Le French

Recent World Events Are Bullish for Metals

One thing I know best is aluminium.

The best positionned company in this industry is RioTinto, as they just acquired Alcan, one of the leading aluminum firms. The reason is that global demand for aluminum is expected to grow at a faster pace than all of the main iron-ore commodity types (copper, steel, ...) for the next decade. I don't have the source link, but it was on one of the last annual reports, you can find that on their website.

The major expenditure in producing aluminum is energy cost, and that where RioTinto-Alcan makes a difference.

What gives RioTinto Alcan a competitive advantage other its competitors, is that they own the most advance smelter technology that reduces energy consumption. Secondly, 2/3 of their energy comes from hydroelectric power in Quebec whereas Chinese competitors use coal-fired electricity generators. On a cost curve chinese competitors energy costs seem on average twice as expensive.

I don't know if this is going to make a difference on the stock, but clearly I would go with the leader in the long-term. Otherwise, Alcoa is poised to be bought or merge in the next two years.

Check out my final report for more information which I made for a class presentation this semester on RioTinto Alcan.

www.nicolasmurcia.com/...