This Annual Report on Form 20-F/A amends the Annual Report on Form 20-F filed by Pechiney on March 25, 2003.

The amendment includes restated financial information as of December 31, 2001 and 2000 and for each of the years ended December 31, 2002, 2001 and 2000.

The principal effect of the restatement of financial information is to include Pechiney's subsidiary Pechiney Far East within the scope of consolidation for the years ended December 31, 2000 and 2001. For further information, see Notes 1 and 25 to our Consolidated Financial Statements.

As a result, recorded net sales have increased by €458 million (or 4.1%) in 2001 and by €195 million (or 1.8%) in 2000, recorded net loss has increased by €5 million (or 10.0%) in 2002 and recorded net income has increased by €1 million (or 0.4%) in 2001 and by €4 million (or 1.3%) in 2000.

The filing of this Annual Report on Form 20-F/A should not be understood to mean that all statements contained in this document are true or complete as of any date subsequent to March 25, 2003. You should not consider this amendment to be a reaffirmation or reiteration of any forward-looking statements from the original filing that may be reproduced in this amendment.

The Company publishes its Consolidated Financial Statements in euros ("euros" or "€"). However, the Company’s financial statements for 1998 were originally prepared in French francs, and have been translated into euros for purposes of this document at the rate of FF 6.55957 = € 1.00, the applicable rate established on January 1, 1999. The euro did not exist during 1998, and the conversion rate used may not reflect the FF/euro exchange rate that would have applied if the euro had existed at such times. Solely for the convenience of the reader, this document contains translations of certain euro amounts into U.S. dollars at specified rates. These translations should not be construed as representations that the converted amounts actually represent such U.S. dollar amounts or could have been (at the relevant date) converted into U.S. dollars at the rates indicated or at any other rate. Unless otherwise stated, the translations of euros into U.S. dollars have been made at the rate published by the European Central Bank (the "ECB Rate") of € 1.00 = $1.0487 (or $1.00 = € 0.9536) on December 31, 2002, the last trading day for the year 2002. See "Item 3. Key Information - Exchange Rate Information" for information regarding the euro/U.S. dollar exchange rate from January 1, 2002 to the present.

In this document, references to "United States" are to the United States of America, references to "U.S. dollars" or "$" are to United States dollars and references to "tons" or "t" are to metric tons (1,000 kilograms or 2,204 pounds). References to "Euronext Paris" are to the integrated national dealing system through which listed securities are traded in France. References to "LME quotations" are to three-month forward quotations on the London Metal Exchange.

As used herein, the term "Company" refers to Pechiney without its consolidated subsidiaries and the terms "Pechiney" and "Group" refer to the Company together with its consolidated subsidiaries. References to "Common Shares "A"" are to the Company’s Class "A" shares, nominal value € 15.25 per Share, and references to "Preferred Shares "B"" are to the Company’s Class "B" Shares, nominal value € 15.25 per Share. References to "share capital" are to the nominal amount of Common Shares "A" and Preferred Shares "B" and references to "voting rights" are to the rights to vote in general meetings of the holders of Common Shares "A" or Preferred Shares "B" (see "Item 10. Additional Information - Description of Share Capital").

As used herein, the term "Consolidated Financial Statements" refers to the Company’s audited consolidated financial statements as at and for the three years ended December 31, 2002.

Various amounts and percentages set out in this document have been rounded and, accordingly, may not total.

Except as otherwise noted herein, references to "Europe" do not include Russia or Turkey. Data regarding primary aluminum production in the "Western World" refers to worldwide production excluding China, CIS, and Eastern and Central European countries.

Certain of the statements contained in this document that are not historical facts, including, without limitation, certain statements made in the sections entitled "Item 3. Key Information - Risk Factors", "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects", are statements of future expectations. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "is expected to", "will", "will continue", "should", "would be", "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Although the Company believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties. Risks that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things:

• changes in exchange rates, including particularly the exchange rate of the euro to the U.S. dollar;
  
• changes in aluminum prices;
  
• changes in economic trends and seasonality;

• increasing levels of competition in France and other international aluminum markets;
• customers and market concentration;
  
• pricing and availability;
  
• changes in laws and regulations;
  
• risks and uncertainties attendant to doing business in numerous countries which may be exposed to, or may have recently experienced, economic or governmental instability;
  
• general competitive and market factors on a global, regional and/or national basis;
  
• raw materials and energy.
  

Readers are urged to carefully review and consider the various disclosures made by the Company that attempt to advise interested parties of the factors affecting the Company’s business, including the disclosures made under the captions "Item 3. Key Information - Risk Factors", "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects" in this annual report, as well as the Company’s other periodic reports on Form 6-K filed with the Securities and Exchange Commission.

Unless otherwise indicated, statistical and market trend information, as well as statements related to market position and competitive data, are based on the Company’s internal statistics and/or estimates, which are in turn

based on the Company’s own research and various publicly available sources.

»Identity of Directors, Senior Management and Advisers

»Offer Statistics and Expected Timetable

»Key Information

The following table sets forth selected consolidated financial data for the Group for the periods indicated. These data were derived from the Consolidated Financial Statements of the Group prepared in accordance with French generally accepted accounting principles ("GAAP"), which differ in certain significant respects from U.S. GAAP. This information is qualified by reference to, and should be read in conjunction with, the Consolidated Financial Statements, the related Notes thereto, and "Item 5. Operating and Financial Review and Prospects" included elsewhere in this Annual Report.

Beginning with the financial statements for fiscal year 2001, Pechiney has prepared its financial statements in accordance with French GAAP only, and provides a description of the principal differences between French GAAP and U.S. GAAP and a reconciliation to U.S. GAAP of consolidated net income and shareholders’ equity. The use of a single set of accounting principles prevents any confusion that may be generated by the simultaneous publication of two different sets of financial statements and

notes and comments thereto. The application of French GAAP is consistent with the standards used by the Company’s internal reporting system.

The impact of the differences between French GAAP and U.S. GAAP is presented in Note 25 to the Consolidated Financial Statements for a description of the principal differences between French GAAP and U.S. GAAP, as they relate to the Company and its consolidated subsidiaries and for a reconciliation to U.S. GAAP of net income and shareholders’ equity.

In addition, the Company has changed its presentation of goodwill amortization in its Consolidated Financial Statements for the 2002 fiscal year with respect to previous years, impacting several line items on the Company’s income statement. Accordingly, income from operations and other line items for the fiscal years 2001, 2000 and previously have been reclassified in this Annual Report to conform to the new accounting treatment.

»Key Information

Under the provisions of the Treaty on European Union negotiated at Maastricht in 1991 and signed by the 12 member states of the European Union in early 1992, a European Monetary Union (known as the "EMU") was implemented on January 1, 1999, and a single European currency, known as the "euro", was introduced. The following 12 member states participate in the EMU and have adopted the euro as their national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. The legal rate of conversion between French francs and euros was established on January 1, 1999 at FF 6.55957 = € 1.00.

For a discussion of the impact of currency fluctuations on the Group’s financial condition and results of operations, see "Item 5. Operating and Financial Review and Prospects - General Information - Currency Fluctuations".

The following table sets forth, for the periods and dates indicated, certain information concerning the noon buying rate in New York City, as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") for cable transfers:

• in French francs for 1998 (expressed in French francs per $1.00, and converted for informational purposes into U.S. dollars per € 1.00 at the French franc/euro conversion rate established on January 1, 1999);
  
• in euros for subsequent periods (expressed in U.S. dollars per € 1.00).
  

