In today's metals and mining sector, accepting the first takeover bid that comes your way would be madness. With its stock trading at an 8 per cent premium to the price implied by Alcoa's cash and stock offer, Alcan was hardly likely to jump into its US rival's arms. It knows there are potential buyers out there for both companies. BHP Billiton is touted as one - notwithstanding speculation that BHP is considering a $100bn-plus bid for arch-rival Rio Tinto. Meanwhile, yesterday, Norilsk Nickel of Russia submitted its second bid in the battle with Xstrata for nickel producer LionOre.

Consolidation bolsters pricing power. At the same time, the current upswing in industrial metals is stronger and has lasted longer than any in the past four decades. Equity investors, however, have derated miners, reflecting scepticism over the cycle's staying power. But, if they are wrong, the leveraged bets placed now can be repaid with record cash flows.