We will make 12% of global zinc output

 The acquisition of Anglo American’s zinc assets on Monday made Vedanta group chairman Anil Agarwal the owner of the largest integrated zinc and lead producer conglomerate in the world. He took time out to speak to Reeba Zachariah from Sao Paulo on the long journey so far. Excerpts. 

Q: Hindustan Zinc has become the largest zinc producer in the world after the acquisition. Could you tell us about the journey so far? 

A: When we took over Hindustan Zinc, it was a high-cost producer of zinc and it was churning out 1,69,000 tonnes of zinc. We retained the same management and now produce around 8,79,000 tonnes. We saw an opportunity in Anglo American’s zinc assets, which has interests in Namibia, South Africa and Ireland. We will be now producing 12% of the total zinc output in the world and at the lowest cost. 

Q: How easy was it to negotiate the deal? Since there were other companies interested in the takeover. What swung the deal in your favour? 

A: It was a tough negotiation. It took about five to six months. We had an advantage because we have handled one of their projects, Konkola Copper Mines, in Zambia. We bought it (Anglo American sold Konkola to the government, which was later divested to Vedanta) and they liked what we did with the asset. They were confident that we are the best people to handle the asset as we had the necessary experience of handling large projects. 

Q: The deal with Anglo American gives you a 74% interest in South Africa and there’s a clause that the black economic empowerment partner (Exxaro Resources) has the pre-emptive right to match your offer ($332 million). Would they be making an offer or would they be creating any hindrance? 

A: According to local regulation, 26% should be held by the black economic empowerment and they have a pre-emptive right. But going by the number of statements recently made by the company that zinc is not their core business, we don’t think the group will execute the option. We don’t know but they could change their mind. 

Q: How much time do they have to exercise the pre-emptive option? 

A: There is no fixed time. Now Anglo American would approach them and it may take three to four weeks. In fact, even the regulatory approvals would take around four to six months. 

Q: Since the acquisition makes you the largest integrated zinc producer in the world, what would be your future plans? Would you still look for new acquisitions in the zinc space? 

A: We are into the business of aluminium, copper and zinc and we are in a dominant position in each of the businesses. This acquisition is about going to a place and adding value. In zinc, we are not looking at any at the moment. This is good enough to digest for sometime. 

Q. Can you give us an update on your plan to buy out the government’s stake in Hindustan Zinc?  

A. In the government divestment programme, we bought a 45% stake in Hindustan Zinc. There were two call options — one for 19% and the other 29.5%. We had completed the first one in 2003 and now we hold 64.9%. There has been an issue with the validity of the call option. Arbitration proceedings have been going on for some time. The next hearing is in August. We hope to have a successful closure. 

Source: TOI