These rates are provided solely for the convenience of the reader and are not the rates used by the Company in the preparation of its Consolidated Financial Statements included elsewhere in this Annual Report. The Group uses the ECB Rate for its internal financial reporting and for the presentation of certain U.S. dollar/French franc and U.S. dollar/euro translations set forth herein (see "Presentation of Information"). No representation is made that French francs or euros could have been, or could be, converted into U.S. dollars at these rates or at any other rate.

We are exposed to the risk of fluctuations in the price of aluminum on the London Metal Exchange (LME) (see "Item 5. Operating and Financial Review and Prospects - General Information - Volatility of World Aluminum Prices"), which determines the price at which we are able to sell aluminum in the market. If the price of aluminum on the London Metal Exchange declines substantially, our operating results may deteriorate. Since the world price of aluminum (quoted on the LME) is denominated in U.S. dollars, and a substantial portion of our Primary Aluminum sales is linked to U.S. dollars, the negative impact on our operating results of a decline in the world price of aluminum is generally amplified when the U.S. dollar declines in value vis-à-vis the euro, while it is usually attenuated if the U.S. dollar is strong vis-à-vis the euro. Conversely, the positive impact of a rise in the world price of aluminum on Primary Aluminum’s earnings from

operations can be significantly attenuated by a weak U.S. dollar vis-à-vis the euro. In addition to the effort made to reduce our sensitivity to the effects of currency fluctuations, we may occasionaly, through specific short-term hedging operations, anticipate fluctuations in the world price of aluminum (see "Item 5. Operating and Financial Review and Prospects - General Information - Sensitivity of the Group’s Industrial Operations to Fluctuations in Aluminum Prices - Primary Aluminum"). Even when we have entered into hedging arrangements to protect ourselves from this fluctuation risk, we may cease to engage in hedging arrangements in the future, and any existing or future hedging arrangements may not be successful. Fluctuations in aluminum prices could thus result in lower profits and a reduction in any dividends, and could cause the trading price of our shares to decline.

The principal raw materials we use in manufacturing our products are alumina, aluminum and plastics. The prices of many of the raw materials we use depend on supply and demand relationships at a worldwide level, and are therefore subject to variation. The price of aluminum and other raw materials that we use, and demand for aluminum volumes, depend upon a number of factors, including general economic conditions, cyclical trends in our end-use markets and imbalances in supply. Prices for the raw materials we require may increase and, if they do, we may not be able to pass on the entire cost of the increases to our customers, which may cause our profitability to decline.

There is a potential time lag between changes in prices under our purchase contracts and the point when we can implement a corresponding change under our sales contracts with our customers. As a result, we cannot necessarily protect ourselves from fluctuations in raw materials prices since during the time lag period we may have to temporarily bear the additional cost of the change under our purchase contracts, which could have a temporary negative impact on our profitability.

We consume large volumes of energy, mainly electricity, particularly in producing aluminum and ferroalloys. Aluminum smelters generally require an uninterrupted supply of intense electrical energy, and any interruption of more than four hours, whatever the cause, may have a major technical, commercial and financial impact on the activities of the facility concerned.

If energy costs were to rise, or if energy supplies or supply arrangements were disturbed, our profitability may decline, which could lead to a reduction in any dividends and cause the trading prices of our shares to decline.

»Key Information

We are subject to a broad range of environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly stringent environmental protection standards on us that relate, among other things, to air emissions, wastewater discharges, the use and handling of hazardous materials, waste disposal practices, and cleanup of environmental contamination. Such laws and regulations expose us to the risk of substantial costs and liabilities, including liabilities associated with assets that we have sold and activities that we have discontinued.

It is our policy to identify and, to the extent possible, quantify the costs associated with the potential clean-up of sites where we could incur liability. There can be no assurance, however, that the amounts we have budgeted and provisioned will enable us to satisfy our environmental obligations, especially in light of several factors: the rapid development of increasingly

stringent environmental laws and regulations and of their interpretation by the courts; governmental orders to carry out additional compliance on certain sites not initially included in remediation in progress; and potential liability of the Group to remediate sites for which provisions have not been established. Our accounting reserves may not be sufficient to cover future environmental liabilities. The amounts of these liabilities could result in lower profits, lead to a reduction in any dividends and cause the trading prices of our shares to decline.

In addition, future developments, such as changes in law or new information regarding environmental conditions, could result in increased environmental costs and liabilities that could have a material adverse effect on our future financial condition and results of operations or our consolidated financial position.

We use a variety of materials and chemicals in our manufacturing activities. In the event that any of these substances, such as aluminum or solvents such as glycol ethers, proves to be toxic, we may be liable for increased costs for health-related claims or removal or retreatment of such substances.

Although we do not currently use asbestos or its derivatives as raw materials in our manufacturing process, there is some risk of asbestos exposure associated with the use of consumer goods in the manufacturing

process, as well as with maintenance work on our buildings or ovens. We have implemented a strict system by which residual asbestos materials, such as fibrocement, are identified. We have also implemented a program that assures the protection and medical surveillance of the workforce. In the event that the provisions we have set aside to eliminate asbestos in our facilities is insufficient, our financial condition and results of operations could be harmed.

Fluctuations in the euro/U.S. dollar exchange rate could result in lower profits and a reduction in any dividends, and could cause the trading prices of our shares to decline.

In 2002, 40% of our production was located in North America and in countries whose currency is linked to the U.S. dollar. In addition, a substantial portion of Primary Aluminum sales is denominated in or linked to U.S. dollars and is therefore subject to fluctuations in the euro/U.S. dollar exchange rate. Since most of our sales are denominated in currencies other than the euro, foreign exchange rate fluctuations have a significant

impact on our operating income. We strive to reduce our sensitivity to the effects of currency fluctuations, in particular the fluctuations between the euro and the U.S. dollar or between the euro and currencies linked to the U.S. dollar, by financing our foreign investments in the currency of the country in question, on the one hand, and by hedging our foreign exchange risks, primarily through centralized management of such risks, on the other (see "Item 5. Operating and Financial Review and Prospects - General Information - Derivative Financial Instruments - Currency Fluctuations").

We use derivatives both to hedge our exposure to changes in exchange rates, interest rates and metals prices, among other things, and in our trading activities. With respect to our use of derivatives, we bear the risk of market movements and the risk of default by our counterparties. We have in the past experienced losses with respect to our use of derivatives. For

further discussion of these matters, please refer to "Item 5. Operating and Financial Review and Prospects - General Information - Derivative Financial Instruments". Future losses of this nature nature could result in lower profits, which could lead to a reduction in any dividends and cause the trading prices of our shares to decline.

We engage in substantial trading activities, including the purchase and sale of forwards, futures and options, both on and off exchanges. Although we believe we have established appropriate risk management procedures, trading activities involve elements of forecasting, and we bear the risk of market movements and the risk of default by our counterparties. For further

discussion of our trading activities, please refer to "Item 4. Information on the Company - International Trade". Any of these risks could result in lower profits, which could lead to a reduction in any dividends and cause the trading prices of our shares to decline.

A major portion of our financial debt is subject to variable interest rates. This results in exposure to interest rate fluctuations, which we strive to anticipate by using certain interest rate derivative instruments. (See "Item 5. Operating and Financial Review and Prospects - General Information - Derivative Financial Instruments - Interest Rate Fluctuations".) There can be no

assurance that our risk management initiatives can adequately compensate for adverse changes in interest rates. An increase in interest rates could increase the cost of financing our existing debt and make future borrowings more expensive, which could harm our financial condition and results of operations.

