Vedanta boss Anil Agarwal floats plan to consolidate copper assets

Billioniare Anil Agarwal is planning to transfer Zambia’s Konkola Copper Mines — the country’s largest integrated copper producer — from his group’s holding company Vedanta Resources to listed Indian arm Vedanta Ltd. The sale can “create a fully integrated copper vertical and eventually, a successful global copper company, like Chile’s Codelco and Mexico’s Southern Copper,” Agarwal posted on social media platform X (formerly Twitter).

At present, the promoter company is carrying out debt repayment and reduction and the proceeds from such a sale can help it meet its payment obligations, say analysts. In May, Vedanta Resources said it had repaid bonds worth $1.4 billion due in May and June, reducing its gross debt to $6.4 billion from $7.8 billion as at the end of March, 2023.

There was no official statement from Vedanta Resources and Vedanta Ltd at the time of going to press. If considered, this would be Agarwal’s second attempt at transferring assets between group entities in the current calendar year. The 69-year-old metals magnate is executive chairman of Vedanta Resources, and non-executive chairman and promoter of Vedanta Ltd. As of March 2023, Vedanta Resources held 68.1 per cent in Vedanta Ltd.

In a similar attempt, Vedanta Ltd had in January approved selling assets of Zinc International — its zinc assets located in South Africa and Namibia — to a proposed wholly owned unit of majority-held Hindustan Zinc for $2.98 billion. The deal, however, fell through with strong resistance from the Indian government, which holds a 29.54 per cent stake in Hindustan Zinc. Past instances include the merger of Vedanta Ltd and Cairn India, which unlocked cash for the promoter entity Vedanta Resources in 2016.

 “My thought is that we must maximise synergies between KCM (Konkola Copper Mines) and Vedanta Ltd refining/smelter businesses in UAE and India. KCM can be moved from Vedanta Resources to Vedanta Ltd at the right valuation,” Anil Agarwal said in a post on Tuesday. Vedanta Resources first acquired a 51 per cent stake in KCM in 2004 for a total cash consideration of $48.2 million. As of March 2023, Vedanta Resources’s stake in KCM stood at 79.4 per cent.

On September 5, Vedanta Resources said the company had got back KCM’s ownership and management, after it was seized in 2019. KCM, according to Vedanta’s statement, has reserves and resources of 16 million tonnes of contained copper. Closer home, Vedanta’s copper operations are marred by suspension of operations at its Tuticorin smelter and refinery in Tamil Nadu. For its Silvasa unit, Vedanta reported a full year copper cathode production of 148 kilo tonnes per annum in FY23. The fate of Vedanta’s Tuticorin unit operations depends on a pending court order.

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