Vedanta Resources would search for oil off SA’s west coast as it confirmed its interest in the country’s mineral wealth, said chairman Anil Agarwal, who, as Anglo American’s largest shareholder, is urging the London-based company to remain true to its South African roots.
Vedanta was the largest private oil producer in India, supplying 30% of the country’s output, Agarwal said.
“We have taken some [exploration] licences in SA and looking at how we can explore that, but it’s very early stage. There’s a very good probability in SA to produce oil,” said the billionaire businessman.
Agarwal has used the family’s Volcan group to invest in Anglo, giving it a 21% stake in the company through a complex mechanism of borrowed shares in an exchangeable bond structure, which entails him to either buy the shares or return them to shareholders. Of the 21%, Agarwal only owns 2% outright.
In a wide-ranging interview on the sidelines of the African Mining Indaba, Agarwal reiterated earlier comments that he was “not an activist” shareholder in Anglo, but that it was an investment with which he was pleased because the value had increased 50% since he started taking a stake in the diversified miner.
There was no plan to merge Anglo with Vedanta, he said. “At the moment there is nothing of that sort. We have nothing on the cards to do anything together. We are so comfortable running Vedanta. We have enough to do.”
Agarwal did, however, say he had spoken to Anglo CEO Mark Cutifani and chairman Stuart Chambers on a number of occasions about the company’s strategy, particularly in SA where he was loath to see the group breaking up its asset base as it had detailed in 2015 to reduce debt of $13bn.
He has urged Anglo to step up investments in its South African suite of assets, ranging from platinum group metals, iron ore, thermal coal, diamonds and manganese.
On Monday, Agarwal unequivocally said that he was not lining up Volcan or Vedanta for any asset sales Anglo might have considered in SA.
“Not at all. We always wanted Anglo to be rooted in SA. At the moment they are focusing on SA, but they should also look at more investment in South African mining and exploration to expand their capacity. They are so competent they will decide on which minerals. But their focus has come back to SA,” he said.
Quite what the reception within Anglo has been to his suggestions on SA is unknown, but Anglo has stopped its asset disposal programme in SA and abroad as commodity prices firmed and the company generated cash to repay debt. A number of analysts have urged Anglo to dispose of its South African businesses, reducing its exposure to what they considered a risky investment destination.
An Anglo insider said the talks with Agarwal were cordial and he was “very supportive of everything we’re doing”.
Vedanta is a large investor in SA, pumping nearly $1bn into a zinc project in the Northern Cape, while it has copper mines in Zambia, where it is in talks with the government to build a 300-500MW power plant to supply its operations and feed power into the national grid, Agarwal said, pointing out that Vedanta was a major power producer in India, supplying its iron, aluminium and zinc businesses with electricity as well as the national grid and would use that experience in Zambia.
Source: Business Live