Our ability to insure against the risk of industrial property damage or loss is subject to prevention audits commissioned by our insurance companies. Insurance companies evaluate the quality of risk control at industrial facilities to determine appropriate insurance premiums and coverage. Negative evaluations resulting from these prevention audits could limit the availability of our insurance coverage, or significantly increase the cost of our premiums. The percentage of physical assets designated as Highly Protected Risks decreased this year from 68% as of January 1, 2002 to 55% as of January 1, 2003, with the loss of rating of six major facilities in 2002.

While we have implemented action plans for 2003 designed to regain Highly Protected ratings for our facilities, there can no assurance that these efforts will be successful in increasing the coverage or decreasing the cost of insurance, or in reducing the probability and seriousness of financial loss in the event of an accident.

Increased cost or other difficulties in obtaining insurance could harm our financial condition and results of operations.

Our operations in developing countries may be more vulnerable to risks of war, civil disturbances and adverse governmental action than our operations in the rest of the world. Governmental action, for example, may disrupt or impede operations and markets, restrict the movement of funds, impose limitations on foreign exchange transactions or result in the

expropriation of assets. Certain of the countries in which we operate have been subject to economic instability in recent periods. Any of these factors could adversely affect our operations in those countries and result in lower profits, which could lead to a reduction in any dividends and cause the trading prices of our shares to decline.

Our Aerospace business, and to a lesser degree the Pechiney Automotive division, both of which are included in the Aluminum Conversion segment, rely, to varying degrees, upon a relatively small number of major customers for a significant portion of their sales. Although we believe we have good working relationships with these customers, if our existing relationships with them are discontinued in the

future, or we do not replace them if we lose them as customers, our financial results may be harmed, which could lead to a reduction in any dividends and cause the trading prices of our shares to decline.

We are committed to protecting our trade secrets and investing in research and development in order to maintain the benefits of our technology in the future. However, we may not be able to protect, or continue to develop, some of our proprietary information in the future. In addition, we may be

subject to litigation in the future regarding the use of proprietary information that we have developed. For further discussion of our investments in technology, please refer to "Item 4. Information on the Company - Business Overview - Intellectual Property" and "- Litigation".

»Key Information

Whether we are able to pay dividends in the future, and if so, at what time, will depend upon our future earnings and financial condition. In addition, the holders of our Preferred Shares "B" are currently still entitled to a cumulative preferential dividend of € 1.45 per share per year, together with additional priority dividends based on the Company’s net income excluding certain nonrecurring items, and these payments must be made from available funds before we can make any decision whether to pay dividends to holders of our Common Shares "A" and the corresponding ADSs. For further discussion of these rights, please refer to "Item 10. Additional Information - Description of Share Capital - General Provisions Applicable to Shareholders - Dividend and Liquidation Rights". The number of outstanding Preferred Shares "B" is much

smaller than the number of outstanding Common Shares "A" and corresponding ADSs, and certain holders of Preferred Shares "B" have proposed a resolution which, if adopted, would lead to the conversion of the remaining Preferred Shares "B" into Common Shares "B" and the consequent disappearance of the preferential and priority dividend rights associated with the Preferred Shares "B". Unless and until that resolution is approved, however, the rights associated with our Preferred Shares "B" could, under certain circumstances, lead us to declare reduced dividends or no dividends to holders of our Common Shares "A" and the corresponding ADSs, which could cause the trading prices of our Common Shares "A" and the corresponding ADSs to decline.

Our Common Shares "A" trade in euros and our ADSs trade in U.S. dollars. Any dividends we declare are also denominated in euros. As a result, the trading prices of our ADSs in U.S. dollars may fluctuate as the U.S. dollar/ euro exchange rate fluctuates, and any material decrease in the value of the euro in relation to the U.S. dollar may cause the trading prices of our ADSs to decline.

Moreover, there is currently a resolution proposed by two of the Pechiney's shareholders to convert Preferred Shares "B" into Common Shares "A" after the payment date of the dividend proposed in respect of the 2002 fiscal

year, and this resolution will be presented to the annual General Shareholders' Meeting scheduled to take place on April 3, 2003. For a more detailed description of this proposed resolution, see "Item 9. The Offer and Listing - Price History of the Shares - Preferred Shares "B".

In addition, for a discussion of our business exposure to fluctuations in currency exchange rates, please refer to "– Risk factors relating to our Group – Fluctuations in euro/U.S. dollar exchange rate may lead our financial results to decline".

»Information on the Company

The Pechiney Group operates in two core businesses, in which it ranks among the global market leaders⁽¹⁾: the production of primary aluminum and fabricated aluminum products and the production of packaging materials. The Group believes that it is Europe’s second and the world’s fifth largest producer of primary aluminum on the basis of 2002 obtainable production capacities and one of the leading European producers of flat-rolled aluminum products on the basis of 2002 sales volume, with strong positions in aerospace, cansheet, automotive and foil & thin foil markets. Its aluminum technology is recognized as some of the most efficient in the world. The Group believes that it is also one of the world leaders in the production of packaging materials for the food, healthcare and beauty industries on the basis of 2002 sales. It is the world’s largest producer of collapsible tubes. The Group’s other activities include the production of ferroalloys and international trade.

Through its unrelenting efforts to reduce indebtedness and improve competitiveness over the last few years, Pechiney believes it has the resources it needs to finance its development. Since April 2000, the Group committed, on an average annual basis, more than € 500 million per year to growth projects, in addition to maintenance expenditures. This strategy is primarily designed to ensure the Group of leading positions in each of its businesses in terms of market share and technological expertise. Nevertheless, this strategy will only be fully effective if the Group makes improving its cost position a constant priority. The Continuous Improvement System, whose mechanisms and objectives were presented in December 2001, is the cornerstone of profitable growth and the priority of Pechiney.

The figures relating to the fiscal years 2000, 2001 and 2002 presented in this document were prepared in euros.

The Group’s Aluminum sector is comprised of two segments: Primary Aluminum and Aluminum Conversion.

Primary Aluminum is Europe’s second and the world’s fifth largest producer of primary aluminum on the basis of 2002 obtainable production

capacity (1,240,000 metric tons). It also holds interests in companies that produce bauxite and alumina. Primary Aluminum also licenses alumina and aluminum production technology and related equipment and believes that approximately 80% of world smelting capacity recently put into operation in Western World uses the Group’s technology.

»Information on the Company

Aluminum Conversion includes the activities of four divisions, which regroup activities organized around industrial or commercial goals shared in common:

• The Aerospace, Transport, Industry division regroups the production of aluminum rolled products for transport markets (aerospace, sea and ground, excluding automotive) and industry, as well as the production of hard alloy extrusions;
  
• The Cans, Automotive, Standard Rolled Products division regroups the production of aluminum rolled products at Neuf Brisach for the can, automotive and standard rolled products market;
  
• The Foil and Thin Foil / Specialty Products division includes Pechiney

• Eurofoil’s foil and thin foil activities at Dudelange, Flémalle and Rugles, as well as different specialty activities (circles, precoated sheets, etc.);
• The Extrusions, Casting Alloys, Automotive division manufactures and markets aluminum soft alloy sections for the construction, transport and equipment markets, as well as casting alloys used almost exclusively in the automotive market. The division is also in charge of Pechiney Automotive, a cross-division structure specially dedicated to the automotive market.

