Strong aluminium outlook underpins Alcan deal: Rio Tinto

Rio Tinto Chief Executive Tom Albanese said a strong outlook for demand for aluminium, especially from China, underpins Rio Tinto's offer for Canada's Alcan Inc. (AL). Speaking at a news conference after Rio Tinto Thursday unveiled a US$38.1 billion recommended offer for Alcan, Albanese said global aluminium demand is forecast to grow more than 6% a year through 2011, with demand from China expected to grow 15%. "The three key metals that you can associate with the growth of China ... are steel, copper and aluminium," he said. "We already have very strong, very leading positions in steel. Our interest in iron ore, and copper and this rounds that out neatly." Rio Tinto's Chief Financial Officer Guy Elliot said the miner's all-cash offer would see the company take on debt, but he said Rio Tinto was committed to its single A rating and would work to de-leverage its balance sheet once the deal was complete, starting with the sale of Alcan's packaging business. Asked why the miner had pitched its US$101 offer at such a premium to the rival offer from Alcoa Inc. (AA), Elliott said there had been an auction process for Alcan with several "white knights" involved. Alcoa had made a US$76.03 a share hostile bid for Alcan. Elliott said one of the attractions of the Rio Tinto bid versus that of Alcoa was that its offer would face less anti-trust issues.