Vedanta (LSE:VED), the India headquarter mining group with a strong presence in base metals production, has diversified its mining interests through the acquisition of Anglo American’s (LSE:AAL) zinc assets for US$1.388 billion. Anglo American placed its zinc operations, along with several other interests, up for sale in 2009 as part of its restructuring. Vedanta on the other hand, has been keen to diversify its mining interests into other regions of the world, which this transaction will help facilitate by giving the FTSE 100 constituent a greater presence in Africa and Ireland.
Vedanta will fund the transaction from its existing cash resources, which stood at US$7.2 billion at the end of March.
Assets included in the transaction include the Lisheen Mine in Ireland, a 74% stake in Black Mountain Mining, which in turn owns the Black Mountain Mine and Gamsberg Project in South Africa, and the Skorpion Mine in Namibia. “Anglo Zinc is an excellent operational and strategic fit with Vedanta's existing zinc business and will create significant long term value for Vedanta's shareholders,” Vedanta stated.
The new assets will boost the company’s annual production capacity of zinc and lead by 37% to 1,462 ktpa, increase attributable reserves and resources by 76%, or 206 million tonnes, and offer ‘significant’ organic growth through the Gamsberg mine – one of the largest undeveloped zinc mines in the world.
Anil Agarwal, Chairman of Vedanta, said: "We are delighted to have reached this agreement with Anglo American to acquire their portfolio of zinc assets. These high quality assets complement Vedanta's existing portfolio, creating the largest zinc and lead producer in the world. We intend to rapidly develop Gamsberg, one of the largest high quality zinc projects in the world, leveraging our world-class large project development expertise. Vedanta has consistently demonstrated a track record of successfully integrating and investing in its acquisitions, and we look forward to working with the high quality management team and employees of Anglo American Zinc, Exxaro and the local communities towards growing the business. We are committed, as we are throughout all of our operations world wide, to maintaining the highest health and safety standards, and to the sustainable development of these operations."
Disclosure: The author holds no positions in the company