In 2002, the Group’s Packaging sector regrouped the following activities:

• Plastic Packaging, an important North American and European producer of flexible packaging for the food, healthcare and specialty markets;
  
• Cebal Tubes Europe and Cebal Tubes Americas, which together are the world leader in the manufacture of flexible plastic, laminated and aluminum tubes for the cosmetics, personal care and healthcare markets on the basis of 2002 production;

• Cebal Aerosols, the world’s largest manufacturer of seamless aluminum aerosol and spray cans;
  
• Techpack International (TPI), one of the world’s principal producers of plastic packaging for makeup, perfume and cosmetics on the basis of 2002 sales;
  
• Pechiney Capsules, which produces caps and overcaps for wines and spirits.
  

Pechiney Electrométallurgie, a wholly-owned subsidiary of the Group, mainly produces silicon and ferroalloys as well as abrasives and refractories.

International Trade operates three lines of business: a worldwide network of sales agencies which market products manufactured by the Group and

third parties; trading of non-ferrous metals and other basic materials; and the distribution of semi-finished aluminum products.

In order to ensure that the organization of the Pechiney Group reflects its different businesses, it was decided, as announced in December 2002, to divide aluminum activities into two distinct sectors:

• the Primary Aluminum sector, which now regroups in a single entity bauxite-alumina-aluminum production activities and ferroalloys;
  
• the Aluminum Conversion sector, comprised of rolled products, extrusions and casting alloys used in a wide variety of markets: aerospace, automotive, sea transport, rail, industry, industrial equipment, construction and beverage cans.
  

This new organization of aluminum activities in two sectors, each of which has expertise to share, illustrates the Group’s business-based strategy - the two sectors are distinct and respond to very different industrial and commercial approaches.

The Group expects this organization to provide more simplicity and responsiveness through the continued deployment of the Pechiney Continuous Improvement System and profitable growth projects. The new organization took effect as of February 1, 2003.

»Information on the Company

Pechiney is the successor company of Pechiney Ugine Kuhlmann, itself created through the merger of two French manufacturing companies, Compagnie Pechiney and Ugine Kuhlmann, which for over a century had been developing new technologies for the conversion of natural resources and basic materials into a wide range of metal and chemical products.

At the end of the 19th century, Pechiney developed a technique for the production of aluminum by electrolysis, to which it dedicated an increasing portion of its capital expenditures. To be more competitive in the post World War Environment, Pechiney reorganized its production activities by merging with Société Electrométallurgique Française. Beginning in 1950, due to the need to access new energy sources and raw materials, Pechiney decided to participate in the consolidation of the chemical industry in France, to integrate more closely its non-ferrous metal conversion activities and to work in foreign countries to develop its upstream aluminum activities.

Compagnie Pechiney and Ugine Kuhlmann merged in 1971, creating an industrial group with diversified and complementary activities.

Included in 1982 in the nationalization plan adopted by the French State, Pechiney Ugine Kuhlmann sold its specialty steel and chemical activities in 1982 and 1983 respectively, and adhered to a strategy of concentrating the Group’s resources in those areas in which its technical and market positions enabled it to rank among the world’s leaders. In 1983, after the reorganization of its activities, the Company readopted the name "Pechiney". In 1987, Pechiney sold its copper conversion activities.

As part of this strategy, Pechiney also made certain acquisitions, including, most notably, the acquisition of American National Can (ANC) at the end of 1988, which enabled the Group to become one of the world’s largest packaging manufacturers. Following the acquisition of ANC, the Group consolidated its packaging activities, turbine component activities and principal international aluminum assets in its subsidiary Pechiney International, 25% of which was then sold on the Paris Bourse in 1989 in an initial public offering.

In 1992, the Group implemented a program aimed at rebalancing its portfolio of activities, part of which included the transfer from Pechiney International to Pechiney of its Aluminum and International Trade activities. Concurrently, Pechiney’s shareholding in Pechiney International was further reduced to 67%. That same year, the Group sold its nuclear fuel assembly and zirconium/titanium activities.

In 1995, upon the completion of an extensive strategic internal analysis, Pechiney restructured its portfolio of activities around two core sectors - Aluminum and Packaging - and implemented a disposition program which

significantly reduced its financial indebtedness. Following the sale of a controlling stake in Carbone Lorraine and Ugimag at the end of June 1995, the Group disposed of three business segments: Food Metal and Specialty North America, Beverage Glass North America and Turbine Components, in July, September and December 1995, respectively. The combined divestitures allowed the Group to reduce its indebtedness by 1.6 billion euros.

Pechiney was privatized in December 1995 through an offering of shares. In addition, two public exchange offers were undertaken for the Certificats d’Investissements Privilégiés (CIP) and shares in Pechiney International. On December 16, 1997, Pechiney International, of which the Group had held 97.3% since January 1996, was merged into Pechiney. The French State sold its remaining interest in Pechiney in April 1998, retaining only the shares necessary to grant free shares to Group employees on February 5, 1999.

In July 1999, Pechiney launched an initial public offering on the New York Stock Exchange of the majority of the capital of its worldwide Beverage Cans activities. This transaction generated additional financial resources enabling the Group to pursue the selective and profitable development of its activities.

Since the end of 1999, in addition to continuing to implement its cost control policy, Pechiney has targeted an active strategy of internal and external growth, with the objective of strengthening the Group’s leadership in high value added segments and expanding its geographic coverage. This strategy of profitable growth has been illustrated by many acquisitions since April 2000, including the following notable examples:

• in Primary Aluminum, the acquisition of an additional 15.5% equity interest in Tomago, which makes Pechiney the main partner of one of the world’s most efficient primary aluminum smelting operations;
• in Aluminum Conversion, the acquisition of Workington and Eurofoil;
  
• in Packaging, the acquisition of Anchor Cosmetics (a subsidiary of Moll Industries), JPS Packaging and Soplaril, which allows the Group to strengthen its positions in different growth markets in the packaging sector and expand its geographic coverage.
  

In December 2001, Pechiney announced the effective launch of the Pechiney Continuous Improvement System, a program which targets not only cost reductions but also improved product quality, the multiplication of customer services, the optimization and heightened reliability of production tools and processes, safety, etc.

By making processes more reliable and reducing costs, the Group aims to attain annual Continuous Improvement Gains, gross of inflation, of € 450 million by 2004.

»Information on the Company

Pechiney is a société anonyme à conseil d’administration (a corporation with a board of directors) incorporated under the laws of France. It is governed by the provisions of Titles I to IV of Book II of the legislative part of the new French Commercial Code (previously provisions of the French Companies Law no. 66-537 of July 24, 1966, now codified pursuant to Decree (ordonnance) no. 2000-912 of September 18, 2000) and the provisions of Decree no. 67-236 of March 23, 1967, by other applicable provisions of French law, as well as by its by-laws (statuts).

Pechiney was incorporated on November 17, 1922. The duration of the corporation, which was extended on November 10, 1951, will expire on November 30, 2051, unless an Extraordinary General Meeting of Shareholders decides to extend the duration or wind up the Company. Pechiney’s registered office is located at 7, Place du Chancelier Adenauer, 75116 Paris, France, and the telephone number is +33 1 56 28 20 00.

Capital expenditures in Aluminum totaled € 263 million in 2002, compared with € 188 million in 2001 and € 150 million in 2000. Capital expenditures in Packaging totaled € 196 million in 2002, compared with € 177 million in 2001 and € 106 million in 2000. For the Group’s other activities and Holdings, capital expenditures represented € 20 million in 2002, compared with € 24 million in 2001 and € 31 million in 2000. These expenditures principally related to the modernization of existing facilities, in particular:

• in Primary Aluminum, the increase of production capacity in existing facilities;
  
• in Aluminum Conversion, the expenditures related to the modernization plan for industrial facilities, especially the Ravenswood plant in the United States;
• in Packaging, the modernization of production facilities, especially in plastic packaging.

