SC TO-T/A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE TO
(Rule 14d-100)

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)

Alcan Inc.
(Name of Subject Company (Issuer))

Rio Tinto Canada Holding Inc.
an indirect wholly-owned subsidiary of Rio Tinto plc
and
Rio Tinto plc
(Names of Filing Persons (Offeror))

Common Shares
(Title of Class of Securities)

(013716105)
(CUSIP Number of Class of Securities)

Anette V Lawless
Rio Tinto plc
6 St James's Square
London SW1Y 4LD
United Kingdom
Tel: 011 44 20 7930 2399
with a copy to
Thomas B. Shropshire, Jr.
Linklaters LLP
One Silk Street
London EC2Y 8HQ
United Kingdom
Tel: 011 44 20 7456 2000

(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)

CALCULATION OF FILING FEE:

Transaction Valuation(1)	Amount of Filing Fee(1)(2)
$19,065,207,127	$585,302

(1)

For purposes of calculating the filing fee pursuant to Rule 0-11(d) only, the transaction value of the Alcan Common Shares to be received by Rio Tinto, assuming acceptance of the Offer by holders in the United States, is calculated as follows: 188,764,427 Alcan Common Shares in the United States, representing 50% of the entire issued share capital, multiplied by $101, the cash consideration being offered per Alcan Common Share, which yields $19,065,207,127, multiplied by 0.0000307, which yields $585,302. Each of the capitalized terms used is defined below.

(2)

Sent via wire transfer to the SEC on July 24, 2007.

o

Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid	Filing Party:
Form or Registration No.:	Date Field:

o

Check the box if the filing relates solely to preliminary communications made before commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

ý

third-party tender offer subject to Rule 14d-1.

o

issue tender offer subject to Rule 13e-4.

o

going-private transaction subject to Rule 13e-3.

o

amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

        This Amendment No. 1 (this "Amendment No. 1") amends and supplements the Tender Offer Statement on Schedule TO originally filed on July 24, 2007 (the "Schedule TO"), by Rio Tinto plc, a public limited company organized under the laws of England and Wales ("Rio Tinto"), and by Rio Tinto Canada Holding Inc. (referred to herein as the "Offeror"), a corporation incorporated under the laws of Canada, and an indirect wholly-owned subsidiary of Rio Tinto, relating to the offer (the "Offer") by the Offeror to purchase, upon the terms and subject to the conditions set forth in the take-over bid circular, dated July 24, 2007, as amended (the "Circular"), and the related Letter of Transmittal, Notice of Guaranteed Delivery and other documents disseminated therewith, each issued and outstanding common share of Alcan Inc., a corporation incorporated under the laws of Canada ("Alcan"), together with the associated rights (the "Alcan Rights" and, together with the common shares of Alcan, the "Alcan Common Shares") issued and outstanding under Alcan's Shareholder Rights Agreement, made as of December 14, 1989, amended on February 8, 1990 and March 5, 1990, approved by shareholders on April 26, 1990, amended and restated on March 2, 1995 and April 24, 1995, reconfirmed by shareholders on April 27, 1995, amended and restated on April 22, 1999, reconfirmed by shareholders on April 22, 2002 and amended on April 28, 2005, between Alcan and CIBC Mellon Trust Company, as rights agent for U.S.$101 (equivalent to Cdn$ 105.44 based on the July 20, 2007 Bank of Canada Noon Rate) per Alcan Common Share in cash (less any applicable withholding taxes and without interest).

        On July 12, 2007, Guy Elliott, Finance Director of Rio Tinto, gave interviews relating to the Offer to Bloomberg UK, CNBC Europe and CNN International. The transcripts of these interviews have been filed as Exhibits (a)(5)(C), (a)(5)(D) and (a)(5)(E) hereto and are incorporated herein by this reference.

