Vedanta Unit Pays 17.5 Billion Rupees for Mine Assets
June 11 (Bloomberg) -- Vedanta Resources Plc's iron ore unit, India's biggest exporter of the raw material, paid 17.5 billion rupees ($368 million) for Dempo Group's mining assets in the western state of Goa.
Sesa Goa Ltd. funded the all-cash transaction internally, it said today in an e-mailed statement. Panaji, Goa-based Sesa acquired all of V.S. Dempo & Co., which fully owns Dempo Mining Corp. and 50 percent of Goa Maritime Pvt., Sesa said.
Buying Dempo gives Sesa an estimated 70 million metric tons of iron ore reserves and resources in Goa, plus processing plants, barges, jetties and transhippers, according to Sesa. The unit is seeking to increase output and tap demand in markets such as China, the largest user of the steelmaking ingredient.
Sesa rose 12.05 rupees, or 6.7 percent, to close at 192.15 rupees in Mumbai trading. The shares have more than doubled this year. The acquisition was announced after the market closed.
Sesa will spend as much as $700 million to increase mining capacity to 25 million tons by next year, Chairman Anil Agarwal said in September. Sesa sells almost 90 percent of its annual 15 million ton output to steelmakers in China and Japan.
Iron ore prices have retreated after as the global recession eroded demand. Rio Tinto Group, the world's second- largest iron ore exporter, agreed to a 33 percent cut in contract prices with Japanese steelmakers last month.
Rio and BHP Billiton Ltd., the world's second- and third- largest iron ore producers, said last week they will form a $5.8 billion joint venture with their Australian iron ore assets.
"The consolidation in the iron ore industry will ensure prices remain stable and strong," Rakesh Arora, an analyst with Macquarie Group Ltd. in Mumbai, said yesterday by telephone.
To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net .
June 11 (Bloomberg) -- Vedanta Resources Plc's iron ore unit, India's biggest exporter of the raw material, paid 17.5 billion rupees ($368 million) for Dempo Group's mining assets in the western state of Goa.
Sesa Goa Ltd. funded the all-cash transaction internally, it said today in an e-mailed statement. Panaji, Goa-based Sesa acquired all of V.S. Dempo & Co., which fully owns Dempo Mining Corp. and 50 percent of Goa Maritime Pvt., Sesa said.
Buying Dempo gives Sesa an estimated 70 million metric tons of iron ore reserves and resources in Goa, plus processing plants, barges, jetties and transhippers, according to Sesa. The unit is seeking to increase output and tap demand in markets such as China, the largest user of the steelmaking ingredient.
Sesa rose 12.05 rupees, or 6.7 percent, to close at 192.15 rupees in Mumbai trading. The shares have more than doubled this year. The acquisition was announced after the market closed.
Sesa will spend as much as $700 million to increase mining capacity to 25 million tons by next year, Chairman Anil Agarwal said in September. Sesa sells almost 90 percent of its annual 15 million ton output to steelmakers in China and Japan.
Iron ore prices have retreated after as the global recession eroded demand. Rio Tinto Group, the world's second- largest iron ore exporter, agreed to a 33 percent cut in contract prices with Japanese steelmakers last month.
Rio and BHP Billiton Ltd., the world's second- and third- largest iron ore producers, said last week they will form a $5.8 billion joint venture with their Australian iron ore assets.
"The consolidation in the iron ore industry will ensure prices remain stable and strong," Rakesh Arora, an analyst with Macquarie Group Ltd. in Mumbai, said yesterday by telephone.
To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net .
No comments:
Post a Comment