Culprit company announces huge expansion of Goa mines
Not to be out-manoevred by adverse publicity attaching to its abject failure to protect workers in Chhattisgarh, UK-listed Vedanta has announced a massive expansion of its parlous iron ore mining in Goa and elsewhere in India.
Just over a week ago, the company's Sesa Goa subsidiary was found guility of significant environmental violations at one of its largest mines in Goa. See: http://www.minesandcommunities.org/article.php?a=9494
The expansion is being funded by a foreign exchange bond issue, underwritten by two international banks, Goldman Sachs and Morgan Stanley.
Vedanta on path to 50 million tonnes annual iron ore output; the UK company increases its stake in Sesa Goa
25 September 2009
Barely 36 hours after members of Vedanta's workforce in Korba fell victim to one of the worst industrial disasters in recent Indian history, the UK company's iron-ore subsidiary, Sesa Goa, has announced issue of a FCCB (Foreign currency Convertible Bond), valued at US$ 500 million.
The finance will be devoted to a major, aggressive, expansion of Sesa's operations in the "sunshine state" of Goa, and elsewhere in India - to a massive 50 million tonnes a year.
Over the past fortnight, Vedanta, through three of its "promotional" subsidiaries (Westglobe, Finstar, Twin Star), increased its stake in Sesa Goa to 57.1%
Bankers in the frame - again
Goldman Sachs and Morgan Stanley are book runners for the bond issue.
Last Friday PK Mukherjee, Sesa's general manager in Goa, gave an interview to leading Indian TV channel, NDTV *.
Viewers may find it savagely ironic that this self-congratulatory interview was screened barely 36 hours after the disaster in which at least 25 workers - and possibly as many as a hundred - died while constructing Vedanta's Korba power plant in Chhattisgarh.
[Financial note: Earlier this year, Vedanta said it was raising its 53.1% stake in Sesa Goa to around 55%, using existing funds. Sterlite's US$1 billion convertible US bond (ADR) issue in June 2009 was designed for unspecified acquisitions and other capital expenditure. Vedanta announced that its takeover of Goa-based mining company, V S Dempo & Co Ltd, in early June, would be funded from existing cash balance [Dow Jones, 12 June 2009.]
* Watch the NDTV video:
"Sesa Goa plans to raise $500 million via FCCB. PK Mukherjee, the MD, said the company has huge growth plans and it is looking to expand it capacity to 50 million tones in two to three years."