AMENDED AND RESTATED MOLTEN METAL SUPPLY AGREEMENT

Exhibit 10.7

AMENDED AND RESTATED MOLTEN METAL SUPPLY AGREEMENT

between

NOVELIS INC.

(as Purchaser)

and

RIO TINTO ALCAN INC.

(as Supplier)

for the Supply of Molten Metal to Purchaser’s Saguenay Works Facility

Dated as of January 1, 2008

TABLE OF CONTENTS

1. DEFINITIONS AND INTERPRETATION			1
2. MOLTEN METAL			6
3. FORCE MAJEURE			11
4. ASSIGNMENT			13
5. TERM AND TERMINATION			14
6. EVENTS OF DEFAULT			15
7. DISPUTE RESOLUTION			16
8. MISCELLANEOUS			19

SCHEDULES

1		Contract Tonnage and Estimated Weekly Shipping Schedule for Contract Year 1
2		Saguenay Smelters

AMENDED AND RESTATED MOLTEN METAL SUPPLY AGREEMENT

THIS AGREEMENT entered into in the City of Montréal, Province of Quebec, as of January 1, 2008.

BETWEEN:		NOVELIS INC. , a corporation organized under the Canada Business Corporations Act (“ Novelis ” or the “ Purchaser ”);
AND:		RIO TINTO ALCAN INC. (formally known as Alcan Inc.) , a corporation organized under the Canada Business Corporations Act (“ Alcan ” or the “ Supplier ”).
RECITALS:

WHEREAS the Parties entered into a Molten Metal Supply Agreement dated January 5, 2005 (the “Original Agreement”) relating to the supply of Molten Metal by the Supplier to the Purchaser for the Purchaser’s Saguenay Works facility; and

WHEREAS the Parties wish to modify certain of the terms and conditions of the Original Agreement and amend and restate the Original Agreement by this Agreement.

NOW THEREFORE, in consideration of the mutual agreements, covenants and other provisions set forth in this Agreement, the Parties hereby agree as follows:

1.1		Definitions
		For the purposes of this Agreement, the following terms and expressions and variations thereof shall, unless another meaning is clearly required in the context, have the meanings specified or referred to in this Section 1.1:
		“ Affected Party ” has the meaning set forth in Section 3.1.
		“ Affiliate ” of any Person means any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such first Person as of the date on which or at any time during the period for when such determination is being made. For purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise and the terms “ controlling ” and “ controlled ” have meanings correlative to the foregoing.
		“ Agreement ” means this Amended and Restated Molten Metal Supply Agreement, including all of the Schedules hereto.

 2

		“ Alcan ” means Rio Tinto Alcan Inc. and its successors and permitted assigns.
		“ Alcan Group ” means Alcan and its Subsidiaries from time to time .
		“ Applicable Law ” means any applicable law, rule or regulation of any Governmental Authority or any outstanding order, judgment, injunction, ruling or decree by any Governmental Authority.
		“ Base Contract Tonnage ” means in respect of each Contract Year, *** Tonnes, subject to reduction in accordance with Section 2.3(c) and Section 2.4(b).
		“ Bill of Lading Date ” means the date of the bill of lading representing Molten Metal cargo to be delivered under this Agreement.
		“ Business Concern ” means any corporation, company, limited liability company, partnership, joint venture, trust, unincorporated association or any other form of association.
		“ Business Day ” means any day excluding (i) Saturday, Sunday and any other day which, in the City of Montréal (Canada) or in the City of New York (United States), is a legal holiday, or (ii) a day on which banks are authorized by Applicable Law to close in the city of Montréal (Canada) or in the city of New York (United States).
		“ Commercially Reasonable Efforts ” means the efforts that a reasonable and prudent Person desirous of achieving a business result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible in the context of commercial relations of the type contemplated in this Agreement; provided, however, that an obligation to use Commercially Reasonable Efforts under this Agreement does not require the Person subject to that obligation to assume any material obligations or pay any material amounts to a Third Party or take actions that would reduce the benefits intended to be obtained by such Person under this Agreement.
		“ Consent ” means any approval, consent, ratification, waiver or other authorization.
		“ Contract Price ” for each Tonne of Molten Metal sold and purchased hereunder in any month shall be:

(i)

in respect of each month occurring during the initial Term (Contract Year *** to Contract Year ***, inclusive); the Midwest Price minus the Molten Metal Discount; and

(ii)

in respect of each month occurring during any extension of the Term, such price as may be agreed by the Purchaser and the Supplier as a result of good faith negotiations in connection with any extension of the Term pursuant to Section 5.2 hereof.

