• Due diligence to determine the benefits for shareholders from the creation of two separate ASX listed companies: Sugar; and Building Products, Property & Aluminium

• Demerger of Sugar to create a focused, market leading Sugar and Renewable Energy business with attractive growth options in sugar, renewable electricity and liquid fuel

• CSR to retain market leading Building Products, Aluminium and Property businesses

CSR Limited (“CSR”) announced today that it is proceeding with final evaluation and due diligence to confirm the benefits of undertaking a demerger to create two separate listings of its businesses on the Australian Securities Exchange.

A demerger would create two separately listed entities:

• a substantial Sugar and Renewable Energy business; and

• a leading Australasian Building Products business and Property division which will also hold a significant investment in a globally competitive Aluminium business.

CSR’s Chairman Dr Ian Blackburne, said: “today’s announcement is an important step in the evolution of CSR’s strategy and underlines the Board’s resolve to maximiseshareholder value from CSR’s mix of businesses.

“The proposed demerger recognises the fundamentally different strategic and operational characteristics of CSR’s businesses and is expected to facilitate better recognition of their value over time by creating two ASX-listed companies,” he said.

CSR’s Managing Director, Mr Jerry Maycock, said: “CSR has for some time been actively reviewing its portfolio structure and preparing for the possible separation of the Sugar and Renewable Energy business from Building Products, Property and Aluminium.

“This has included the creation of more independent management within each business and adding directors to the CSR Board with skills relevant to a standalone Sugar business. However, very difficult market conditions, particularly with the onset of the global financial crisis last year, delayed any decision to proceed with the demerger proposal at that time.

“Improving market conditions, combined with the stronger performance and outlook for the Sugar business, mean it is now an appropriate time to move forward with this proposal and address any issues associated with a demerger through formal due diligence,” he said.

A demerger would provide CSR shareholders with greater investment portfolio choice.

The Sugar and Renewable Energy business is the clear market leader in raw sugar milling in Australia. It also has leading positions in sugar refining, ethanol production and cogeneration of renewable energy, with a growing proportion of stable earnings from these businesses. In raw sugar milling, CSR’s Sugar business is strategically located relative to the high growth Asian markets, maintains a globally cost competitive position compared to Brazil, the world’s largest sugar producer, and is also well positioned to meet growing demand for renewable energy and fuel through its ethanol and cogeneration capacity.

Through its refining joint ventures, Sugar Australia and New Zealand Sugar, the business has strong brand positions and an excellent reputation for customer value and innovative products in both the food and beverage and retail sectors.

CSR’s Building Products business enjoys a portfolio of Australia’s leading brands in the residential and commercial building sectors, with a particular focus on energy efficient building products.

This business would hold the investment in Gove Aluminium Finance, which is a joint venture participant in the Tomago aluminium smelter, one of the world’s lower cost and more efficient smelters, as well as retaining responsibility for CSR’s contingent product liabilities.