Tom Albanese, the chief executive of Rio Tinto, owns a narrowboat moored on a canal between Weybridge and Guildford. As it happens, it is not made of steel like so many other barges, but of aluminium. That makes the boat lighter and easier to manoeuvre.

This is not to say that Mr Albanese, who has just launched a $38.1 billion bid for an aluminium company, has just had the biggest Victor Kiam moment in modern business history. It is that aluminium has an extraordinary array of uses.

Aluminium is one of the essential components of urbanisation. It is one of the three metals used in the construction of high-rise buildings and big-ticket infrastructure. Girders are made of steel, the wiring is made of copper and the high-tension cables as well as much of pannelling, flooring and fittings are made of aluminium.

The largest single consumer of construction materials, has been China: Shanghai’s skyline has been remade in the past decade and that transformation is set to repeat itself in every Chinese city from Kunming to Harbin. Rio Tinto expects that China, which is currently growing at 11 per cent, will still be growing at 9 per cent a year in 2015 and beyond.

So, it is easy to see why Mr Albanese liked aluminium so much that he bought the company.

But the new boy’s big bet on Alcan – the Rio Tinto chief executive has been in the job for two-and-a-half months and is offering a 65 per cent premium to Alcan’s prebid share price – is not as safe as forecasts of Chinese demand would suggest. After all, Rio Tinto has had an excellent record in M&A because it has historically made acquisitions at the bottom of the commodity cycle. This time, it is taking a risk in buying near the top.

Mr Albanese is taking a gamble on the cost and consolidation of supply. The calculation is that Alcan will provide low cost production of aluminium, courtesy of the cheap sources of energy it can access in Quebec. When the market is oversupplied, as it surely will be, the low-cost producers will survive and the high cost ones will go under. Rio Tinto Alcan will be able to act as consolidator. This is a sensible, but unproven, case.

The question now is what happens to the others in the industry, notably Alcoa.

BHP has been looking at tying up with Blackstone and CVRD has been talking to Texas Pacific about tabling offers. The one name that has not yet entered the fray is Cynthia Carroll, the recently installed chief executive at Anglo American who joined the company, interestingly enough, from Alcan.

One auction nears its end, another begins.

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