, in the Northern Territory of Australia. This potential expansion would increase Alcan's capacity for smelter-grade alumina production from 2 million tonnes per annum ("Mtpa") to approximately 3.5 Mtpa. Alcan expects to complete this and other studies by mid-2004 and, depending on the outcome of the studies, to potentially commission the expansion by 2007.

On 17 October 2003, the Company announced that it had developed a sustainable solution for the treatment of spent potlining and would invest up to CAN$150 million in the construction of a treatment plant in the Saguenay region. The technology which will be used at the plant was developed by Alcan's R&D team in Quebec. The construction of the 80,000 tonne-per-year treatment facility using Alcan's low caustic leaching & liming process is expected to begin in the second quarter of 2004.

On 23 October 2003, Alcan signed a definitive joint venture agreement with Qingtongxia Aluminum Company and the Ningxia Electric Power Development and Investment Co. Ltd. Under the agreement, Alcan will invest up to $150 million, for a 50% participation and a secure power supply in an existing 150,000 tonnes modern pre-bake smelter located in the Ningxia autonomous region, in the People's Republic of China. The agreement also gives Alcan a substantial operating role and the option to acquire, through additional investment, up to 80% of a new 250,000-tonne potline already under construction. The investment is expected to take place in the first quarter of 2004.

On 30 December 2003, Alcan acquired the remaining 65% stake in the Aluminium Dunkerque smelter, located in Dunkerque, France, from the smelter's financial partners through its subsidiary, Pechiney, which already owned a 35% share of the smelter. The acquisition of the smelter was made for €248 million. The transaction also resulted in the assumption by Alcan of an additional $128 million in debt.

On 22 January 2004, the Company announced that it will permanently halt production at its 60-year-old Jonquière Söderberg primary aluminum facility, in the Saguenay region of Quebec, by the second quarter of 2004. Compared to the other Alcan smelters in Quebec, the Jonquière Söderberg plant had the highest production costs, faced the greatest environmental challenges and was one the of the least energy efficient. The Company plans to close the four Söderberg potlines between February and April 2004. The closure will directly impact approximately 550 jobs in total, but Alcan will work closely with employee representatives to minimize layoffs and the impact on employees.

Pechiney was a publicly traded company with shares listed on the Euronext Paris Stock Exchange until 6 February 2004 and Pechiney American Depositary Shares ("ADSs") listed on the New York Stock Exchange until 20 January 2004.

Pechiney operates in three core businesses: the production of primary aluminum, the production of fabricated aluminum products and the production of packaging materials. Pechiney's other businesses also include Ferroalloys and International Trade.

In 2003, Pechiney achieved sales and operating revenues of €10,812 million and employed 34,000 employees.

Alcan's offer to acquire all of the outstanding Pechiney common shares, Pechiney Bonus Allocation Rights, Pechiney OCEANEs (convertible debentures) and Pechiney ADS (collectively "Pechiney securities") was made through two separate offers:

Beginning in May 2003, members of Alcan's management, assisted by advisors, conducted a review of the feasibility of a transaction combining Alcan and Pechiney. Alcan's management presented the results of its analysis and views concerning the potential for an Alcan-Pechiney business combination, including summaries of confidential discussions with the European Commission's Merger Task Force, to Alcan's Board of Directors at meetings held on 3 June 2003 and 26 June 2003.

On 2 July 2003, Alcan's Board of Directors held a meeting to discuss further the potential Pechiney Combination and received additional input from Alcan's management and advisors. After further review and discussion, the Directors present unanimously agreed and directed that the Company should pursue the Pechiney Combination.

On 4 July 2003, Mr. Engen met with Mr. Rodier and presented to him the business case for the Pechiney Combination. Mr. Rodier advised that he was not then in a position to formally respond.

On 5 July 2003, Mr. Engen met again with Mr. Rodier in Paris. Mr. Engen and Mr. Rodier together discussed the timeline for a potential Alcan offer. Mr. Rodier indicated that discussions among Pechiney's directors had begun and that three key criteria in assessing the merits of any offer would be price, the views of Pechiney's key managers with respect to potential acquirers of Pechiney and competition and antitrust issues.

On 7 July 2003, Alcan announced plans to launch a tender offer for Pechiney and filed its offer documents with the French Conseil des marchés financiers ("CMF"), the French Commission des opérations de bourse ("COB") and the SEC. The offer valued each Pechiney common share at €41. The offer consisted of 60% in cash and 40% in new Alcan Common Shares. The main characteristics of the offer included:

The offer was subject to the following conditions:

On 8 July 2003, Pechiney's board of directors rejected the Alcan offer.

On 16 July 2003, the CMF declared Alcan's offer acceptable.

