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Service centers on the sidelines of Rio Tinto-Alcan merger.

Article Excerpt
IN A MOVE THAT WOULD CREATE the world's largest aluminum company, mining giant Rio Tinto Plc announced last month that it planned to acquire Montreal-based Alcan Inc. for $38.1 billion in cash--an offer that received the unanimous support of Alcan's board of directors. This offer came about two months after Pittsburgh-based Alcoa Inc. unsuccessfully attempted to pick up Alcan in a hostile bid that followed two years of negotiations.

The union of Alcan and Rio Tinto's aluminum businesses, to be called Rio Tinto Alcan and based in Montreal, is not expected to affect aluminum service centers much, especially if the company structure remains as currently envisioned. "There would have been more of an impact had Alcoa acquired Alcan," says Bill Sales, senior vice president for nonferrous operations for Reliance Steel & Aluminum Co., Los Angeles.

Rio Tinto is more active in the upstream end of the aluminum business, mainly in Australia, says Charles Bradford, metals analyst for Bradford Research-Soleil Inc., New York.

Even in Australia the company has been a relatively small player in aluminum, maintains Lourenco Goncalves, president and chief executive officer of Metals USA Inc., Houston. "It is primarily an iron ore company," he says.

"This...

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