In 2002, proceeds from divestitures totaled € 43 million and principally concerned the sale of investments in non consolidated companies. In 2001, proceeds from divestitures totaled € 30 million and principally concerned the sale of Société de Gerzat. In 2000, proceeds from divestitures totaled € 496 million and mainly included proceeds from the sale of the residual interest in the ANC Group, Inc. held by Pechiney.

Tender Offer by Alcan Inc.

On July 7, 2003, Alcan Inc., a Canadian corporation (“Alcan”) announced an unsolicited bid for Pechiney’s Common Shares “A”, American Depositary Shares, Bonus Allocation Rights and “OCEANE” convertible bonds (collectively, the “Pechiney Securities”). On July 8, 2003, Pechiney’s Board of Directors decided that this unsolicited offer was uncertain and that the price proposed by Alcan was clearly inadequate, when taking into account Pechiney’s industrial, technological and intangible assets, and in no way reflected its true strategic value.

On September 11, 2003, following successive increases in the value of its bid, each of which was rejected by Pechiney’s Board of Directors, Alcan made a new revised proposal to increase the offer price to the following:

• up to €48.50 per Common Share “A”, consisting of €47.50 per Common Share “A” plus €1.00 in cash per Common Share “A” if at least 95% of Pechiney’s share capital and voting rights on a fully diluted basis are tendered into the offer (including any reopened offer pursuant to Article 5-2-3-1 of the General Rules and Regulations of the French Conseil des marchés financiers (“CMF”)) and

• €83.40 in cash per OCEANE plus €0.40 for each OCEANE tendered if at least 95% of Pechiney’s share capital and voting rights on a fully diluted basis are tendered into the offer (including any reopened offer pursuant to Article 5-2-3-1 of the General Rules and Regulations of the CMF).
  

On September 12, 2003, Pechiney’s Board of Directors determined that this new revised proposal constituted the best value alternative available to the holders of Pechiney Securities and determined to recommend to holders of Pechiney Securities to accept this proposal, which it viewed as being in the best interest of Pechiney’s shareholders, employees, partners and customers.

On September 29, 2003, the CMF declared Alcan’s new revised proposal acceptable (recevable) and published a declaration to that effect (avis de recevabilité). On that same day, Alcan issued a press release announcing that the European Commission had granted clearance under European merger regulations and that it had reached an agreement with the U.S. Department of Justice (the “DOJ”) and, accordingly, the statutory waiting period under the U.S. Hart-Scott Rodino Act was to expire that evening.

In connection with the receipt of clearance from the European Commission, Alcan announced that it had undertaken to divest either its 50% share in the AluNorf, Gottingen and Nachterstedt rolling mills or Pechiney’s rolling mills at Neuf-Brisach, Rugles and, if necessary, the Annecy rolling mill. Alcan’s Latchford casting operations may also be added to either the AluNorf or Neuf-Brisach packages. In addition, Alcan announced that it had agreed to undertakings for the licensing of alumina refining technology, alumina smelter cell technology and anode baking furnace designs and agreed to eliminate the overlap in Alcan’s and Pechiney’s activities in aluminum aerosol cans and aluminum cartridges. Pursuant to an agreement and a related consent decree with the DOJ, Alcan has agreed to divest Pechiney’s aluminum rolling mill located in Ravenswood, West Virginia. Pechiney was not a party to the negations between Alcan and the European Commission and Alcan and the DOJ.

On October 2, 2003, the French Commission des opérations de bourse (the “COB”) granted its approval with respect to Alcan’s offer documentation in France. On October 7, 2003, Alcan formally commenced its offer to holders of Pechiney Securities (other than American Depositary Shares) who are either located in France or located in other jurisdictions (except the United States and Canada) if, pursuant to local laws and regulations, they are permitted to participate in the offer.

On October 9, 2003, Pechiney issued a press release announcing that the Pechiney Board had made a formal recommendation (avis motivé) to the holders of Pechiney Securities to accept Alcan’s offer.

Under U.S. securities regulations, Alcan’s offer to all holders of Pechiney American Depositary Shares worldwide, as well as to any holders of other Pechiney Securities who are located in the United States or Canada, is expected to commence following issuance by the U.S. Securities and Exchange Commission of its declaration of effectiveness of the Registration Statement on Form S-4 filed by Alcan with respect to the offer.

During the period 2000-2002, many acquisitions were finalized, made possible by the Group’s low level of indebtedness and its solid cash flow. Pechiney’s strategic acquisitions included Eurofoil in thin foil, Soplaril in flexible packaging in Europe, and acquisitions targeting products or markets which are complementary to Pechiney’s own, such as Alufin (technical alumina), Euromin (trading), Envaril and Molplastic in South America (packaging), Tiger in Indonesia (cosmetics packaging), Harken’s production lines and Phœnix’s assets in medical packaging in the United States.

These acquisitions may be considered as successes for the Group - teams have been integrated; know-how has been transferred; and synergies identified at the time of acquisition have taken concrete form. This has produced visible results at the level of each of the activities concerned and therefore of the Group itself.

One of the two major focuses of Pechiney’s strategy is the constant improvement of the Group’s performance in all fields through the

implementation of the Pechiney Continuous Improvement System throughout the Company.

The Pechiney Continuous Improvement System targets four main objectives:

• to enhance safety, since the safest plants are the most efficient;
  
• to ensure the reliability of production processes and reduce controlled costs;
  
• to provide quality customer service;
  
• to improve the performance of acquisitions by standardizing and sharing best practices.
  

The Pechiney Continuous Improvement System is implemented in all the Group’s activities, applying a common point of reference and indicators to monitor performance. The progress achieved is regularly measured and reported savings have been published quarterly since January 1, 2002. In

2002, two-day Continuous Improvement evaluations were conducted at 48 facilities which are representative of all of the divisions. Focused on the priorities defined by the divisions, the Pechiney Continuous Improvement System reviews make it possible to verify that implementation and results are in line with commitments, and to identify best practices, which will be incorporated into the frequently consulted Continuous Improvement Intranet base.

With €130 million in cumulated Continuous Improvement Gains, gross of inflation, at the end of 2002, Pechiney aims to realize, in the medium term, on average € 150 million per year.

»Information on the Company

More growth, more efficiency: the Pechiney Continuous Improvement System is the ideal way to achieve the Group’s objectives of sustained and profitable growth over the long term.

The Pechiney Continuous Improvement System is based on the mobilization of expertise and the commitment of all our people in a

learning, responsive organization focused on satisfying customers’ needs. It fosters industrial excellence by sharing best practices and applying the highest standards, especially with regard to safety and environmental protection. It promotes a corporate culture based on initiative and excellence that is open and stimulated by change.

People mobilization and employee involvement are the foundation of the Pechiney Continuous Improvement System. Continuous Improvement success will be driven by management’s commitment to unleash the potential of the workforce. In 2002, a common set of Human Resources standards were defined to drive the people mobilization needs of the

organization. The five new Roadmap elements (visual communication, the role of management, the development of expertise and technical skills, suggestion systems and employee recognition) are based on best practices throughout the Pechiney organization.

Training is a key component in the deployment of the Pechiney Continuous Improvement System. It allows employees to improve their performance and develop skills so that they can contribute to the success of the Group’s strategy, and to rally teams around shared values, methods and objectives. In 2002, Pechiney continued to adapt training programs to the needs of its different businesses and their developmental needs.

