Vedanta to sell South Africa, Namibia mining units to Hindustan Zinc; stock surges

Billionaire Anil Agarwal-led Vedanta on Thursday said the company will be selling its mining business in Namibia and South Africa to its subsidiary Hindustan Zinc Ltd (HZL) for $2.98 billion. The company’s board approved the sale of the Zinc International business held by THL Zinc Ventures Ltd (THLZV), which is a wholly-owned subsidiary of Vedanta. 

“The SPV will purchase/subscribe to the equity share capital of THLZ for a cash consideration not exceeding $2,981 million (in a phased manner basis agreed milestones). After the above transaction, THLZ will utilize the funds received from the SPV to provide a suitable exit to THLZV such that the SPV will become a 100% holding company of THL Zinc Ventures Ltd (Mauritius) ( THLZ),” the company said.   

The proposed transaction will ensure the asset sale of Black Mountain Mining Pty Ltd, South Africa, and HL Zinc Namibia Holdings (Pty) Ltd to Hindustan Zinc Limited. Vedanta holds a 69.6% stake in Black Mountain Mining, whereas a 100% stake in HL Zinc Namibia holdings. 

The company says through the proposed transaction, Hindustan Zinc will be able to grow and increase its foothold overseas and take its brand globally. With the R&R of Zinc Assets, HZL will have the combined Reserves & Resources of 1,000+ Mn T of ore & 65+ Mn MT of Metal across India and Africa. 

The shares of Vedanta surged 1.01% at ₹334 today. The shares of Vedanta opened higher at ₹338, against the previous closing price of ₹330.70. The company’s market capitalisation stood at ₹1,24,191 crore, with as many as 5,21,431 lakh shares exchanging hands on the BSE against the two-week average of 2.81 lakh. 

Meanwhile, in the October to December quarter last year, Hindustan Zinc Limited reported a decline in net profit by 20.17% to ₹2,156 crore against a net profit of ₹2,701 crore in the year-ago period. The company’s revenue from operations plunged 2.71% to ₹7,628 crore in the December quarter against ₹7,841 crore in the year-ago period. The company’s zinc production during the quarter witnessed a slump of 1.7% YoY at 210 kT. Its nine-months integrated zinc production surged 7.3% YoY at 606 kt. 

Apart from this, Vedanta made some strategic announcements as part of the company’s commitment to net zero by 2050. The company is targeting the use of 500 MW of RE RTC power in its operations by 2030. The company’s board has also approved a further investment of up to approximately ₹438 crore under the Group Captive Scheme for sourcing up to 250MW of renewable energy in phase II, which will enable HZL to get more than 50% of its total power consumption through RE resulting into reduction in ~2.7 MnT of carbon emission.