ITEM 12. EXHIBITS

(a)(1)(A)°	Circular, dated July 24, 2007.
(a)(1)(B)°	Form of Letter of Transmittal.
(a)(1)(C)°	Form of Notice of Guaranteed Delivery.
(a)(1)(D)°	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)°	Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(A)°	Summary Advertisement in The Wall Street Journal, dated July 24, 2007.
(a)(5)(B)°	Press release announcing commencement of the Offer, dated July 24, 2007.
(a)(5)(C)	Transcript of interview with Bloomberg UK, dated July 12, 2007.
(a)(5)(D)	Transcript of interview with CNBC Europe, dated July 12, 2007.
(a)(5)(E)	Transcript of interview with CNN International, dated July 12, 2007.
(b)(1)°	Facility Agreement, dated July 12, 2007, among Rio Tinto, Credit Suisse, Deutsche Bank AG, London Branch, The Royal Bank of Scotland plc, and Societe Generale.
(d)(1)°	Support Agreement, dated July 12, 2007, among Alcan, the Offeror and Rio Tinto.
(d)(2)°	English language translation of undertakings and confirmations made by Rio Tinto and Offeror to the Government of Quebec and Alcan, dated July 11, 2007.
(d)(3)°	Confidentiality Agreement, dated April 11, 2007 between Alcan and Rio Tinto.
(d)(4)°	Amendment to Confidentiality Agreement, dated June 25, 2007.
(d)(5)°	Standstill Agreement, dated June 13, 2007, between Alcan and Rio Tinto.
(d)(6)°	Amendment to Support Agreement, dated July 20, 2007, among Alcan, the Offeror and Rio Tinto.
(g)°	None.
(h)°	None.

°

Previously filed with the SEC.

SIGNATURE

        After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date:  July 27, 2007	RIO TINTO PLC
	By:	/s/  GUY ELLIOTT
	Name: Title:	Guy Elliott Finance Director
	RIO TINTO CANADA HOLDING INC.
	By:	/s/  IAN RATNAGE
	Name: Title:	Ian Ratnage Director

EXHIBIT INDEX

(a)(1)(A)°	Circular, dated July 24, 2007.
(a)(1)(B)°	Form of Letter of Transmittal.
(a)(1)(C)°	Form of Notice of Guaranteed Delivery.
(a)(1)(D)°	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)°	Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(A)°	Summary Advertisement in The Wall Street Journal, dated July 24, 2007.
(a)(5)(B)°	Press release announcing commencement of the Offer, dated July 24, 2007.
(a)(5)(C)	Transcript of interview with Bloomberg UK, dated July 12, 2007.
(a)(5)(D)	Transcript of interview with CNBC Europe, dated July 12, 2007.
(a)(5)(E)	Transcript of interview with CNN International, dated July 12, 2007.
(b)(1)°	Facility Agreement, dated July 12, 2007, among Rio Tinto, Credit Suisse, Deutsche Bank AG, London Branch, The Royal Bank of Scotland plc, and Societe Generale.
(d)(1)°	Support Agreement, dated July 12, 2007, among Alcan, the Offeror and Rio Tinto.
(d)(2)°	English language translation of undertakings and confirmations made by Rio Tinto and Offeror to the Government of Quebec and Alcan, dated July 11, 2007.
(d)(3)°	Confidentiality Agreement, dated April 11, 2007 between Alcan and Rio Tinto.
(d)(4)°	Amendment to Confidentiality Agreement, dated June 25, 2007.
(d)(5)°	Standstill Agreement, dated June 13, 2007, between Alcan and Rio Tinto.
(d)(6)°	Amendment to Support Agreement, dated July 20, 2007, among Alcan, the Offeror and Rio Tinto.
(g)°	None.
(h)°	None.

°

Previously filed with the SEC.

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ITEM 12. EXHIBITS
SIGNATURE
EXHIBIT INDEX

EX-99.(A)(5)(C)

Exhibit 99.(a)(5)(C)

Name:	Guy Elliott
Position:	Finance Director
Company:	Rio Tinto
Date:	12/07/2007
Time:	09:05 BST
Channel:	Bloomberg UK
Duration:	8 mins 55 secs

Interview with Guy Elliott

Nigel Stevenson

Let’s get back to our top story this morning. The largest acquisition ever in the mining industry has been announced this morning, Rio Tinto agreeing to buy the aluminium producer Alcan for $38.1bn, trumping a hostile bid from Alcoa. Francine’s got the latest details for us. Francine?

