BHP silent on Alcoa

BHP Billiton Ltd has declined to comment on speculation it is preparing a bid for aluminium producer Alcoa Inc of the U.S., after Alcoa's failed offer for Canadian rival Alcan Inc. Shares in the world's biggest miner fell 20 cents to $38.96 in early trading. Reports in London over the weekend suggested BHP Billiton was mulling a STG20 million ($A46.85 million) takeover for Alcoa. Such a bid would surpass the value of Rio Tinto Ltd's $US38 billion ($A43.73 billion) offer for Alcan launched last week. BHP Billiton said today it does not comment on market speculation and rumour. Rio Tinto's grab for Alcan, which will make it the world's biggest producer of aluminium and fourth biggest of alumina, left Alcoa in a precarious position. Alcoa had made its own tilt at Alcan, before Alcan recommended the Rio Tinto bid. Consolidation is still expected to ramp up in the aluminium sector amid a buoyant outlook for Chinese appetite for the lightweight metal. Alcoa's failed bid has also put a spotlight on Alumina, its 40 per cent joint-venture partner in Alcoa World Alumina and Chemicals (AWAC). "There's a few things Alcoa can do, including buying Alumina, or Alcoa could get out taken out by someone else, BHP or someone else, but all those scenarios bode well for Alumina," ABN Amro analyst Rob Clifford said. Mr Clifford said that in theory, an offer by BHP Billiton for Alcoa would be a good move. "The strategy would be good - it would make them the dominant player in alumina and allow them to be more proactive in terms of the price setting of that commodity," he said. "I think absolutely that would be strategically a very good move, but the strategy Rio had in taking over Alcan was also very sound, but it all comes down to price." Aluminium is the most widely produced and consumed non-ferrous metal in the world. Its use is dominated by the transport and packaging sectors, but it may also have a strong future in aerospace. Alumina is another name aluminium oxide. Over the past four years, demand for aluminium has been around 7.7 per cent, double that of copper. Rio Tinto is forecasting growth of six per cent a year until 2011, underpinned by demand growth of 15 per cent a year in China. But while BHP Billiton's share price has shown some weakness in morning trade, but Mr Clifford said it is not related to a potential move on Alcoa. "The global (resources) markets on Friday were off ... so they were generally softer across the board, and we're seeing some of that softness come through now," he said.