Vedanta to spend US$9.8 billion raising aluminum output, reorganise

Tag : aluminum
Vedanta to spend US$9.8 billion raising aluminum output, reorganise

Vedanta Resources Inc plans to invest US$9.8 billion to liftaluminum production and reorganise
Vedanta Resources Inc, the Indian mining company controlled bybillionaire Anil Agarwal, plans to invest US$9.8 billion to becomethe world`s fifth-largest aluminum producer and also plans areorganisation to eliminate cross holdings and streamline thecorporate structure.
The company said it would raise annual smelting capacity to almost2.6Mt by 2012. It plans to build an aluminum smelter and powerplant in India`s Orissa state.

Vedanta will also expand a refinery producing alumina. "Thealuminum expansions highlight once again the scale of management`sambitions to leverage off the company`s advantageous position inIndia and, in turn, the abundance of mineral resources within thecountry,`` JPMorgan Cazenove Ltd wrote in a note.

The increase in alumina output to 5Mt/y will be achieved by addingan additional 600,000t to the existing 1.4Mt capacity at theLanjigarh plant in Orissa by 2010 and building 3 production streamsof 1Mt/y each, Vedanta said.

Vedanta said planned changes to its corporate structure wouldresult in three units focused on commodities produced by the group:copper, zinc and lead; aluminium and energy; and iron ore.

A string of acquisitions in recent years had resulted in crossholdings between group companies and overlapping businesses, astatement said. "We believe that the resulting structure will bringmaterial improvements to our organisation and will improve focusand transparency across our businesses," chairman Anil Agarwalsaid.

The reorganisation, which will take effect in April next year, willinvolve share swaps between several of the current group companies.Independent consultants had evaluated the share swap ratios toensure all shareholders were being treated fairly, it added. Thereorganisation will result in focused management teams, betterdecision making and will eliminate conflicts of interest betweengroup companies.

The move would not affect the buyout of minorities in both BALCOand HZL and further consolidation of minority interests wouldcontinue, it added. "Post completion of the restructuring, Vedantawill continue to seek opportunities to further simplify, streamlineand collapse the corporate structures within the new businessgroups," it said.

"This is to simplify corporate structure and to ensure clearallocation of opportunities and eliminate conflict of interest,``Agarwal, who is also Vedanta`s chairman, told reporters today inMumbai. "When opportunities arise, people wonder which company itshould go to. With the new structure, it will be clear who will ownwhich asset."

Vedanta declined 16 pence, or 1%, to 1,569 pence at 10:30 am on theLondon Stock Exchange. The shares have fallen 23% this year, paringthe company`s value to £4.5 billion (US$7.9 billion).

The Bloomberg Europe Metals & Mining Index, which tracks 14stocks, was down 2.3% on September 9.

(Reuters/Bloomberg, September 9)

Related articles:
KONKOLA TO LIFT COPPER
Vedanta scores highest-ever revenue on strong metals
VEDANTA BOOST