Francine Lacqua

Thank you very much, Nigel. In terms of how big this deal is, it’s close to what Mittal actually paid for Arcelor a year ago. Of course, these were steel-makers; these are mining stocks, and so it is the biggest in the mining industry. A quick check on some of the stocks, first of all: Rio Tinto, you can see there; we saw a reversal on the share price, down by 1.7%. It was earlier gaining as much as 1%. Rio Tinto is currently the world’s third largest mining company, but it is soon to become the second biggest. That’s after the acquisition of Alcan will be completed in the fourth quarter. Rio Tinto agreed to fork out $38.1bn to buy the aluminium producer Alcan in a deal which trumps Alcoa’s hostile bid. The offer is 33% higher than Alcoa’s bid of $76 a share. The new company will be called Rio Tinto Alcan, and will be chaired by Alcan’s CEO, Dick Evans. Nigel?

Nigel Stevenson

Okay; Francine, stay there. Thanks very much indeed for that; Francine’s going to stay with us. Is Rio Tinto overpaying for Alcan? Let’s put the question to the man in charge of the cash flow. Guy Elliott is the Finance Director of Rio Tinto, and he’s joining us live. Mr Elliott, good morning to you. Thank you very much indeed for joining us today. That’s the obvious question, first of all: quite a price you’re paying. Are you overpaying?

Guy Elliott

Good morning, first of all. No, I don’t believe we are. I think we’re offering a price which has got a very good chance of winning this business. The important thing is the quality of what we’re buying. This is a terrific combination which will create a world leader in aluminium. It will be based on low-cost hydro power, which has a life for us of decades. It will give us a much larger presence in the aluminium business which is growing at a much faster rate than most commodities, on the back of very strong Chinese demand of roughly 15% a year. We think that paying this price is a fair price, one which will strongly compete against the offer of Alcoa and others. We think it’s going to position us extremely well for an exciting future.

Nigel Stevenson

I noted you have a break-up fee in excess of $1bn. Does that suggest that A: you’ve paid what you think is a sufficient premium, and B: that you are expecting other competition?

Guy Elliott

Break fees are pretty normal and standard practice.

Nigel Stevenson

Not of this size, if you’ll excuse me.

Guy Elliott

Well, the percentage is 2.75% of the offer, and of course it’s intended to deter others. The important thing is that this offer has been recommended by the board, and it’s an all-cash offer. The other offer that’s in the public at the moment, of course, is not an all-cash offer. It’s partly shares and partly cash. In addition to that, it has some significant anti-trust challenges

lying ahead, whereas I think the anti-trust challenges for us are much lesser. What we can say, therefore, is that ours is an all-cash offer with a higher level of certainty. I think that’s very important to the shareholders of Alcan.

Francine Lacqua

Guy Elliott, I’m Francine - a colleague of Nigel. In terms of what you’ve said about Alcan, it is an attractive company, but how badly do you want it? Alcoa might be reviewing a higher offer. How confident are you that you’ll be able to take it away?

Guy Elliott

Look, this is not simply a cash matter, either. It’s not simply a matter of anti-trust; it’s also a matter of what we plan to do together. We’ve got some terrific growth plans together. We’ve also made a very particular point of going to see, today, the governments of Quebec, of Canada. We’re also visiting other relevant governments here. We think it’s a very important part of this, to differentiate ourselves, if we can, in political terms. We have, of course, a very big business already in Canada, and an even bigger one in Australia, which was another –

Francine Lacqua

Would you say today that the Quebec government is supportive of your intentions?

Guy Elliott

Well, there is a thing called the continuity agreement which exists between Alcan and the government of Quebec. The board of Alcan has, under that agreement, certain rights to recommend a bidder, which is what it’s done in this case. It’s recommending to the government of Quebec, as well as to its shareholders, that we are the right bidder for these assets.

Francine Lacqua

If you do have to put more money on the table, are you ready to do it?

Guy Elliott

Look, this is a very good offer as it is. I think that the important thing is to focus on talking to our shareholders about this offer and talking to Alcan’s shareholders about this offer. It’s a compelling offer, as you said earlier; it’s at a strong premium; it’s an all-cash offer; and it is intended to be the winning offer.