		Such amount shall be rounded upwards to the nearest Dollar.
		“ Contract Tonnage ” has the meaning set forth in Section 2.3(c).
		“ Contract Year ” means each calendar year during the Term and any extension thereof.
		“ CPT ” means, to the extent not inconsistent with the provisions of this Agreement, CPT as defined in Incoterms 2000, published by the ICC, Paris, France, as amended from time to time.
		“ Default Interest Rate ” means the rate of interest charged by Supplier from time to time on late payments in accordance with Supplier’s normal commercial practice, as indicated on invoices issued by Supplier to Purchaser hereunder.
		“ Defaulting Party ” has the meaning set forth in Section 6.
		“ Delivery Site ” means the Purchaser’s Saguenay Works facility located at 2040 Fay Street, Jonquière, Quebec, Canada .
		“ Disputes ” has the meaning set forth in Section 7.1.
		“ Dollars ” or “ $ ” means the lawful currency of the United States of America.
		“ Event of Default ” has the meaning set forth in Section 6.
		“ Force Majeure ” has the meaning set forth in Section 3.2.
		“ Governmental Authority ” means any court, arbitration panel, governmental or regulatory authority, agency, stock exchange, commission or body.
		“ Governmental Authorization ” means any Consent, license, certificate, franchise, registration or permit issued, granted, given or otherwise made available by, or under the authority of, any Governmental Authority or pursuant to any Applicable Law.
		“ Group ” means Alcan Group or Novelis Group, as the context requires.
		“ ICC ” means the International Chamber of Commerce.

		“ Incoterms 2000 ” means the set of international rules updated in the year 2000 for the interpretation of the most commonly used trade terms for foreign trade, as published by the ICC.
		“ Information ” means any information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, test procedures, research, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, manufacturing techniques, manufacturing variables, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, products, product plans, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer information, customer services, supplier information, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.
		“ LME ” means the London Metal Exchange.
		“ Midwest Price ” for any calendar month means the arithmetic average of the mid-west transaction prices for primary high grade aluminum, as published in Platt’s Metals Week on each day during the calendar month preceding such calendar month or as otherwise determined pursuant to Section 2.6(b). As an example, the Midwest Price for the month of April will be based on metal prices published during the month of March.
		“ Molten Metal ” means P1020 aluminum metal in molten form.
		“ Molten Metal Discount ” means, (i) for each of Contract Year *** to Contract Year ***, inclusive, the Molten Metal Discount for the preceding Contract Year multiplied by a factor equal to *** of the preceding Contract Year’s US PPI increase (or decrease); and (ii) for any Contract Year after Contract Year ***, such amount as may be agreed by the Purchaser and the Supplier as a result of good faith negotiations in connection with any extension of the Term pursuant to Section 5.2. For the purposes hereof, the Molten Metal Discount for the year preceding Contract Year *** shall be deemed to be $*** per Tonne.
		“ Novelis ” means Novelis Inc. and its successors and permitted assigns.
		“ Novelis Group ” means Novelis and its Affiliates from time to time.

		“ Ordinary Course of Business ” means any action taken by a Person that is in the ordinary course of the normal, day-to-day operations of such Person and is consistent with the past practices of such Person.
		“ Original Agreement ” has the meaning set out in the Preamble to this Agreement.
		“ Party ” means each of the Purchaser and the Supplier as a party to this Agreement and “ Parties ” means both of them.
		“ Person ” means any individual, Business Concern or Governmental Authority.
		“ Purchaser ” has the meaning set forth in the Preamble to this Agreement.
		“ Representatives ” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants or attorneys.
		“ Saguenay Smelter ” means those aluminum smelters of the Supplier identified in Schedule 2.
		“ Saguenay Works ” means the Purchaser’s light gauge rolled products facility at Jonquière, Quebec, Canada.
		“ Sales Tax ” means any sales, use, consumption, goods and services, value added or similar tax, duty or charge imposed by a Governmental Authority pursuant to Applicable Law.
		“ Separation Agreement ” means the Separation Agreement dated December 31, 2004 between the Parties, as amended, restated or modified from time to time.
		“ Specifications ” means such specifications for Molten Metal as may be proposed from time to time in accordance with Section 2.7.
		“ Subsidiary ” of any Person means any corporation, partnership, limited liability entity, joint venture or other organization, whether incorporated or unincorporated, of which a majority of the total voting power of capital stock or other interests entitled (without the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof, is at the time owned or controlled, directly or indirectly, by such Person.
		“ Supplier ” has the meaning set forth in the Preamble to this Agreement.
		“ Term ” has the meaning set forth in Section 5.1.
		“ Terminating Party ” has the meaning set forth in Section 6.

