Rio Tinto Group is moving to mop up the rest of Alcan's issued capital after emerging with a 90.2% stake in its $US38.1 billion offer.
Rio needed to reach the 90% mark to begin compulsory acquisition, so the margin was there, but not by much, to allow it to start the acquisition of the remaining 9.8% of Alcan's outstanding shares under the offer announced on July 12.
Now for the hard bit of rationalising and putting assets up for sale in an investment climate that has changed markedly since the deal was done in July.
One factor in Rio's favour is the sharp rise in the company's share price and the Australian dollar, thanks to its position as the world's second ranked iron ore exporter; and not its holdings in copper, coal or aluminium and alumina where it is facing cost concerns.
The higher Aussie dollar has cut the cost by around $A2.3 billion since the deal was announced: the $US38.1 billion deal was worth around $A43.6 billion on July 12 at an exchange rate around 87.30 USc. Last Friday it touched 92.30 USc in New York.
The world aluminum price however has weakened since July. Rio shares peaked at $115 last week but fell 3% or $4 Friday to $110 in the little sell-off.
Rio shares were above $100 in early July when the bid was finally announced. The shares fell to around $84 in the big sell-off in the August credit freeze. They have rebounded around 32% from the low.
But that has come on rising speculation that it, BHP and other iron ore producers are looking to get price rises of 30% to 50% from Asian buyers for the 2008 contract year in talks about to start.
The price strength has been underlined by the boom in West Australian iron ore prospecting and companies, with at least two major takeovers mooted (one of which seems to have failed already) and the boom in the price of Fortescue Metals, which looks like being the first competitor for RIO and BHP in the Pilbara for some time.
RIO said in a statement issued in London over the weekend that it had so far spent $US34.3 billion acquiring that 90.2% at the offer price of $US101 a share.
RIO sold investors on the deal by saying it would position the company to take advantage of rising demand for the metal because of rising use in China and India, and rising production and environmental costs in China.
While the metal has fallen by around 10% this year in price (the US dollar has fallen 9% against the euro and is a strong short term driver), the metals price has almost doubled in price in the past five years, closing at $US2,622 a tonne on the London Metal Exchange on Friday.
Rio Chief Executive Officer, Tom Albanese, said he expects global aluminum demand to increase more than 6% a year to 2011.
He said last month that China's demand for aluminum had risen strongly in recent years and it now has 30% of world consumption of the metal.
He says he believes India will follow a similar path to China in coming years.
Alcan's biggest plus though is the large proportion of metal Alcan produces in Canada using cheap and 'green' hydro plants rather than more-expensive coal or gas-fired stations which also have environmental costs that the Chinese are now grappling with.
Rio says it plans to sell Alcan's consumer-product packaging business to focus on aluminum and the process of bauxite into alumina used to make the metal.
There has been speculation that RIO could sell its industrial chemicals businesses which are not the performers that its coal, copper or iron ore businesses are.
Rio shares have surged 32% in the past three months (the fourth-best performer on London's FTSE 100 Index) buoyed by a confidence in global economic growth which has fanned prices for aluminum, iron ore and coal.
Meanwhile Rio Tinto Alcan said earlier last week that it had reached an agreement with Norsk Hydro ASA to expand its alumina supply to Hydro Aluminium from 500,000 tonnes of alumina per year to 900,000 tonnes from 2011 to the end of the contract.
Steve Hodgson, president and chief executive officer, Bauxite and Alumina, Rio Tinto Alcan, said in a statement, "The expansion of our supply contract with Norsk Hydro underpins our decision to invest in an expansion of the Yarwun alumina refinery. It is consistent with our strategy to maximise the value of Rio Tinto Alcan's world class bauxite deposits at Weipa in north Queensland, Australia."
Under a 20-year contract signed in 2003 with Norsk Hydro, Rio Tinto Alcan is committed to supplying Hydro Aluminium with 500,000 tonnes of alumina per year from 2006 until 2030. This contract also gave Norsk Hydro an option to increase its purchases of alumina.
It seems business as usual, even before the merger has been completed.