1,000 managers to be trained in Pechiney Continuous Improvement System management

To facilitate effective implementation of the Pechiney Continuous Improvement System, Pechiney launched a program for plant managers, from unit heads to supervisors. Training takes place at production sites. It lasts a week and is organized in groups of 16 people.
Alternating theory and practice, it teaches managers how to analyze situations, draw up an action plan and lead projects. The plant’s basic issues and priorities are focuses from the beginning and practical applications are important. Two- and three-day projects are undertaken in small groups with the participation of the plant’s operating staff. One-third of the managers targeted took this course in 2002.

Pechiney Continuous Improvement System (PCIS) reviews will be organized at all of the Group’s industrial facilities. Fifty plants will be concerned in 2003, and an PCIS review frequency of two years is targeted. These PCIS reviews are conducted using standards of industrial excellence in the Company’s businesses. The first objective is to evaluate the pertinence of action plans in line with the plant’s priorities. The PCIS review helps identify best practices at the facilities and in the divisions and contributes to the use of Pechiney Continuous Improvement System standards.

The PCIS reviewers and the plant’s management work together to prepare the PCIS review, which lasts two full days. During this time, improvement suggestions are collected; the main recommendations are circulated throughout the unit and monitored quarterly.
The PCIS reviewers are confirmed managers, who represent the Group’s operating and functional divisions, coordinated by the Pechiney Continuous Improvement System division. Its standards will be improved in 2003, in order to better account for the Group’s priorities, as well as practices already developed by the most advanced facilities.

Best practices in the framework of review standards are systematically detected and described in PCIS reviews. They are communicated to all of the Group’s workforce over the Intranet. Successive PCIS reviews enrich this data base, which thus becomes a real deployment assistance tool. In priority areas concerning both technical (e.g., process control, equipment

maintenance) and operating (recognition systems, the role of production supervisors) issues, groups of experts have defined common standards for all the entities. Their deployment is piloted in the divisions and systematically verified during PCIS reviews. Individual improvement objectives are defined for managers concerning their implementation.

»Information on the Company

The safest plants are the most efficient. Improving health and safety conditions is a major priority in the Pechiney Continuous Improvement System. This effort is based on a risk prevention policy that applies standardized practices for priority risks, involves employees at all levels and promotes multi-year action plans with objectives defined in each facility. The Group aims to reduce the Lost Time Rate (LTR) per million hours worked to 2, and the Total Incidence Rate (TIR) per million hours to 7 (based on the French reporting system).

The Success Stories trophy rewards the unit or department that achieved the best implementation of the Pechiney Continuous Improvement System

during the year. In 2002, the winner was Cebal Tubes Europe’s Kolin facility in the Czech Republic, which has not reported an accident in two years. The mobilization of the unit’s 300 employees enables them to find a solution for any problems. Practical solutions include protection guards on all the machines, Plexiglas barriers to keep fingers out of the polisher motors, safety wire to facilitate the emergency shutdown of welding equipment, activated on simple contact, ergonomics, systematic wearing of hearing protection devices, standard and shared tools, and ecological washing solvents. These solutions are often not expensive and ensure protection and productivity at the same time.

The second focus of Pechiney’s strategy is to ensure selective and profitable growth. The criteria which guide this growth strategy are simple:

• selectivity: growth must be based on the Group’s strong points, in profitable markets; it must help strategically bolster Pechiney’s positions and business portfolio;
• profitability: each project must correspond to strict profitability levels applied to the investment. Pechiney targets internal profitability of more than 13% after taxes.

In plastic packaging, growth opportunities are more numerous and often of smaller size. They may aim to consolidate positions, expand the product line or access new geographic markets, in particular regions with low labor costs. Pechiney is determined to participate in the consolidation of this industrial sector - which it believes is a sure way to create value - while focusing on specialty products.

Internal growth is primarily based on selectivity in the choice of markets, customers and products. This selectivity presupposes a thorough understanding of the markets, which the Challenge Revenues program helped build. Ongoing innovation in the range of products offered, particularly in the packaging sector, where customers are stepping up the pace of their product launches, also provides opportunities for growth, since these launches, which are organized on broader geographic bases, lead to an increasingly demanding selection of suppliers.

This dynamic, which aims to strengthen ties with the Group’s customers, whether they be on a contractual basis, co-development, integrated logistics or "Just in Time", is a fundamental thrust in all the Group’s businesses. Pechiney believes it is positioned to meet these needs.

»Information on the Company

Primary Aluminum was comprised of two operating segments as of December 31, 2002:

• Bauxite Alumina;
  
• Aluminum Metal.
  

As announced in December 2002, the Ferroalloys division, presented at the end of Item 4. became part of the Primary Aluminum sector in February 2003.

Primary Aluminum specializes in the production and sale of primary aluminum, and also produces bauxite and alumina. The Group believes that its industrial and commercial positions, together with its smelter technology, place it at the forefront of the aluminum industry. The Group believes that it is Europe’s second and the world’s fifth largest producer of primary aluminum on the basis of 2002 obtainable production capacity.

The following table sets forth certain selected Primary Aluminum data.

In the Primary Aluminum segment, the bauxite mines send their output to the alumina plants. This output for the most part satisfies the plants’ aluminum production requirements. A portion of the production of alumina is used in non-metallurgical applications. Such technical alumina is primarily used in the production of various chemical products, refractory materials and ceramics.

Primary Aluminum produced by smelting is cast into a number of different products, from basic aluminum ingots, rolling ingots, extrusion billets and wire for conductors, to specialized products such as mechanical wire and welding wire.

Finally, Primary Aluminum also licenses alumina and aluminum production technology, know-how and equipment.

In 1999, Pechiney created two new divisions, Bauxite-Alumina and Aluminum Metal. Each division has responsibility to adopt best practices in cost reduction in its business on a systematic basis and to consolidate and increase the Group’s market share by applying all profitable and possible developments.

The operating units that report to these two divisions were broken down as follows:

• Bauxite-Alumina division: the Aluminium Pechiney plant in Gardanne (France), the bauxite-alumina activities of Aluminium de Grèce (Greece), the Alufin unit acquired in 2002, the Group’s equity interest in Queensland Alumina (Australia) and in Compagnie des Bauxites de Guinée, alumina technology sales activities and Sogerem (fluorspar);
• Aluminum Metal division: the facilities of Aluminium Pechiney at Saint-Jean-de-Maurienne and in the Pyrénées (France), Pechiney Nederland (Netherlands), the primary aluminum and casting activities of Aluminium de Grèce (Greece), the Group’s equity interest in Tomago (Australia), Aluminerie de Bécancour (Canada), Aluminium Dunkerque (France) and Alucam (Cameroon), smelter technology sales activities and ECL.
  

In 2002, the Bauxite-Alumina division obtained approximately 2.4 million metric tons of bauxite from the bauxite mines in Greece and Guinea in which it has an equity interest (see "- Primary Aluminum - Selected Data). These facilities supplied all of the bauxite requirements of the Gardanne (France) alumina refinery, and a significant portion of the requirements of the Saint-Nicolas (Greece) refinery. The average utilization rate of these mines in 2002 was 95%.

In addition to the Group’s share of output from these mines, the Bauxite-Alumina division purchases bauxite, pursuant to long-term supply contracts, for the supply of Aluminium de Grèce (“ADG“) from Greek mines and suppliers of tropical bauxite, and for the Gladstone refinery (Australia) from Comalco, one of the Group’s partners in the Gladstone refinery.