		“ Third Party ” means a Person that is not a Party to this Agreement, other than a member or an Affiliate of Alcan Group or a member or an Affiliate of Novelis Group.
		“ Tonne ” means 1,000 kilograms.
		“ US PPI ” means the Producer Price Index for industrial commodities (Series Id: WPUSOP2000), as published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor.
1.2		Currency All references to currency herein are to Dollars unless otherwise specified.
1.3		Vienna Convention
		The Parties agree that the terms of the United Nations Convention (Vienna Convention) on Contracts for the International Sale of Goods (1980) shall not apply to this Agreement or the obligations of the Parties hereunder.
2.		MOLTEN METAL
2.1		Supply and Sale by the Supplier

	(a)		Subject to the terms and conditions of this Agreement, beginning on the date hereof and continuing throughout the Term of this Agreement, the Supplier shall supply and sell to the Purchaser “CPT the Delivery Site” the quantities of Molten Metal determined in accordance with this Agreement.
	(b)		The Supplier shall supply Molten Metal produced by the Supplier from a Saguenay Smelter of the Supplier’s choosing or from such other sources and locations as may be agreed.

2.2		Purchase by the Purchaser
		Subject to the terms and conditions of this Agreement, beginning on the date hereof and continuing throughout the Term of this Agreement, the Purchaser shall purchase and take delivery from the Supplier “CPT the Delivery Site” the quantities of Molten Metal determined in accordance with this Agreement.

2.3

Quantities of Molten Metal Required by the Purchaser

(a)

The Purchaser agrees to purchase and the Supplier agrees to supply, in each Contract Year, Contract Tonnage of no more than the Base Contract Tonnage applicable for such Contract Year and no less than eighty percent (80%) of the Base Contract Tonnage applicable for such Contract Year as specified by the

			Purchaser pursuant to Section 2.3(c) below. The purchase and supply, as applicable, by the Parties, of any greater quantity shall be subject to further agreement of the Parties, at each Party’s discretion.
	(b)		The Parties shall use Commercially Reasonable Efforts to arrange for shipping and delivery schedules to be approximately evenly spread on a daily and weekly basis throughout each Contract Year.
	(c)		On or before October 31 in each Contract Year, the Purchaser shall submit to the Supplier a notice setting forth the annual quantity of Molten Metal required for the next succeeding Contract Year (the “ Contract Tonnage ” for such Contract Year), which shall be no less than 80% of the Base Contract Tonnage applicable to the next succeeding Contract Year, and no more than the Base Contract Tonnage for such Contract Year, and an estimated shipping schedule and quantities of Molten Metal to be purchased in each week of such Contract Year; in establishing such shipping schedule, the Purchaser shall endeavour to divide the Contract Tonnage as evenly as possible for delivery throughout each day and each week in the Contract Year. The Contract Tonnage for Contract Year 1, and the estimated shipping schedule and quantities of Molten Metal to be delivered in each week during Contract Year 1, are set out in Schedule 1 hereto.

2.4

Other Terms Affecting Quantity

	(a)		Throughout the Term of this Agreement, the Purchaser shall be entitled to request reductions in the amount of Molten Metal to be delivered in any week by the Supplier hereunder by notice to the Supplier, and the Supplier shall adjust its shipments so as to provide such reduced amount in such week, provided such reduction is made in connection with either (i) a planned maintenance shutdown of the Purchaser’s facilities at Saguenay Works or (ii) a statutory holiday falling in such week, and the Parties have agreed on the timing for any such maintenance shut down or variation in quantity. The Parties shall use their Commercially Reasonable Efforts to reach agreement under this Section 2.4(a) with a view to avoiding production disruptions or inventory buildup. Any reduction of weekly supply pursuant to this Section 2.4(a) shall not affect the obligations of the Purchaser and the Supplier under Section 2.3(a).
	(b)		The quantity of Molten Metal which the Purchaser agrees to purchase and the Supplier agrees to supply hereunder shall be subject to reduction in the event the Supplier provides notice to the Purchaser that one or more of the Saguenay Smelters owned by the Supplier has been temporarily or permanently shut down by the Supplier, provided such shut down has occurred as a result of a good faith decision by the Supplier that the continued operation of such Saguenay Smelter would be uneconomic or otherwise unviable for the Supplier or non value-maximizing for the Supplier. The reduction shall be for such

			quantity as may be agreed by the Parties and, failing agreement, shall be for such quantity as is equal to the Contract Tonnage multiplied by the annual reduction capacity of the Saguenay Smelters (or Smelter) that has (or have) been shut down, and divided by the total annual production capacity of all Saguenay Smelters before giving effect to the shut down. Supplier shall provide not less than 18 months prior notice to Purchaser before invoking this provision.
	(c)		Subject to the Parties’ obligations to purchase and supply, as applicable, the Contract Tonnage in each Contract Year on the terms of this Section 2, the Parties shall consult at least once a week in order to agree on the quantities of Molten Metal to be supplied on a daily basis. The Supplier will use Commercially Reasonable Efforts to allocate Molten Metal produced by the Supplier on a fair basis between the Purchaser and facilities of the Supplier or its Affiliates that require Molten Metal.

