MONTREAL (CP) -- Six months after it was spurned at the altar, American aluminium giant Alcoa Inc. [NYSE:AA] has once again crossed paths with Alcan, possibly to take another run at the assets of its longtime rival, analysts said Friday.
The world's third-largest aluminium company is helping Aluminum Corp. of China (Chinalco) [NYSE:ACH] to become the largest shareholder of Rio Tinto, Alcan's new owner, after spending US$14.06 billion to buy 12% of the British-based Rio Tinto PLC [NYSE:RTP; LSE:RIO]. As a result, Alcoa-Chinalco also own 9% of the Australian-traded company Rio Tinto Ltd.
Alcoa loaned the Chinese firm US$1.2 billion, which is eventually convertible into equity of Shining Prospect Pte, a Singapore company set up specially to invest in Rio Tinto.
Alcoa and Chinalco insisted their move was purely an investment and they had no ''current'' plans to bid for the world's largest mining company.
But Charles Bradley of Soleil-Bradford Research doesn't buy it.
''I just wonder if there isn't something else involved, like are they going to try to squeeze Rio Tinto to try to get Alcan,'' Bradley said in an interview from New York City.
The involvement of the American and Chinese aluminium companies may complicate or threaten BHP Billiton's efforts to purchase Rio Tinto or force it to raise its offer. BHP has until Feb. 6 to make a firm offer or walk away.
Alcoa and Chinalco said they reserved the right to do so if another party entered a firm bid.
An ultimate change in owner would likely have little or no impact on Alcan's Canadian assets, analysts said.
''Usually you don't buy something in order to do something to it unless it's doing badly,'' said Bradford. ''I don't know if there's anything you would want to do to Alcan. Alcan had been pretty well cleaned up before this whole thing got started.''
Any owner of Alcan's Canadian assets will have to honour agreements made to the Quebec and federal governments, added Victor Lazarovici, who recently retired as an analyst for BMO Capital Markets.
Alcoa's small stake in the purchase suggests it's not the leading force in this strategic alliance, said another analyst, who didn't want to be named.
''They're along for the ride,'' he said. ''All they're hoping is that some assets will fall from this that they can afford to buy, that's it.''
One of the ways targets buy back large blocks of its stock is to trade them for assets. Consequently, Rio Tinto may seek to repurchase Chinalco's stake using cash and some of its aluminium assets.
But Lazarovici said it's too early to assess Alcoa's intentions.
''What they've done is planted themselves at the table and bought themselves a stake and then they'll see what opportunities develop,'' he said in an interview.
Severe anti-trust issues would be raised if Alcoa merged with Alcan and Rio Tinto's Comalco aluminium assets, Lazarovici added.
With few options to purchase a smaller aluminium player, Alcoa may simply be partnering with a larger company that it has worked with before to help consolidate the ever changing mining and metals industry. In September 2007, Alcoa sold its stake in Chinalco's Chalco unit for US$2 billion, for which it paid US$200,000 during Chalco's 2001 initial public offering.
''There is a lot strategizing going on in the industry and people are trying to figure out how to position themselves for best advantage given the rapid consolidation we have seen, which a lot of people expect to continue,'' he said.
Having Alcoa on its side may also make the China's ownership stake more palatable to western countries, than if it had gone it alone, Lazarovici added.
There has been widespread speculation that China was looking for a way to block the merger of BHP and Rio Tinto, which it feared would allow the behemoth to control prices of key commodities by restricting supply.
Alcoa declined to refer specifically to Alcan, saying the aluminium division headquartered in Montreal is now part of Rio Tinto.
''We have long believed that Rio Tinto has a world-class portfolio of assets and is very well positioned to prosper in the current mining cycle,'' Alcoa spokesman Kevin Lowery said in an interview from London.
''We think that this investment, made in partnership with Chinalco allows us to mutually benefit from the developments in the sector.''
Last November, Rio Tinto completed its US$38.1-billion purchase of Alcan after Alcoa withdrew its $28-billion offer for its Canadian rival.
The value of Alcan may be lower now because of the impact of a surging Canadian dollar and lower aluminium prices. These factors may prompt Rio Tinto to be more willing to sell the assets, said Bradford.
Rio Tinto officials declined to comment. In a news release, company chairman Paul Skinner said the ''unsolicited development, of which we had no prior notice, reinforces our view of the long term value of Rio Tinto.''
(c) The Canadian Press 2007