»Information on the Company

Boké mine (owned by Compagnie des Bauxites  de Guinée - CBG”)⁽²⁾

The share of capacity obtainable by the Bauxite/Alumina division from the alumina refineries which it owns or in which it has an equity interest amounts to approximately 2.2 million metric tons per year. Its production of metallurgical alumina is generally sufficient to satisfy more than 80% of the alumina requirements of its smelters (with the balance supplied pursuant to

long-term contracts). The average utilization rate of these facilities in 2002 was 95%. In addition, part of Aluminum Metal’s share of alumina produced at Gardanne is sold to third parties as non-metallurgical alumina.

In 2002, deployment of the Pechiney Continuous Improvement System was pursued in the BXA division. The focus on standard and technical PCIS audits was broadened to include process control and employee mobilization.

At ADG (Greece), improved performance led to a new production record, with an increase of 5% over 2001.

At Gardanne (France), technical difficulties at the beginning of the year resulted in a 2% decline in production compared with 2001. Sales of technical alumina again increased, rising 3% from 2001.

The QAL plant (Australia) was not able to maintain its level of production (- 1.3%) in 2002, owing to the accidental interruption of the facility’s electricity supply at the end of the year. The investment in new calcination furnaces will help improve the plant’s environmental performance in 2003.

Pechiney believes it is one of the world leaders in the sale of technology and in technical assistance for alumina production facilities. Its main achievements in this area in 2002 were as follows.

• The debottlenecked installations at the Pingguo alumina facility in China were successfully started up. Guaranteed performances were achieved and the reception of the contract was obtained without reserve. The construction of the plant’s second unit is under way, and a new licensing agreement was signed in 2002. The technology chosen remains that developed by Aluminium Pechiney for attack and decomposition;
  
• The startup of the new Guizhou attack unit in China took place at the beginning of 2002;

• The feasibility study commissioned by the government of Vietnam for an integrated bauxite/alumina/aluminum facility in the province of Lam Dong was completed in the third quarter of 2002;
  
• The third potline at the Nalco alumina plant in India was started up in the first quarter of 2002, and nominal capacity of 1,575,000 metric tons per year was attained by mid-2002. The technical reception of the oxalate removal unit took place at the end of September;
  
• The conditions precedent to the realization of the agreement signed with CVG in 2000 for the modernization of the Bauxilum complex in Venezuela were satisfied in 2002. The full agreement is retroactively in effect. Technical assistance continued and led to a rise in production. Debottlenecking studies advanced.

»Information on the Company

Unless otherwise indicated, statistical and market trend information are based on the Company’s own statistics, which are in turn based on the Company’s own research and various publicly available sources.

In 2002, the production of alumina in the western world totaled 43.4 million metric tons, up 1.0 million metric tons from the previous year.

During the year, the alumina market, which had experienced a considerable surplus in 2001, progressively returned to a more balanced level, owing to significant purchases by Chinese buyers. The reductions in

production introduced the previous year were partially lifted. A new production line was started up at a plant in India. Improvement was reported in the utilization rate of many facilities, particularly in Latin America.

Spot prices rose moderately, from U.S.$130 per metric ton at the beginning of the year to U.S.$160 per metric ton in December. This situation nevertheless had a limited impact on medium-term contracts which cover most of the volume of alumina traded and are generally indexed on the price of aluminum on the London Metal Exchange (LME).

At the end of December 2002, primary aluminum obtainable capacity (expressed in tons of metal under control) amounted to approximately 1,240,000 metric tons per year.

Approximately 40% of the Group’s primary aluminum production capacity is located in France at facilities owned by Aluminium Pechiney (a wholly-owned subsidiary of the Company and Aluminum Metal’s principal

operating company in France) and Aluminium Dunkerque (a 35%-owned affiliate). The remaining aluminum production capacity is located in Greece, the Netherlands, Australia, Canada and Cameroon.

The following table sets forth selected data regarding the aluminum smelters in which the Group has an interest. The average utilization rate of these facilities in 2002 was approximately 95% of capacity.

»Information on the Company

The division pursued its efforts to base the management of its activities on the Pechiney Continuous Improvement System. The principal focuses are production systems and employee mobilization, within the more general framework of an approach that targets significant improvement in safety.

• The standardization of work methods received special attention. This is achieved through the effective deployment of many standardized operating modes which are frequently audited on site, and through training (in 2002, the division significantly increased the number of hours of training each employee received);
  
• In addition, the division’s units pursued and developed Pechiney Continuous Improvement System projects by focusing on priority objectives, particularly the control of raw materials and equipment reliability.
  

Pechiney’s share of total production increased by 42,000 metric tons between 2001 and 2002.

Highlights of the year included the following.

• The Saint-Jean-de-Maurienne plant, where production was affected by a strike in August, continued to develop the production of wire for electrical and mechanical applications;
  
• The Pechiney Nederland unit encountered operating difficulties in August and a series of problems due to exceptional weather conditions which struck the north of Europe at the end of October, causing an interruption of the energy supply for several hours. However, the point feeding cell conversion project went ahead as planned, and a potline had already been converted by the end of the year;
  
• The Alucam facility in Cameroon was again affected by a lack of energy linked to poor hydraulics and the bad condition of the facilities operated by the local electricity producer. It nevertheless set new records for intensity and efficiency;
  
• Despite labor difficulties caused by the introduction of an ambitious cost reduction program, the Tomago smelter increased production by more than 10,000 metric tons and launched a project to achieve a 10% rise in production within existing scheduling and budget limits.

Development teams attained the targeted objective of ensuring stable operating conditions for very high intensity (500kA) AP50 cells, acquiring sufficient experience to plan for the study and construction of an industrial unit with a capacity of at least 460,000 metric tons per year. The construction of the whole smelting facility around this technology aims to reduce the cost of investment per ton by 15%. In addition, operator safety will be enhanced through a new organization of flows within the plant.

A new unit was created and teams mobilized to complete this project. After the signing of an electricity supply agreement with Eskom in March 2002, the AP50 project focuses on South Africa, where advanced negotiations are being conducted with the South African government, potential partners and local elected officials. The feasibility of other locations continued to be examined throughout 2002. On September 30, 2003, Pechiney exercised the option provided for in the agreement, thus making the agreement effective. For further information, see "Item 4. Information on the Company - Recent Developments".

Electricité Charpente Levage (ECL), a wholly-owned subsidiary of Aluminum Pechiney, markets equipment for aluminum smelters. The Group believes that it is the world leader in its activity with more than 90% of its production exported throughout the world. ECL supplies all the major producers of primary aluminum. In 2002, the company did

record business, in particular supplying equipped superstructures for electrolysis cells in the expansion of the Mozal facility in Mozambique. ECL pursued the development of its service business through its subsidiaries (Canada, South Africa, Australia, Netherlands), which allow the company to make its expertise available to its main customers.

Primary Aluminum is active in the sale and licensing of primary aluminum smelting technology and know-how to third parties, an activity in which the Group believes it is the world leader. Major technology transfer contracts executed in 2002 include the following.

• The startup of the extension of 80 AP18 cells at Talum (Slovenia) took place at the beginning of 2002 and was successfully completed in May;
  
• The startup of the Alma plant in Quebec (Alcan), which has one and a half potlines of AP30 cells, was successfully completed. Performance test results were excellent. The mission of two experts was extended by four months in 2002; all the experts have now returned from this assignment;
  
• The new Mozal facility in Mozambique, where the first AP30 potline was started up in 2000, launched a project to double capacity. Startup of the AP30 extension is scheduled for 2003;
  
• The contract for an extension of 144 AP30 cells at Hillside in South Africa (Billiton), which was signed in 2000, was activated in April 2002. Construction is moving forward rapidly;

• Technical assistance continued at Alba (Bahrein) and a contract for an extension of more than 300,000 metric tons per year was signed and activated in May 2002;
  
• In July, Alouette signed a contract for a 330 cell extension of its Sept-Iles facility in Quebec. The contract also includes a license for the second phase of the anode furnace;
  
• A contract to modernize furnaces at Alro (Romania) was signed in May 2001 and work has begun at the site;
  
• Technology licensing contracts for a furnace at Hydro Aluminium / VAW Kurri Kurri (Australia) and for a furnace at Almahdi (Iran) were signed and activated in August and November, respectively.
  