Francine Lacqua

Alcan’s share has been rising. Why did you wait so long to make this offer?

Guy Elliott

Look, this was an auction. The auction was partly being conducted in public, in the sense that the Alcoa offer already existed; but, as Alcan announced a day or two ago, there are other, or there have been other, interested parties. We were able to present a package to the Alcan board which not only contained a price, but also contained other elements which were of political importance, which were of social importance, which were also of importance to the province of Quebec and to other constituencies. We think we’re in with a very good chance there.

Nigel Stevenson

You mentioned that you don’t think your credit rating will be affected by this. How key is that in your deliberations?

Guy Elliott

That’s not what we’ve said. We have said, though, that we do intend to maintain a rating in the single-A category. At the moment, that is where we stand; but of course we could move within that single-A. It is very important to us to have a balance sheet which, over the long run, is in respectable condition. At the moment, I would say that it is probably a little too strong. On the other hand, when we complete this acquisition, it will be stretched a little bit. It’s for that reason that we’ve also announced, at the same time as this transaction, the intention to sell the packaging business of Alcan, and also to review the entire combined

business of Rio Tinto and Alcan to see whether there are other business which, because the company as a whole is now much bigger, do look a bit non-core, or under scale, for the combined business. Probably we’ll be selling some other businesses into the bargain.

Nigel Stevenson

Tell us more about the structure of the company; I’m a little unclear. Are you creating a new unit called Rio Alcan that will be basically a part of Rio with Dick Evans as its head, or something else? It seems to me that Dick Evans basically stays in place doing what he’s doing, and it’s now part of Rio Tinto. Have I got that right?

Guy Elliott

He will be, if this transaction succeeds as we expect, another of our product groups. A very important one. He will, like our copper product group, our iron ore product group, our diamonds and minerals product group and our energy product group, he will be one of those product groups - a very significant one. He will move, and the whole aluminium business will move, into that category. Dick will continue to run Alcan, which will by then be a bigger company because it will include the present Rio Tinto aluminium business, so that the combined Rio Tinto Alcan business will be larger, of course. It will then be folded into the overall Rio Tinto business. I think that it will compliment the other businesses that we have and strengthen what is currently a rather sub-size regional aluminium business and make it a global leader.

Nigel Stevenson

Speaking of which, then, what are your bets, because aluminium has underperformed some of the other metals out there. Are you taking a bit of a bet that it’s going to recover somewhat, with Chinese and Indian demand performing better? You’ve got the bauxite; they’ve got the smelting side of things and the production of various types of aluminium. Is that the key? Is that a bet that you’re taking?

Guy Elliott

I think you’re quite right to focus on China and, to a degree in future, India. These are countries where we’re seeing tremendous investment going on into infrastructure, and we foresee very high levels of growth going forward. No doubt from time to time they will be interrupted by some kind of speed bump, but we still foresee very, very fast rates of growth. We think that India will follow in that path and we, as you say, have very advantaged hydro-based supply which will be very competitive.

Nigel Stevenson

Okay. We must go to a break. Guy Elliott, thank you very much indeed for that.

Guy Elliott

Thank you.

Nigel Stevenson

That is the Finance Director there of Rio Tinto.

Important Disclaimer

Although strenuous efforts are made to ensure the accuracy of interview transcripts, Executive Interviews and its associated companies accept no liability for what is said, for any discrepancy between the spoken and written word, or for any errors and omissions. Where doubt arises, please refer to the original broadcast video interview.

EX-99.(A)(5)(D)

Exhibit 99.(a)(5)(D)

Name:	Guy Elliott
Position:	Finance Director
Company:	Rio Tinto
Date:	12/07/2007
Time:	10:18 CET
Channel:	CNBC Europe
Duration:	7mins 25secs

Interview with Guy Elliott

Ross Westgate

Back to one of our lead stories; Martin was talking about it: Rio Tinto agreeing to buy, or it’s got an agreement to buy Canada’s Alcan for $38bn. Joining us to go through that is Guy Elliott, the Finance Director at Rio. Guy, good to see you. Thanks for joining us. Tell me: I mean, you’ve blown Alcoa away with this bid. You’re paying so much more. Why is it worth the money?