On 14 August 2003, Alcan filed the notification of its offer for Pechiney with the European Commission, and on 18 August 2003, it offered commitments for divestiture in relation to the European markets for certain aluminum flat rolled products, aluminum aerosol cans and aluminum cartridges. As a result of this notification and these commitments, the European Commission's initial competition review period, or "Phase I'' review, ended on 29 September 2003.

On 20 August 2003, Mr. Engen met with Mr. Rodier and discussed issues relating to the European competition approval process and factors relevant to the price Alcan was willing to pay. They agreed that their investment bankers should meet.

Discussions took place in August 2003 between Alcan's investment bankers and Pechiney's investment bankers to discuss potential modifications of the financial terms of the offer. Pechiney's investment bankers met with Alcan's investment bankers on 28 August 2003 and communicated to them that Pechiney believed the proposed offer was insufficient.

On 29 August 2003, Alcan filed its Hart-Scott-Rodino notification form in the U.S., triggering a 30-day waiting period under the U.S. antitrust laws, which ended on 29 September 2003.

On 31 August 2003, at Pechiney's request, Alcan submitted a written proposal. This proposal was contingent on the Pechiney board of directors' acceptance at a meeting scheduled for that day. The financial terms of the proposal stated that an additional Euro of consideration would be payable if 95% of Pechiney's securities were tendered. The proposal also addressed certain social and employment issues. However, Alcan was later informed that the Pechiney board of directors had rejected its proposal.

Alcan announced on 1 September 2003 that, because its proposal had not been accepted by the Pechiney board of directors, the proposal had lapsed and discussions with Pechiney had ended and Alcan would proceed with its offer.

On 4 September 2003, Mr. Rodier contacted Mr. Engen's office seeking to reopen discussions.

On 5 September 2003, Alcan announced that the French Ministry of Economy, Finance and Industry cleared Alcan's offer to acquire Pechiney securities. Alcan committed that the combined Company's worldwide headquarters would be in Montreal but, reflecting Alcan's significantly increased industrial presence in France, Alcan would locate the world headquarters of the combined entity's packaging business in Paris, while the European headquarters for primary aluminum operations, the world headquarters for engineering and aerospace operations and the global headquarters for new cell technology development would be located in France.

On 11 September 2003, Mr. Rodier met with Mr. Engen to discuss potential changes to the terms of Alcan's offer that could be proposed to Pechiney's board of directors. On 12 September 2003, Mr. Engen and Mr. Rodier exchanged a letter attaching the terms of revised offer. That same day, Alcan announced that the board of directors of Pechiney recommended the revised offer of Alcan as detailed below:

On 15 September 2003, Alcan filed documents relating to its revised offer for Pechiney with the CMF and the COB, and on 16 September 2003, Alcan filed the revised offer documents with the SEC.

On 22 September 2003, the CMF declared Alcan's revised offer for Pechiney to be acceptable (recevable), and this decision was released on 29 September 2003.

On 29 September 2003, Alcan announced the European Commission had granted clearance of Alcan's revised offer for the acquisition of Pechiney, subject to agreed conditions and commitments. To meet the Commission's regulatory concerns in relation to aluminum flat-rolled products, Alcan undertook to divest either its 50% share in the AluNorf rolling mill and its Göttingen and Nachterstedt rolling mills or Pechiney's rolling mills at Neuf-Brisach, Rugles and, if necessary, the Annecy rolling mill. Alcan's Latchford recycling/casting operations could also be added to either the AluNorf or Neuf-Brisach packages. In addition, Alcan agreed to undertakings for the licensing of alumina refining technology, aluminum smelter cell technology and anode baking furnace designs. Alcan would also eliminate the overlap arising from Alcan's and Pechiney's activities in aluminum aerosol cans and aluminum cartridges.

Also on 29 September 2003, Alcan announced that it had reached an agreement with the DOJ, which cleared its revised offer to acquire Pechiney. Under this agreement and a related consent decree, Alcan undertook to divest Pechiney's aluminum rolling mill located in Ravenswood, West Virginia, following its acquisition of Pechiney. The consent decree was filed in U.S. District Court on the same day and, as a result, the statutory waiting period under the U.S. Hart-Scott Rodino Act expired that night. The agreement with the DOJ removed the final condition related to Alcan's revised offer for Pechiney.

On 27 October 2003, Alcan announced that the registration statement filed with the SEC in connection with its offer for Pechiney had been declared effective. Accordingly, the U.S. offer was open for acceptance beginning on that date.

On 17 November 2003, Alcan announced the specific consideration to be paid in its offer for Pechiney following the determination of the average value of Alcan Common Shares and Alcan's decision to substitute additional cash consideration. In exchange for each Pechiney common share, each 10 Pechiney Bonus Allocation Rights or each two Pechiney ADSs that would be tendered into Alcan's exchange offer for Pechiney, tendering holders of Pechiney securities would receive:

In respect of each Pechiney OCEANE tendered, Alcan would pay €83.40 in cash (subject to increase).

