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Vedanta to buy zinc mines for $1.34 bn

Vedanta to buy zinc mines for $1.34 bn
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First Published: Mon, May 10 2010. 10 02 PM IST
Updated: Mon, May 10 2010. 10 02 PM IST
London/Mumbai: London-listed Vedanta Resources Plc, the mining company controlled by Indian billionaire Anil Agarwal, agreed to pay Anglo American Plc $1.34 billion (Rs6,030 crore) for zinc mines in Africa and Ireland.
Vedanta will buy the Skorpion mine in Namibia, the Lisheen mine in Ireland and a 74% stake in Black Mountain Mining in South Africa, London-based Anglo American said in a statement on Monday.
The acquisition will add to Vedanta’s copper, zinc, lead, iron ore and aluminum mines in India, Australia and Zambia as the company diversifies its production. Vedanta said the acquisition will increase its zinc capacity by 37% to 1.46 million tonnes a year.
Vedanta said the acquisition will increase its zinc production to 12% of global capacity. The purchase will also increase the company’s reserves and resources by 76%, vice-chairman Navin Agarwal said in a conference call.
Vedanta rose 250 pence (Rs167.25), or 11%, to 2,566 pence by 2.01pm in London trading, the biggest gain in almost a year. Anglo jumped 187 pence, or 8.5%, to 2,713 pence. The 15-member FTSE 350 mining index gained 7.62%.
“The zinc operations are integrated and the acquisition will give them access to three or four big mines,” said Sumeet Singhania, an analyst at Antique Stock Broking Ltd in Mumbai, who has a “buy” rating on the stock.
Anglo had announced the sale of its zinc assets in October as it sought to focus on assets such as copper and iron ore that are in demand in fast growing economies in Asia.
“I don’t think this deal will bring a huge amount of strategic benefit to Vedanta as it has no footprint in the countries,” said Macquarie Bank Ltd analyst Sam Catalano in London, who has an “outperform” rating on the stock. “Their only benefit will be to increase Vedanta’s zinc production.”
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First Published: Mon, May 10 2010. 10 02 PM IST
More Topics: Vedanta | Anglo American | Mining | Zinc | Metal |