London Metal Exchange (LME) in an effort to lift premiums and encourage consumers announced it will impose a daily backwardation limit in aluminium and is investigating backwardation policies.

Full press release and contract follows...

From Executive Director: Regulation and Compliance

To: ALL MEMBERS

Ref: 99/010 : A010

Date: 11 January 1999

Subject: THE PRIMARY ALUMINIUM CONTRACT

The Regulation and Compliance Department of the LME has been monitoring the development and structure of the LME’s primary aluminium market in January 1999. It has analysed the localised backwardation in January and is concerned about the apparent artificial tightness in the market around January’s third Wednesday prompt. The LME has therefore launched a formal investigation under rule 9 of part 2 of the LME’s rules and regulations into the development and structure of the January primary aluminium market.

The Special Committee, which has been established by the Board of Directors, pursuant to Article 64 of the Company’s Articles of Association, met on 8 January 1999. It considered the localised backwardation in the LME’s primary aluminium contract around January’s third Wednesday prompt, and whether this amounted to an undesirable situation as contemplated by rule 14 of part 3 of the LME’s rules and regulations. After taking into account all the relevant facts and consulting with the London Clearing House, the Special Committee resolved that, while the investigation proceeds:-

1 A limit to the daily backwardation of US$1 per metric tonne per business day is to be applied to the primary aluminium contract. This backwardation limit will be effective immediately until 26 February inclusive, when the limit will be reviewed. Please note that this limit applies to every market day which is also a settlement business day on which commercial banks are open in New York city for the settlement of international transactions in US dollars. Thus Monday 15 February 1999, for example, is not a settlement business day as the US banks are closed for international transactions in US dollars on that day.

2 All those with short positions in primary aluminium contracts falling due on those dates, if they are unable to effect physical delivery and/or are unable to borrow metal at or less than the daily limit shall pay a penalty of that limit per metric tonne per market day.

3 Physical delivery against short positions affected through the Clearing House shall be allocated to long positions on a pro rata basis.

4 The announcement of the imposition of the above was made prior to the commencement of the first morning primary aluminium session today.

A WHITING

Executive Director