In addition, the Chinese company Lanzhou Aluminium Co. and Aluminium Pechiney signed a preliminary agreement to develop major technical cooperation in China. The agreement provides for a detailed preliminary study on an aluminum smelting project of 260,000 metric tons per year with an integrated electric power plant. If the profitability of the project can be demonstrated, the parties will create a joint venture in 2004.

Unless otherwise indicated, statistical and market trend information are based on the Company’s own statistics, which are in turn based on the Company’s own research and various publicly available sources.

The economic recovery, which had gotten off to a good start in 2002, particularly in the United States, lost momentum during the year. Compared with 2001, growth again slowed in Europe and remained close to zero in Japan. Asian economies (excluding Japan) reported strong growth owing to an upswing in world trade and significant internal demand. This was particularly the case in China, which demonstrated persistent economic dynamism.

The consumption of primary aluminum benefited from the moderate improvement in the world economy and picked up in 2002. Despite the continued shutdown of certain production capacities in North America, production rose significantly in 2002, especially in China. Overall, the market surplus observed in 2001 carried over into 2002 and continued to weigh on the price of aluminum, which decreased by 6% to U.S.$1,365 per metric ton (three month quotation on the LME). Expressed in euros, the average price decreased by 10% to € 1,457 per metric ton.

Demand for Primary Aluminum

Global demand for primary aluminum, which had been affected by the

slowdown in the world economy in 2001, rose in response to the economic recovery in 2002. At the global level, it increased by approximately 7% to 25.5 million metric tons.

• Global performance owes much to the rise in consumption in China (+16%), backed by strong growth in industrial production;
• In Asia (excluding Japan), consumption grew rapidly;
  
• In Japan, aluminium consumption partially recovered from a sharp drop in 2001. Although down slightly, automobile production boosted aluminum consumption in the transport sector, while business in the construction sector further eroded in 2002;
  
• Europe, experienced a growth in 2002 in spite of unfavorable underlying economic circumstances. This performance can be partially explained by a shortage of recycled material on the continent, which led to an extended use of primary aluminium instead of secondary. In the transport sector, the penetration of aluminum in the automotive market continued, offsetting the drop in automobile production. Construction activities generally stagnated. Aluminum consumption in packaging showed a moderate rise;
  
• In the United States, the consumption of primary aluminum, which had fallen drastically in 2001, rose again in 2002. The increase in automobile production and a sustained high level of activity in the construction sector, at least in the residential segment, contributed to this upturn in aluminum consumption.

»Information on the Company

In 2002, primary aluminum production rose significantly (+6.6% to 26.1 million metric tons). Trends were contrasting in the different regions.

• Production in the West was marked by a moderate increase (+3.3% to 17.2 million metric tons). In Canada, the new smelter started up in 2001 reported its first calendar year of production at full capacity. In Brazil, after the end of energy rationing, all the smelters were restarted in the first

• quarter. In the United States, capacities shut down during the energy crisis were partially restarted. At the end of the year, despite these restarts, 1.3 million metric tons of installed capacity were temporarily stopped in North America due to energy supply issue;
  
  
• In the East, production in Russia and central European countries increased moderately, whereas China’s production jumped 28% to 4.3 million metric tons, owing to the rapid startup of new smelting capacity.

The products marketed by Primary Aluminum are principally sold in the world’s three major regions of consumption (Europe, Asia/Pacific and North and South America). This international presence is made possible by the Group’s local facilities and its efficient international sales network. In the case of Alucam, ADG and Aluminium Dunkerque, in addition to selling its own share (based on equity interests in the operating companies) of the production output of the smelting facilities, the Group obtains, for its own use or for resale, the production output share of the other shareholders of these facilities.

In addition, in order to enhance the geographic efficiency of its operations and to meet customer requirements, the Group may purchase ingots from third parties for resale in different locations and in different shapes. Therefore, the Group’s sales of primary aluminum generally exceed its obtainable share of the annual production output of the smelting facilities in which it has an interest. In 2002, sales of primary aluminum originating from third parties represented 1% of total shipments.

Aluminum Metal distributes a full range of primary aluminum products, from the most standard, such as aluminum and alloy ingots, slabs and

billets, to highly technical and specialized products such as welding and mechanical wire, high purity metals and thixotropic aluminum.

In 2002, the product mix was enhanced by the production of slabs, compared with 2001, as the Challenge Revenues program was pursued. Over the past several years, this program has involved refocusing the product mix to concentrate on value added cast products.

Shipments by Customer Segment

The majority of the primary aluminum requirements of the Group’s European conversion activities are supplied by Aluminum Metal at prevailing market prices. From one year to the next, the corresponding volumes fluctuate based on changes in activity levels. They have historically accounted for 26% to 38% of Aluminum Metal’s annual production during the period 1992-2000. In 2002, intragroup sales accounted for approximately 40% of total shipments, or 476,000 metric tons.

In 2002, Aluminum Metal’s shipments made to companies outside the Group were spread among a large number of customers. More than three-quarters of such shipments are purchased by customers representing individually less than 1% of annual production volume. No single customer accounts for more than 5% of sales to third parties. Aluminum Metal will generally enter into long-term supply contracts with those customers requiring such arrangements (for a discussion of the Group’s policy with respect to forward sales and locking in of sales prices, see "Item 5. Operating and Financial Review and Prospects - General Information - Sensitivity of the Group’s Operations to Future Fluctuations in Aluminum Prices").

Internationally, Aluminum Metal’s principal competitors are the main North American industrial groups such as Alcoa, Alcan and Kaiser Aluminum, as well as other major aluminum producers such as BHP Billiton, Rio Tinto, Russky Aluminiy and Sual (Russia), Dubai (UAE) and Alba (Bahrain). The Company’s principal competitors in Europe, in addition to Alcoa and Alcan, are Hydro Aluminium (which acquired VAW in 2002) and Corus.

Aluminum products also compete in many markets with steel, copper, plastic and other materials for which aluminum may substitute in downstream applications.

Consolidated Net Sales (millions of euros)

»Information on the Company

The Group believes that it is one of the world’s leading producers of aluminum semi-finished products. The Group believes it is the second leading producer of hard alloy flat-rolled products and extrusions in the world and the third largest European manufacturer of rolled products. Its activities are organized in four divisions.

• The Aerospace, Transport, Industry division groups the production of aluminum rolled products for transport markets (aerospace, sea and land, excluding automotive) and industry, as well as the production of hard-alloy extrusions;
  
• The Cans, Automotive and Standard Rolled Products division groups the production of aluminum rolled products for the can, automotive and standard rolled products market of Neuf Brisach;

• The Foil and Thin Foil / Specialty Products division includes Pechiney Eurofoil’s foil and thin foil activities at Dudelange, Flémalle and Rugles, as well as different specialty activities (circles, precoated sheets, refined products, etc.);
  
• The Extrusions, Casting Alloys, Automotive division manufactures and markets aluminum soft alloy sections for the construction, transport and equipment markets, as well as casting alloys used almost exclusively in the automotive market. The division is also in charge of Pechiney Automotive, a cross-division structure specially dedicated to the automotivemarket.