Vedanta UpdatePublished by MAC on 2007-04-25
25th April 2007
If "hubris" has a name today in India, that name is Anil Agarwal. The chairman and majority owner of Vedanta Resources plc has just beaten Lakshmi Mittal (controller of the world's largest steel maker, Arcelor-Mittal) and the Birlas, in acquiring India's biggest exporter of iron ore, Sesa Goa.
Rio Tinto (the world's second biggest iron ore exporter) dropped from the bidding a couple of months back, as did Anglo American. After over-reaching itself in the recent takeover of Corus (and now having to forage for new finance) Tata Steel wasn't even in the final running.
Vedanta says it will finance the Sesa Goa acquistion through " newly committed bank debt facilities of US$1.1 billion and existing cash resources." The obvious immediate question is: where does this leave its further financing of the huge planned expansion of bauxite-to-aluminium facilities in Orissa? (Goa's iron ore has a high alumina content, while bauxite is also mined in the state; did this have any bearing on Vedanta's corporate play for Sesa Goa?)
However, by now waving its card as indisputably India's largest and most diversified mining company, and with last week's deal increasing its market capitalisation to around £4.1 billion, Vedanta is not likely to be overwhelmed by trying to raise further debt funding from its old US and European banking accomplices.
As for the communities in Goa which have faced Sesa Goa's depradations for many years - or those in the iron-rich Keonjhar district of Orissa * which now have India's most ruthless exploiter on their very doorstep - they arguably face an even more parlous future than they did before last week
But this isn't the only coup apparently just scored by Vedanta. Last year it was rumoured that the highly respected Wildlife Institute of India (WII) had been pressured into diluting its unequivocal recommendtion that there be no bauxite mining of the Nyamagiri hills, under pressure from the company and its polticial henchpeople.
Now, according to the Times of India, that fear was real: the WII has just presented a "mitigation" plan that would allow Vedanta to plunder the hills, even though the impacts would be "irreversible."
[Comment by Nostromo Research, London, 27 April 2007]
* See our Indian update this week for a story from Keonjhar