This article is part of a 20 article special report on "Metals, miners and money".

"We've added a high potential acquisition play to our model portfolio, Alumina Ltd. (NYSE: AWC)," note Elliott Gue and Yiannis Mostrous in their Vital Resource Investor.

The advisors explain, "The company is a leveraged bet on the recovery of aluminum prices in the next few quarters as China rationalizes output and exports by taking its high cost, heavily subsidized producers out of the game. Its small size and 40% stake in the world's largest low-cost portfolio of quality bauxite and alumina assets is a tempting target.

"Having the world's largest integrated bauxite mining and alumina refining system (it provides approximately 13% of the world's alumina supply) in one place is the company's main attraction. As energy, raw materials, and freight costs continue to increase, Alumina's setup enables its operations to be extremely efficient and low cost.

"The company is at a sweet spot because China's aluminum demand has been so strong that it's taken the industry by surprise. Although a large number of experts were at the start of the year forecasting 14% growth of China's aluminum demand for 2007, the latest projections (as per Alcoa's calculations) are pointing toward 35% growth.

"Further, China has a long way to go before it reaches the levels of consumption that more mature economies have achieved. And although it won't happen in one go, it will be a long and steady process. The bottom line: To meet this demand as well as demand from other countries like rapidly urbanizing rural India, aluminum production will have to grow much more rapidly than at any time in history."