2.5

Supplier’s Shipping Obligations

	(a)		The Supplier shall supply to the Purchaser, in accordance with the terms hereof, in each week, such quantity of Molten Metal as is identified by the Purchaser in respect of such week in a notice pursuant to Section 2.3(c) hereof, subject to any reduction in accordance with Section 2.4.
	(b)		Notwithstanding the provisions of Incoterms 2000 and Section 2.10, the Supplier acknowledges its responsibility to make all necessary arrangements for the transportation of Molten Metal to the Delivery Site on behalf of the Purchaser. The Supplier shall act as the disclosed agent of the Purchaser in entering into contracts for hiring carriers for the shipment of Molten Metal under this Agreement. In doing this, the Supplier shall use Commercially Reasonable Efforts to obtain the most competitive freight rates and shall obtain approval from the Purchaser before entering into any long term contracts for hiring carriers on behalf of the Purchaser. The Supplier shall use Commercially Reasonable Efforts to ensure that such transportation is suitable for delivering Molten Metal to the Delivery Site.

2.6

Price

	(a)		The price payable by the Purchaser to the Supplier for each Tonne of Molten Metal sold and purchased pursuant to Sections 2.1 and 2.2 shall be the Contract Price. The date used for calculating the Contract Price for any shipment of Molten Metal shall be the Bill of Lading Date.
	(b)		In the event that  Platt’s Metal Week ceases to be published or ceases to publish the relevant reference price for determining the Midwest Price, the Parties shall meet with a view to agreeing on an alternative publication or, as applicable, an alternative reference price. If the Parties fail to reach an agreement within

sixty (60) days of any Party having notified the other to enter into discussions to agree to an alternative publication or reference price, then the Chairman of the LME in London, England or his nominee shall be requested to select a suitable reference in lieu thereof and an appropriate amendment to the terms of this Section 2.6. The decision of the Chairman or his nominee shall be final and binding on the Parties.

2.7

Quality

	(a)		Molten Metal supplied under this Agreement shall comply with the definition of “Molten Metal” set forth in Section 1.1. The Supplier shall use Commercially Reasonable Efforts to notify the Purchaser prior to shipment of any Molten Metal that does not meet this description. The Purchaser shall not be required to accept delivery of any Molten Metal that does not meet this description. If the Purchaser does not accept delivery of Molten Metal not meeting this description, the Supplier’s obligation shall be limited to the assumption of all costs for return of such Molten Metal to the Supplier, and for the delivery of replacement Molten Metal to the Purchaser. All other express or implied warranties, conditions and other terms relating to Molten Metal hereunder, including warranties relating to merchantability or fitness for a particular purpose, are hereby excluded to the fullest extent permitted by Applicable Law.
	(b)		The Purchaser may from time to time propose that Molten Metal to be supplied hereunder comply with additional specifications. The Supplier shall use Commercially Reasonable Efforts to agree to such proposed modifications or additions.

2.8

Payment

	(a)		The Purchaser shall pay the Supplier in full, in accordance with Supplier’s commercial invoice, for each shipment of Molten Metal meeting the Specifications for P1020 aluminum metal or otherwise accepted by Purchaser. Payment shall be made on the first (1 st ) day and fourteenth (14 th ) day of each month during the Term(each a “Payment Date”), or if such day is not a Business Day, then on the immediately following Business Day. Payment shall be made on each Payment Date in respect of all invoices issued more than 30 days prior to such payment date and not previously paid, with invoices issued after such date being payable on the next following Payment Date.
	(b)		If the Purchaser believes that a shipment of Molten Metal does not meet the description of Molten Metal as defined in this Agreement and has rejected such shipment in a timely manner in accordance with the terms hereof, it need not pay the invoice. However, if the Purchaser subsequently accepts that the Molten Metal complies with the requirements of this Agreement, the Purchaser

			shall pay the invoice and, if payment is overdue pursuant to Section 2.8(a) above, interest in accordance with Section 2.8(c).
	(c)		If any payment required to be made pursuant to Section 2.8(a) above is overdue, the full amount shall bear interest at a rate per annum equal to the Default Interest Rate calculated on the actual number of days elapsed, accrued from and excluding the date on which such payment wa