Guy Elliott

This is a very high quality company, absolutely in keeping with Rio Tinto’s strategy, which is to focus on high-quality assets with long lives ahead of them and obtaining value for our shareholders. I’m quite convinced that this offer is going to win that prize and do all of those things.

Michelle Caruso-Cabrera

Hi, Guy. It’s Michelle here in the United States. You’re going to be financing this through debt in part, right? Single-A rated company: are you going to be able to maintain that credit rating as a result?

Guy Elliott

You’re quite right; this is entirely financed with debt. Remember that our balance sheet at the moment is very strong indeed. It’s strong because the conditions of our markets and the quality of our existing assets is very high. We’re generating about $1bn a month at the moment, but yes, you’re right. We’re going to add quite a bit of debt and it will push our gearing up to just short of 60%. Because of the quality of the existing cash flows we have, plus the cash flows of Alcan which we’ll be buying, we expect that debt to come down pretty sharply. At the same time as making this announcement, we’ve also announced that we’re going to sell the Alcan packaging business, so that will bring in some more cash. In addition to that, we’re going to carry out a review of the whole combined Rio Tinto and Alcan businesses to see whether there are assets there which are sub-scale in light of the enlarged business, either sub-scale or non-core. We’ll be able to realize some more through those sorts of asset sales, so we I think will be able to bring down our gearing in a pretty smart way. For that reason, we think that we will be able to retain our single-A rating.

Michelle Caruso-Cabrera

Are you prepared to go even higher here if somebody else steps in? Are you prepared to leverage even more, and do you expect somebody else to step in?

Guy Elliott

Look, we have put in a very strong offer here at a high premium compared to the existing Alcoa offer. There has been an auction carried out in private here amongst the white knights. I don’t know exactly how that’s been done, but it is clear to me that we put in the offer which was the one that the Alcan board is prepared to recommend. It’s more than just simply being a cash offer at this price, which is a compelling price. It’s also the whole offering that we’re making, the whole package of other things that we’re offering to the government of Quebec, and the approach that we’re making to governments elsewhere in the world. We think that we are going to be welcomed in all these constituencies, whether they’re shareholders, governments, or elsewhere. For all these reasons, we think that, actually, this is going to be the winning bid. We think it’s an excellent bid for the Alcan shareholders and an excellent transaction also for Rio Tinto shareholders.

Christine Tan

Guy, this is Christine here. You say that the merger’s all about the China story. What sort of China demand are you factoring into your business model?

Guy Elliott

We think that Chinese demand is growing at about 15% per annum at the moment. Those levels of growth are spectacular, of course. We don’t expect that they will necessarily continue at quite such a high level. We do think that China is going through a phase of extremely materials-intensive growth at the moment as infrastructure is developed to accommodate and to provide jobs for the large numbers of people that are coming in from the country into the towns of China. It is an extraordinary phenomenon, and it is one which uses a great deal of aluminium. We’ve got a very good growth story. In the case of Alcan, we have very low-cost assets that will provide, therefore, a very good margin from this high growth. We think that aluminium is going to follow, to some degree, the very strong stories that we’ve seen in other metals that are fuelling China’s terrific growth.

Christine Tan

Guy, are you open to acquiring a Chinese producer of aluminium?

Guy Elliott

The fact is that Chinese aluminium production is actually quite high-cost. If you look at the fourth quartile of the cost curve, the great majority of the smelters that occupy that quartile are Chinese. For us, that’s not the sort of business that we want to be in. If you look at Alcan, in contrast, 80% of its smelting production is actually in the first and second quartiles of the cost curve. That’s where we like to be. It’s probably unlikely, I think, that we will be starting from scratch and developing a Chinese smelter. Our job, I think, in the developments that we want to make – and there are plenty, by the way, in the combined Rio Tinto and Alcan aluminium portfolio – is to find stranded sources of power which, therefore, are looking for an outlet. That’s an ideal situation in which to build an aluminium smelter. Of course, in China, there’s a power shortage, not a power surplus.

