MAC/20: Mines and Communities

Agarwal's Big Steal

Published by MAC on 2007-02-15

Agarwal's Big Steal

Rumours circulated last week in London (possibly promoted by brokers or hedge funds) that Vedanta is now "ripe" for a takeover.

This doesn't seem likely, but who knows?

The speculation followed two announcements by the company that it is in "talks" with some global steel companies to advance its intentions in India. Mittal and Posco have been mentioned as putative joint venture partners with Vedanta.

As yet, neither Tata, BHPBilliton, nor Rio Tinto (with their greasy claws poised on Orissa) seem to be talking with Agarwal. However, on January 31, Tata finally secured Corus, the UK-Dutch company which is the second biggest steel maker in Europe. What more thrilling game could Agarwal now contemplate than linking with Tata-Corus?

After all, he has an MOU with the Orissa state government, signed three years back, to set up an iron/steel unit in Keonjhar, while the purported EIA for the Nymangiri mine was carried out by Tata-AIG.

Never one to bet on only one horse, Agarwal has also expressed interest in acquiring Mitsui's 51% stake in Sesa Goa, the large private iron ore company operating in India.

To cap it all, the bauxite bandit announced just over two weeks ago (as he was receiving a prestigious Indian industry award for corporate excellence) that he's also going after gold, strongly hinting that Vedanta is in the running to acquire Kolar Gold Fields in Karnataka, should it be privatised.

It's more than a year ago that Agarwal said he intended to diversify into iron and gold, but now he's more specific in identifying his targets.

Doubtless, he was given a boost in this direction by managing to persuade Canadaian regulatory authorities to support his takeover of Sterlite Gold in Armenia last year - a company which he promply merged into Vedanta Resoures plc in the UK.

Not that the going will be smooth. After apparently shelving a case laid against him for a brace of alleged deceptions associated with his gold operations in Armenia, the government there is now reviving its legal proceedings.

Cash for Honours

Meanwhile, as Laskmi Mittal (who's just given the faltering British Labour Party two million quid) and Ratan Tata (a select member of British Chancellor of the Exchequer Gordon Brown's economic think tank) wonder whether they'll get a peerage or a knighthood in return for "Backing Bliar", Agarwal must also be cherishing the prospect of a UK honour of his own.

Last week, the same Gordon Brown declared that "immigrants" to these isles should have to perform a test of their "Britishness"; and if anyone's likely to fall foul of this spurious criteria it's going to be poor British south Asians (especially women).

Upper-class Indians, secure in their luxury London mansions, don't need to worry a jot.

[Commentary by Nostromo Research, London, 2 February 2007]

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