On 3 December 2003, Alcan announced the new executive team and management structure of the enlarged Company following completion of the Pechiney Combination. Alcan's structure remained unchanged, with six Business Groups continuing their responsibilities in each of their respective core markets and products. (see Item 10: "Identification of Executive Officers").

On 5 December 2003, Alcan announced the successful conclusion of its offer for Pechiney securities. As of the expiration of its offers in France and the U.S. on 24 November 2003, Alcan had secured 92.21% of Pechiney's share capital and 93.55% of Pechiney voting rights, on a fully diluted basis.

In order to enable Pechiney shareholders who did not tender their securities to benefit from the offer, Alcan announced on 5 December 2003 its decision to re-open the offer from 9 to 23 December 2003. The terms and conditions of the re-opened offer were the same as those for the initial offer.

On 15 December 2003, Alcan announced that Alcan Common Shares were listed on the Premier Marché of the Euronext Paris stock exchange.

On 15 December 2003, Alcan acquired all Pechiney securities tendered into the initial offer, which was open from 7 October to 24 November 2003.

On 16 December 2003, Alcan announced that the composition of Pechiney's board of directors was modified following Alcan's acquisition of control of Pechiney on 15 December 2003. The new Pechiney board was constituted of 12 members:

On 8 January 2004, Alcan announced that it had secured 97.95% of Pechiney's total share capital and 97.92% of Pechiney voting rights as of the expiry of the re-opened offer (23 December 2003). Thus, because the number of Pechiney securities tendered into the initial offer and the re-opened offer corresponds to over 95% of Pechiney share capital and voting rights, on a fully diluted basis, Alcan would pay the following additional consideration to the holders of Pechiney securities who tendered their securities:

Accordingly, the aggregate final consideration payable by Alcan under its offer for Pechiney would be:

On 15 January 2004, Alcan acquired all Pechiney securities tendered into the re-opened offer. As consideration for the securities tendered into the re-opened offer, Alcan issued 2,082,075 Alcan Common Shares and paid €126 million. On 19 January 2004, Alcan also paid €81 million as additional consideration to holders of Pechiney securities who tendered their securities during the initial offer.

On 23 January 2004, Alcan announced that its withdrawal offer (offre publique de retrait) opened that day as a required step for it to acquire all remaining Pechiney securities in accordance with French securities regulations. The withdrawal offer was opened for ten French trading days until 5 February 2004 and was followed on 6 February 2004 by a compulsory acquisition (retrait obligatoire) by which Alcan became the owner of the remaining Pechiney securities.

The consideration paid by Alcan in the withdrawal offer and compulsory acquisition was in cash only and was the equivalent of the consideration paid in the offer:

The Pechiney ADSs were de-listed from the New York Stock Exchange on 20 January 2004 and following the completion of the compulsory acquisition process, Pechiney common shares were de-listed from the Euronext Paris stock exchange on 6 February 2004. On 9 February 2004, Pechiney filed a notice of termination of registration with the SEC and ceased its status as a reporting issuer under the Securities Exchange Act of 1934.

The cash portion of the consideration for the Pechiney Combination was financed through short-term financing, including a commercial paper issuance, through registered and private notes issuances, as well as through application of cash on hand.

On 8 December 2003, Alcan issued and sold (1) $500 million of 5.20% Notes due 15 January 2014 and (2) $750 million of 6.125% Notes due 15 December 2033.

On 8 December 2003, Alcan Aluminum Corporation ("Alcancorp"), a Subsidiary, sold (1) $500 million aggregate amount of its Floating Rate Notes ("FRN") due 8 December 2004 and (2) $500 million aggregate principal amount of its FRN due 8 December 2005 through private placements. The FRN are fully and unconditionally guaranteed by Alcan. Alcancorp lent the combined net proceeds to Alcan. Alcancorp has the right to redeem the FRN due 8 December 2005 at any time on or after 8 June 2004. The FRN rank equally with Alcancorp's senior unsecured debt and are guaranteed by Alcan.

On 19 January 2004, Alcan announced that, pursuant to its on-going review of Pechiney assets, an impairment charge of €45 million will be recorded for the costs incurred for the Coega smelter project in South Africa up to 30 September 2003. Project costs incurred subsequent to September 30th will be charged to income. This impairment will not affect Alcan's reported earnings and it will be recorded as a charge in Pechiney's 2003 statutory financial statements.

Alcan will continue to review Pechiney's current investments and business plans on the basis of assumptions currently used by Alcan. No decision has been made on any of Pechiney's current investments. The Company will announce in due course any decision taken in relation to this review.

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