Ross Westgate

Guy, does this prove that we’re in an era where it’s far better for companies to buy than to build their business? What sort of assumptions have you taken on the price of aluminium in the future?

Guy Elliott

The question of buy versus build is something that we evaluate all the time. I think that in certain circumstances there’s room for both. We’ve been doing a lot of building in recent years; now we’re doing some buying. I think that we’re going to carry on building no matter what. We’ve got already a $5bn capital expenditure programme in Rio Tinto during the course of this year. I expect next year it will be similar. In fact, we’ve just announced an important investment in aluminium within the Rio Tinto business as it stands. We’re quite happy to build, but we think that this acquisition is compelling. As I’ve said, we’ve also got plenty of building to do when we’ve got it.

Michelle Caruso-Cabrera

Mr. Elliott, Michelle here in the United States. One of the overall stories in the markets has been the concern about the rising cost of credit. Are you seeing any evidence of that? Are you building the possibility of that into your financing of this deal?

Guy Elliott

Look, of course we look at interest rates very carefully. For the moment, we have taken no decision to fix any of the debt that we have. It is something that we will review, but in general, it’s our attitude towards all markets, whether they be metals markets, interest rate markets, or foreign exchange markets, is to retain a full exposure to all of them. The reason for that, in part, is that we think that there are certain natural hedges within the overall portfolio, and so I think that that is a question that we can review, but I remain confident that this is going to general terrific earnings, even if interest rates rise a little bit.

Ross Westgate

Okay, Guy. Thanks very much indeed for that. Guy Elliott, Finance Director at Rio Tinto.

Important Disclaimer

Although strenuous efforts are made to ensure the accuracy of interview transcripts, Executive Interviews and its associated companies accept no liability for what is said, for any discrepancy between the spoken and written word, or for any errors and omissions. Where doubt arises, please refer to the original broadcast video interview.

EX-99.(A)(5)(E)

Exhibit 99.(a)(5)(E)

Name:	Guy Elliott
Title:	Finance Director
Company:	Rio Tinto
Name:	Michelle Wiese Bockmann
Company:	Mining Journal
Name:	Martin Hayes
Title:	Senior Correspondent
Company:	basemetals.com
Name:	Rebecca Bream
Company:	Financial Times
Date:	12/07/2007
Time:	19:32 GME
Channel:	CNN International
Duration:	6 mins 55 secs

Interview with Guy Elliott, Michelle Wiese Bockmann, Martin Hayes, and Rebecca Bream

Owen Thomas

Hello. Welcome to World Business Today. I’m Owen Thomas in London. It’s great to have you with us. The mining giant Rio Tinto has set its sights on creating the world’s biggest aluminium producer. Its $38bn friendly offer for Canada’s Alcan trumps a hostile bid from US aluminium giant Alcoa. It also shows that mergers and acquisitions of commodity firms are as hot as the commodity market itself. Jim Boulden reports.

Jim Boulden

Many commodity prices are at record highs, and now, so are commodity takeovers. Mining giant Rio Tinto’s $38bn deal to buy the large aluminium producer Alcan is a record price for a mining takeover. Miners are flush with cash, thanks to commodity prices and sky-high stock prices. That’s why mergers are ripe.

Michelle Wiese Bockmann

The global commodities boom has fuelled an ‘eat or be eaten’ mindset amongst the mining companies. If they don’t complete mergers and acquisitions, they’re not going to grow. Organic growth is no longer an option for companies.

Jim Boulden

No longer an option, say analysts, because the commodity market is growing so fast, too fast for Rio to buy mines here or there, or take the years required to build it’s own smelters. The deal gives Rio a huge chunk of the aluminium market, while aluminium prices have not risen to record levels like lead and copper prices have.

Martin Hayes

Over the longer run, it does demonstrate a confidence in this commodity bull market, but it’s got further to run, which you see in not only this particular deal, but lots of others in the recent past, in nickel and in copper.

Jim Boulden

Analysts say part of Rio’s strategy is to become too big to be bought by someone else. Rio Tinto beat out the other aluminium giant Alcoa for Alcan, and it could now be at the top of the auction block.

