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The Times of London reports, citing unnamed sources, that both BHP Billiton and Rio Tinto are considering a $40b+ bid to takeover Alcoa in their effort to expand aluminum production as prices hit record levels. It says that BHP, which currently produces 1.3 million tonnes of aluminum/year, has done the groundwork for its bid, while Rio, which makes 1.2m/year, is not as far along in assessing its takeover move. Neither has approached Alcoa's board. Representatives of Alcoa and Rio declined to comment; BHP told the newspaper it considers "every possible opportunity" to grow its business. Simon Toyne, a U.K. mining analyst, told clients this morning the rumors make sense given the rapid rise in Rio's and BHP's share prices and Alcoa's poor performance. But Morgan Stanley analyst Craig Campbell doubts it: "I think the downstream assets make it all too hard to be honest -- I don't put any credence in these rumors." The Times also reported that BHP executives, including CEO Chip Goodyear, are on Alcoa's short list to replace its CEO Alain Belda, who is due to retire next year. Shares of Alcoa jumped 9% after hours, and are up 10% in Frankfurt trading; BHP and Rio shares were each up 1.3% in London.

Sources: London Times, MarketWatch, Dow Jones Commodities News
Commentary: BHP Billiton Barely Feels Tremors in the Mines - Barron'sThe Outlook for Alcoa and AluminumHindalco to Buy Novelis for $6 Billion
Stocks/ETFs to watch: Alcoa Inc. (NYSE:AA), BHP Billiton Limited (NYSE:BHP), Rio Tinto plc (RTP). Competitors: Anglo American plc ADR (AAUK), Alcan Inc. (NYSE:AL), Novelis Inc. (NVL), Corus Group (NYSE:CGA). ETFs: SPDR Metals & Mining (NYSEARCA:XME)

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Source: BHP and Rio Each Plan $40b+ Bid for Alcoa -- London Times