Alcoa, the current king of the industry, has launched a $5.6bn bid for rival Reynolds Metals Company in response to a move by three other companies to join forces against it.

If the deal goes ahead, Alcoa will cement its position as the world's largest producer.

Its aggressive move came just hours after Alcan of Canada, Pechiney of France and the Swiss firm Algroup agreed to merge to create a company provisionally called APA.

Together they will have a market capitalisation of about $19bn and account for nearly 15% of world output.

This merger is expected to lead to the loss of 4,550 jobs - or a 5% cut in staff numbers - to achieve an estimated $600m worth of cost savings.

A spokesman for the three-way merger said: "At this point in time there are no redundancies planned in the UK, which makes up a fairly small part of this deal."

Industry is consolidating

These dramatic developments follow a series of moves to rationalise the sector over the past few years.

The European Commission might want to look closely at the deals

If the deals go ahead, it will be another step in the consolidation of an industry which has long suffered from overcapacity and low prices.

But the deals may come under close scrutiny from European regulators, who are worried about high levels of concentration in many industries.

Alcoa of the US, the world's largest aluminium company, had sales of $15.3bn in 1998.

Alcan is the world's second-largest producer of aluminium. It recorded sales of $7.8bn last year. Pechiney is the world's number four, and had 1998 sales of $10.9bn.

Algroup, the smallest of the four, nearly went broke in the 1980s after a series of disastrous forays into the United States but recorded sales last year of $6.4bn.