Agar­wal to in­vest $2 bn, be top share­holder of An­glo Amer­i­can

Resource Digest - - CONTENT -

Min­ing bil­lion­aire Anil Agar­wal plans to pur­chase up to 1.5 bil­lion pounds worth of ad­di­tional stake in blue-chip Bri­tish miner An­glo Amer­i­can Plc to be­come its largest share­holder with over 21 per cent hold­ing, his fam­ily trust said.

The ac­qui­si­tion of about 9 per cent shares on top of the 12.43 per cent bought in March would give Agar­wal an in­di­rect foothold in the world's largest di­a­mond pro­ducer, De Beers. An­glo owns De Beers.

Sources with di­rect knowl­edge of the de­vel­op­ment said, how­ever, that Agar­wal is not in­clined to take over the en­tire An­glo Amer­i­can de­spite be­com­ing the largest share­holder.

They said that he is also not in­ter­ested in get­ting a po­si­tion on the Board of Di­rec­tors and would con­tinue to re­main just an in­vestor.

Last year Agar­wal had made an un­suc­cess­ful of­fer to merge part of his min­ing em­pire with An­glo Amer­i­can.

In a state­ment, Vol­can In­vest­ments — the fam­ily trust of the chair­man of di­ver­si­fied miner Vedanta — said that it in­tends to to ac­quire shares of 1.25 bil­lion to 1.5 bil­lion pounds ($2 bil­lion), in ad­di­tion to the 2 bil­lion pounds spent in March on ac­quir­ing a 12.43 per cent hold­ing.

"We are en­cour­aged by the per­for­mance of An­glo Amer­i­can since our orig­i­nal in­vest­ment ear­lier this year," Vol­can In­vest­ment added.

"The com­pany has made good progress in its op­er­a­tional and fi­nan­cial per­for­mance and re­mains an at­trac­tive in­vest­ment for our fam­ily trust."

The sources said that Agar­wal be­lieves that An­glo Amer­i­can, a com­pany founded by the Op­pen­heimer dy­nasty in South Africa a cen­tury ago, is ca­pa­ble of get­ting tech­nol­ogy and skilled peo­ple to In­dia which will help in in­creas­ing do­mes­tic pro­duc­tion of me­tals like cop­per, di­a­mond, gold.

An­glo Amer­i­can is one of the world's top five min­ing groups, along­side BHP Bil­li­ton, Rio Tinto, Vale and Glen­core and has cop­per mines in Chile, iron ore op­er­a­tions in Brazil and South Africa as well as De Beers, the iconic di­a­mond pro­ducer.

An in­di­rect foothold in De Beers would in­creae Agar­wal's pres­ence in one more com­mod­ity af­ter zinc, alu­minium, iron ore, cop­per, power, sil­ver and lead. On an av­er­age, De Beers sells rough di­a­monds worth about $5.2 bil­lion ev­ery year, half of which are pur­chased by In­dian dia­man­taires based in Su­rat, Mum­bai, An­twerp, Hong Kong, South Africa and Dubai.

The di­a­monds sold by De Beers to its clients trickle down to the sec­ondary mar­ket in Su­rat and Mum­bai, where they are sold to small and medium dia­man­taires and even big com­pa­nies. In­dia's di­a­mond pro­duc­tion is al­most neg­li­gi­ble and it is the largest con­sumer of rough di­a­mond in the world, im­port­ing 80 per cent of to­tal world pro­duc­tion with an im­port bill of about $15 bil­lion.

Re­cently Rio Tinto, the world's big­gest min­ing com­pany, ex­ited from the Bun­der Di­a­mond mines in Mad­hya Pradesh due to de­lays in se­cur­ing reg­u­la­tory ap­provals. The Bun­der mines have es­tab­lished di­a­mond re­serves. In a state­ment, Lon­don­listed Vedanta Re­sources said that the pro­posed in­vest­ment is be­ing made by Vol­can alone, and that the com­pany is not par­tic­i­pat­ing in this in­vest­ment.

Vedanta has made sig­nif­i­cant progress in its strate­gic pri­or­i­ties over the last year, in­clud­ing com­ple­tion of the Vedanta Ltd-cairn In­dia merger, ramp­ing up pro­duc­tion from its port­fo­lio of low-cost as­sets, in­creas­ing free cash flow and op­ti­mis­ing its bal­ance sheet through two suc­cess­ful li­a­bil­ity man­age­ment ex­er­cises in Jan­uary and Au­gust 2017 re­spec­tively. Vedanta re­mains com­mit­ted to its strate­gic pri­or­i­ties.

"The in­de­pen­dent di­rec­tors of the com­pany (who for these pur­poses do not in­clude Ex­ec­u­tive Chair­man Anil Agar­wal or Ex­ec­u­tive Vice-chair­man Navin Agar­wal) have con­sented to the pro­posed in­vest­ment pur­suant to the Re­la­tion­ship Agree­ment be­tween, among oth­ers, Vol­can and the com­pany," it added.

De Beers, the world's lead­ing di­a­mond ex­plo­ration, min­ing and mar­ket­ing com­pany, pro­duces over 30 mil­lion carats of di­a­monds per an­num, which amounts to 35 per cent of global rough di­a­mond pro­duc­tion.

An­glo, which is listed on the Lon­don and Jo­han­nes­burg stock ex­changes, has rev­enues of $23 bil­lion, EBITDA of $6.1 bil­lion and a mar­ket cap of $20 bil­lion. Its op­er­a­tions ex­tend across South­ern Africa, North and South Amer­ica, Aus­tralia, Asia and Europe and it em­ploys 113,000 peo­ple world­wide.

Its port­fo­lio of min­ing busi­nesses in­cludes pre­cious me­tals and min­er­als, base me­tals and min­er­als, cop­per, nickel, nio­bium and phos­phates and bulk com­modi­ties iron ore and man­ganese, met­al­lur­gi­cal coal and ther­mal coal.


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