Nov. 14 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation's biggest maker of the lightweight metal, is concerned a combined BHP Billiton Ltd. and Rio Tinto Group would concentrate raw-material supplies and may wield too much pricing power.

``Yesterday someone told me that if they combine copper ore and iron ore, prices may double next year,'' President Luo Jianchuan of Beijing-based Aluminum Corp., also known as Chalco, said today in an interview. ``It makes us worried.''

China Shenhua Energy Co., the world's second-biggest coal seller, and Yunnan Copper Industry Co. have raised concern about a merger that would control more than a third of the iron-ore market and make the most aluminum and copper. China is already hurting from a threefold gain in commodity prices since 2002.

``BHP has been very aggressive in the past few years in extracting value from its product selling into China, so the combination of BHP and Rio Tinto would obviously be perceived negatively among mining companies in China,'' said Geoffrey Cheng at the Daiwa Institute of Research. ``Chinese resources companies, particularly smelters, are pretty worried.''

Chalco rose 8.2 percent to close at HK$18.18 in Hong Kong. The stock has gained 0.7 percent since Melbourne-based BHP made its first statement on Nov. 8 about a Rio takeover offer. Yunnan Copper has gained 7 percent.

``The possible combination will concentrate copper-ore supplies,'' Chalco's Luo said in Beijing.

Copper Purchase

Chalco's parent, Aluminum Corp. of China, last month bought a controlling stake in Yunnan Copper Group Co., the biggest metal acquisition in the nation this year. Yunnan Copper Group, which has a 34.5 percent stake in its listed namesake, buys copper concentrate from BHP and others to process into the metal. The parent plans further acquisitions of copper smelters.

A combined BHP and Rio would control 38 percent of the seaborne iron ore trade, said Australia & New Zealand Banking Group Ltd. Iron ore prices may rise 50 percent next year due to surging Chinese demand and the inability of mining companies to meet demand, Macquarie Group Ltd. said last month.

``BHP and Rio's combination will give them more pricing power in iron ore because they are two of the three biggest suppliers,'' Luo Wei, a Shanghai-based analyst with China International Capital Corp., said today.

Largest Supplier

Brazil's Cia. Vale do Rio Doce is the largest supplier of iron ore, and would have a similar market share to a combined BHP and Rio.

The combined company would account for 14 percent and 13 percent of the global share of energy coal and copper respectively, Citigroup Inc. said. BHP would also gain control of the world's largest aluminum producer, which Rio became by buying Montreal-based Alcan Inc. for $38.1 billion this year.

BHP Chief Executive Officer Marius Kloppers is promising to deliver faster supply at lower costs to meet a five-year rally in commodities demand.

``A BHP, Rio combination will over time fundamentally alter the shape of the cost curve,'' Saxon Nicholls, who manages the equivalent of $840 million at Herschel Asset Management Ltd., said today by phone from Melbourne. ``If you do bring the businesses together you can affect both operating costs on future projects and capital expenditure.''

China has grown its economy at an annual average of 10.1 percent since 2002, accounting for 65 percent of the global growth in steel production and becoming the world's largest consumer of metals.

`Increasing Influence'

``China will have an increasing influence on the global demand for minerals and metals,'' Roberto Castello Branco, director of investor relations at Brazil's Vale, said today at a conference in Beijing.

China's share of global copper consumption will rise to 30 percent by 2011, up from 21 percent in 2006, Vale predicted. For aluminum, its share will climb to 41 percent by 2011, from 25.5 percent in 2006, he said.

Kloppers told reporters on Nov. 12 he hasn't ``detected any hostility'' from Chinese steelmakers to the takeover proposal. He will visit China next week to speak with customers, the Australian Financial Review said today without citing anybody.

Shougang Corp., China's ninth-biggest steelmaker, said Nov. 9 a combination of BHP and Rio may lead to higher iron ore prices. China Shenhua Energy's President Ling Wen this week said BHP's offer for Rio is spurring its own acquisitions plans.

``There's some uncertainties regarding BHP-Rio, including pricing, shareholders' preferences, and nationalism issues that may arise as people get concerned about one giant producer, as well as competition issues,'' Michael Elliot, global leader of metals and mining at Ernst & Young, said today in Beijing.

Kloppers said BHP expects to secure regulatory approvals, which could take between nine and 12 months.

Chalco's Luo also said today he is ``unaware'' of any plans by Chinese companies to buy a stake in London-based Rio, when answering questions at a mining conference.

China Development Bank, which funds public works, plans to take a stake in Rio on behalf of a commercial company, Handelsblatt said yesterday, citing unidentified executives.

To contact the reporters for this story: Xiao Yu in Beijing at yxiao@bloomberg.net; Theresa Tang at ttang3@bloomberg.net

Last Updated: November 14, 2007 07:28 EST