in an effort to expand, a UAE behemoth seeks a controlling share in Vedanta's mines in Zambia

in an effort to expand, a UAE behemoth seeks a controlling share in Vedanta's mines in Zambia

Anil Agarwal, the billionaire Indian, owns Vedanta, which owns 51% of Konkola Copper Mines (KCM). The International Holding Company unit recently made an offer of more than $1 billion to purchase Vedanta.

in an effort to expand, a UAE behemoth seeks a controlling share in Vedanta's mines in Zambia.

In an effort to establish an African copper mining empire, the mining investment division of Abu Dhabi's most valued firm has made an offer to purchase the bulk of Vedanta Resources' copper holdings in Zambia, two people familiar with the situation told Reuters.

Anil Agarwal, the billionaire Indian, owns Vedanta, which owns 51% of Konkola Copper Mines (KCM). The International Holding Company unit recently submitted an offer of more than $1 billion to purchase Vedanta.

After spending $1.1 billion to acquire a 51% share in Mopani Copper Mines, the company, International Resources Holding (IRH), is rushing to expand its rapidly expanding copper mining operations in Zambia. Last month, IRH announced that it will make a bid for EMR Capital's interest in the Lubambe Copper Mine, which is also up for sale.

The oil-rich United Arab Emirates (UAE) and Saudi Arabia are pushing for essential metal supplies from Africa as part of a deal-making binge that may also enable them to take part in the shift to renewable energy.

One of the individuals said that negotiations are still underway and that the IRH offer for a majority interest is non-binding. According to the source, Vedanta may object to relinquishing its majority stake in KCM since it has always desired to have the assets included on its financial sheet.

Answering a request for comment, IRH said, "We are firmly dedicated to strategically growing our footprint in the copper mining industry, as shown by our ownership of several properties. Regarding "ongoing discussions," it refused to comment.

In an attempt to obtain money to resuscitate the assets, which were almost completely paralyzed in an ownership dispute with the government that erupted in 2019 while the then-administration seized them, Vedanta wants to sell a portion of its 80% holding in KCM. To that end, it has recruited Standard Chartered to oversee the process.

Through the state company ZCCM-IH, the Zambian government controls 20% of KCM.

According to the sources, Stanchart sent out a "request for proposals" to investors looking to purchase a minority stake in KCM. According to the sources, IRH is solely interested in acquiring a controlling position in KCM since, given the company's lack of profitability and high investment requirements, there are no obvious advantages to becoming a passive investor in the business.

When asked about Stanchart's role in the business's "broader strategy to manage its capital structure as well as ensure the company has the funds necessary to meet its obligations as well as continue operations again," Vedanta provided an explanation.

"As part of this process, we are engaging with prospective partners for both short-term financing as well as longer-term equity financing but are unable to provide the names of these partners or investors due to the sensitive stage of these conversations have reached."

DIFFICULT LEGACY

After lengthy legal fights, including international arbitration, Vedanta recently reclaimed ownership of the assets from the former Zambian government, which had confiscated the copper mines and smelting facilities on the grounds that the business had neglected to invest in increasing copper output.

The legal disputes that surfaced after the government ordered KCM into liquidation in May 2019 deprived the company's operations of new funding and almost brought them to a complete halt.

According to Chris Griffith, the CEO of Vedanta's base metals segment, who spoke with Reuters in February, the company now seeks to raise around $1 billion to invest in the assets over the next five years and an extra $300 million to settle existing debts with local creditors.

The Konkola Deep Mining Project, an underground operation that has one of the richest copper resources in the world, needs a large portion of the money to be advanced.

According to a third source, Vedanta is willing to selling either a majority or minority ownership, and the business is receiving interest from several investors.

The removal of groundwater from the Konkola Deep underground operation is one of the difficult circumstances that may unnerve investors, but a rebound in copper prices is expected to feed their interest in the assets, another source at a major miner that previously investigated a deal over the assets told Reuters.