Further investment in Anglo by majority shareholder of Vedanta

JOHANNESBURG (miningweekly.com) – Vedanta head Anil Agarwal has once again hit the headlines by announcing an intended further personal investment in Anglo American through Volcan Investments, which is the majority shareholder of Vedanta Resources.

Volcan announced on Wednesday that it intended investing £1.25-billion to £1.5-billion in Anglo shares, which follows its £2-billion investment in the London- and Johannesburg-listed company in March.

Reuters quotes an unnamed banking source as calculating that the additional shares could take Volcan’s interest up to 20%.

Vedanta confirmed in a release to Creamer Media’s Mining Weekly Online that the proposed investment is by Volcan alone, with no participation from the London-listed Vedanta. 

“This is a personal investment made ‎by Mr Agarwal through Volcan. It is not a Vedanta investment. Vedanta has no involvement in this transaction,” a spokesperson who did not want to be quoted told Mining Weekly Online.

Independent directors of the Vedanta, advised by Moelis & Company UK LLP and Ashurst LLP, have consented to the proposed investment on the basis of a relationship agreement between Volcan and Vedanta.

In 2010, Vedanta bought Anglo’s zinc assets, the bulk being in Southern Africa, for $1 338-million and managed to achieve full payback two years later through decisive underground and near-pit mining.

Vedanta Zinc International’s Black Mountain Mine is currently building a zinc mine at Gamsberg, in South Africa’s Northern Cape, an asset previously owned by Anglo.

This greenfield project consists of an opencast mine, ore beneficiation plant and associated infrastructure, and is located on one of the world’s largest known zinc deposits, where Vedanta is investing $400-million in developing the first phase of the opencast zinc mine, concentrator plant and associated infrastructure. The first phase encompasses a four-million-tonne-a-year zinc and lead concentrator.

Mining Weekly Online reported last month that more than 80% of the $400-million capital expenditure for the first phase of Gamsberg has been committed.

The first phase of the project is expected to have a mine life of 13 years, replacing the production lost by the closure of the Lisheen mine, in Ireland, and restoring Zinc International’s volumes to more than 300 000 t/y.

Manufacturing of critical machinery, such as the mills, the crusher and transformers, is under way, with major contractors, such as Aveng Moolmans, ELB Group and Liviero Civils, mobilised to site. Site activities, including civil works, power lines and water lines, are also progressing.

The project, which under Anglo's direction did not see the light of day despite announcements that it would proceed, is today, under Vedanta's direction, scheduled to achieve first production in mid-2018, with full production expected in nine to 12 months.