MAC: Mines and Communities

Vedanta in India: a bad project is given thumbs-down

Published by MAC on 2012-01-23
Source: Times of India, Business Standard, The Hindu (2012-01-20)

But two others may yet proceed

The latest attempt by UK-listed Vedanta Resources, to overturn a decision against the expansion of its Lanjigarh alumina refinery, has failed in Orissa's High Court.

For earlier story on MAC: Vedanta's refinery expansion plan suffers another setback

Earlier this month we revealed Vedanta's plan to buy out the government's 49% share in its BALCO subsidiary. See: Vedanta set to grab further Indian resources - twice over

Now the company also plans pushing the government into selling the 29.5% publicly-owned stake in its Hindustan Zinc Ltd  subsidiary.

Meanwhile, Vedanta still awaits official permission to operate its polluting copper smelter in Tamil Nadu - even though the plant hasn't been closed, despite a High Court order of September 2010. See:

Apex court reserves order on Sterlite plant

HC dashes Vedanta hopes to expand refinery

Times of India

19 January 2012

CUTTACK: The Orissa High Court on Thursday rejected the petition of Vedanta Aluminum Ltd (VAL), seeking to recall the court's order of stopping the expansion of its Lanjigarh refinery project in Kalahandi district.

The Orissa high court on July 19, 2011 had rejected the company's plea for a six-fold expansion of its alumina refinery unit at Lanjigarh upholding the decision of the ministry of the environment and forests (MoEF).

Later, VAL had filed a review petition before the High Court seeking reconsideration of the court's order. But the division bench comprising Chief Justice V Gopala Gowda and Justice B N Mohapatra gave a jolt to the company by rejecting the review petition.

"We had filed a review petition before the Orissa high court for reconsideration of our expansion project at Lanjigarh in line with the ministry of environment and forests (MoEF) circular dated November 16, 2010, under which similar cases of Jindal Power Ltd and Lavasa projects have been duly considered. But the high court rejected our review petition citing the MoEF's circular is not applicable to us," said Prashanta Nayak, Vedanta's counsel. "We will move the Supreme court against the Orissa high court's order," added Nayak.

VAL had proposed to expand its one million ton alumina refinery plant at Lanjigarh to 6 million ton and enhance the capacity of the captive power plant from existing 75 MW to 300 MW. VAL had applied for its expansion plan in August 2007 but pending environmental clearance from MoEF, the company went ahead with construction work for its six-fold refinery and four-fold power plant expansion.

The MoEF took note of the violations and ordered halt to the expansion work in October 2010. Challenging the decision of the MoEF, VAL had moved to Orissa high court, but the high court had also rejected its plea.


Sterlite to push govt on HZL

Business Standard (India)

Balco agreement could pave the way for Sterlite to buy residual stake in Hindustan Zinc Ltd

20 January 2012

Shubhashish / Mumbai - With the government agreeing to consider Sterlite's fresh offer to buy the residual stake in Bharat Aluminium Company Ltd (Balco) at a mutually agreeable price, a resolution of the long stand-off between Vedanta Resources and the central government is in sight. Sources familiar with the development said this would pave the way for Hindustan Zinc Ltd's (HZL's) stake buy, as well.

They said the company was looking to push the government to sell its 29.5 per cent stake in HZL at the same time. A company official close to the development told Business Standard that Sterlite, an arm of Vedanta, had been looking to buy the government's stake in HZL for a long time. "With the two parties finally heading somewhere with regard to the Balco stake pricing, Vedanta is keen to push for HZL's stake," he said.

The sources, however, could not confirm whether the company and the government had initiated talks on HZL. An email sent to the company remained unanswered.

Another source said since HZL was a listed company, the valuation was known and transparent. "Since Vedanta is agreeing to buy the government's stake at a mutually agreed price, it will look to apply the same formula for the HZL stake with the share price as a base. What is more comforting in this case is that the company is listed and the valuation is public," he said.

The government is looking to meet its disinvestment target to lower the ballooning fiscal deficit and is eyeing every possible opportunity to do so.

In 2001, Sterlite had bought a 51 per cent stake in Balco from the government for Rs 551 crore. It had a call option to buy the rest, later declared invalid by the government, and the two fought over this.

Sterlite and the government has 65 per cent and 29.5 per cent stake in HZL, respectively. Vedanta owns 54.6 per cent in Sterlite. The market capitalisation of HZL as on date is Rs 52,000 crore. It is a highly profitable company and posted a net profit of Rs 4,900 crore in FY11. Its profit in the first two quarters of this financial year has crossed Rs 2,800 crore. At the current market price of Rs 125 a share, the government's 1.25 billion shares in HZL are worth Rs 15,000 crore.

As on September 30, Sterlite had cash and cash equivalents of Rs 22,706 crore on its books and a debt of Rs 14,900 crore. At the end of the second quarter, cash on HZL's books was Rs 16,295 crore. HZL is a zero debt company.

HZL was divested in 2002 and since then it has invested Rs 12,000 crore in its expansion plans. It is the world's largest integrated producer of zinc at 879,000 tonnes per year.

The company commands 85 per cent of the zinc market in India. Its lead production capacity stands at 185,000 tonnes per year. It is also India's largest primary producer of silver. From 47,000 kg in 2002, the company's silver production grew to 179,000 kg in 20010-11.

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TARGET: HINDUSTAN ZINC LTD

* 8,79,000 tonnes
Zinc production capacity per year. Has 85% of the zinc market in India. Has a lead capacity of 1,85,000 tonnes

* Rs 12,000 cr
Investment in expansion since HZL was divested in 2002

* 1,79,000 kg
Silver production in 2010-11, up from 47,000 kg in 2002. The largest primary producer of silver in India

OWNERSHIP

* 65%
Stake held by Sterlite (majority-owned
by Anil Agarwal's Vedanta), 29.5%
by the government

* MARKET CAPITALISATION Rs 52,000 crore
NET PROFIT Rs 4,900 crore in FY11
PROFIT AFTER H1 has crossed Rs 2,800 crore

* Rs 15,000 cr
The price of government holding in HZL
at current market rate of Rs 125 per share

* Rs 22,706 cr
Sterlite's cash and cash equivalents as on September 30, 2011, its debt stood at Rs 14,900 crore


SC asks Sterlite to seek TN Pollution Board consent

The Hindu

17 January 2012

The [Indian] Supreme Court on Tuesday directed Sterlite Industries Ltd. to file a fresh application before the Tamil Nadu Pollution Control Board to obtain its consent for continuance of the company's copper plant at Tuticorin, which was allegedly causing environmental pollution.

A bench of justices R M Lodha and H L Gokhale asked the company to file its application within 15 days which shall be disposed of by the Board within a month after inquiring into and verifying its claims of complying with various safety and environmental norms.

The apex court further said its October 1, 2010, interim direction staying the operation of the Madras High Court order directing closure of the industry will continue and posted the matter for further hearing to March 28.

The bench also recorded an undertaking from Sterlite Industries' counsel C A Sundram that it has complied with all "green belt" and "health" facilities norms required for ensuring public safety and health.

State's Additional Advocate General Gurukrishna Kumar said the government would examine the claim made by the company in this regard and file its reply.

Sterlite Industries, a subsidiary of UK-based Vedanta Group, had moved the apex court yesterday against the order of the high court which had on September 28, 2010, ordered shutting down of the smelting plant for reportedly failing to comply with environmental norms.

The company, in a special leave petition against the order, had claimed the high court did not give it a proper hearing and ignored its submissions.

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