Michelle Wiese Bockmann

I think Alcoa now stands a very strong chance of falling prey to a company like BHP Billiton.

Jim Boulden

The merger and acquisition fever is not expected to end soon.

Rebecca Bream

When it will end is probably when the current commodities boom ends - all the high prices that we’re seeing for copper and aluminium, etc – and that relies on China, really, China and India, and whether their hunger for raw materials continues.

Jim Boulden

Some wonder if the commodities boom is a bubble. If it is, the market could look back on Rio’s record price and say it was a deal too far. Jim Boulden, CNN, London.

Owen Thomas

Let’s look at that deal a little more closely, shall we, and what it means to the industry. Rio is offering $101 per share; that’s a 13% premium over Alcan’s closing price on Wednesday. The bid’s also one-third higher than Alcoa’s. If approved, the deal would create the world’s largest aluminium company. Together, Rio and Alcan would have the capacity to produce nearly 4.5m tonnes of aluminium a year. Russia’s united company Russal currently holds the top spot, formed in a three-way merger back in March. That pushed Alcoa and Alcan into the second and third spots. Guy Elliott is the Finance Director at Rio Tinto, and I asked him, ‘Why are you doing this deal now?’

Guy Elliott

Well, this asset, Alcan, is a terrific asset, we believe. The reason for that is that the growth for aluminium in the future we think is very strong - in particular, in China, which is a country which, as you know, is growing, especially the infrastructure that it needs in order to withstand these huge population shifts from the country into the towns, and as a result is using an awful lot of materials, in particular, aluminium, which is growing at a rate of 15% per annum in terms of demand over the next few years.

Owen Thomas

Yet this is a third higher than Alcoa’s bid. It offers a 13% premium of Alcan’s closing price. Have you paid too much?

Guy Elliott

Look, this was an auction not only with Alcoa, but also with other players. Our offer was accepted by the Alcan board. It’s an all-cash offer, and it’s being recommended to shareholders and also being recommended to the Quebec government, who have an important role to play in this. We think this is a compelling offer to Alcan shareholders. We think it also confers value on Rio Tinto shareholders. We think that the combination of our two businesses in aluminium really gives us a very important third leg and creates a leader in the aluminium business.

Owen Thomas

It begs the question, because of that, do you expect a higher rival bid from anywhere anytime soon?

Guy Elliott

Well, we think it’s a very good bid, and one which the Alcan shareholders would be wise to accept. It’s an all-cash bid, as I’ve said. It comes with the recommendation, and it also carries less risk, completion risk, than maybe the Alcoa bid does.

Owen Thomas

There’s been a lot of merger and acquisition activity in the mining’s and metals sector. Why the rush?

Guy Elliott

The situation we had here was that Alcoa bid for Alcan. They sought a white knight, and we were very high up, I think, their list of white knight possibilities. I think that that’s the situation which has changed. We’ve always been interested in Alcan as a target. We think that the combination is a compelling one. This was an opportunity, an asset which became available, a very attractive set of assets, and we made an offer which was an offer which was acceptable. That’s why the timing is now. At the same time, we think that the conditions which the aluminium industry is in at the moment are strong conditions, of course. We think they’re going to continue, maybe not in exactly as strong a place as this, but for some considerable time we’re going to have strong conditions in this and other markets in which we serve.

Owen Thomas

And is it just China that is really driving that market through?

Guy Elliott

China is a very important factor. Following along from China, we think, is India. India, too, is building infrastructure at a rapid pace. It, too, is going through an increasingly materials-intensive phase of growth. This means more materials and more aluminium in particular. All of this means strong growth in aluminium. If you’re a low-cost supplier, which is what Alcan is, based upon hydroelectric power in Canada, especially, we’re going to be able to make a strong profit as these good conditions continue. If, one day long ahead, we see more difficult conditions, we’re going to be the low-cost supplier.

Owen Thomas

That was Rio Tinto’s Finance Director Guy Elliott. Trading of the company’s shares were halted in Sydney ahead of the announcement. Here in London, the company’s shares closed down 4.5%.

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