The London-based mining group Vedanta Resources has purchased Anglo American's zinc assets for $1.34 billion, in order to increase its exposure to the metal, it has been announced.
Vedanta has bought assets including the Skorpion mine in Namibia, Lisheen in Ireland and Black Mountain in South Africa, making it the world's largest zinc producer with 11 per cent of the global market.
Anglo announced the sale of its zinc assets in October as it sought to focus on key long-life commodities such as copper, iron ore and platinum via a divestment programme.
Of the total purchase price, $698 million relates to the Skorpion mine, $308 million relates to the Lisheen mine and $332 million relates to AngloÔÇÖs 74 per cent interest in Black Mountain Mining.
The completion of the transaction is expected to be in stages, with separate completion dates for Skorpion, Lisheen and Black Mountain. The transaction is also subject to regulatory approvals as well as competition clearance in the relevant jurisdictions.
Vedanta will also acquire South AfricaÔÇÖs Gamsberg zinc projects, one of the largest undeveloped zinc deposits in the world, with a mineral resource of 186 million tons of ore. Planned production capacity is 400 kilotons per annum of zinc metal, with an operating life in excess of 20 years and potential for further exploration.
Anil Agarwal, chairman of Vedanta, said: "We are delighted to have reached this agreement with Anglo American to acquire their portfolio of zinc assets. These high quality assets complement Vedanta's existing portfolio, creating the largest zinc and lead producer in the world. We intend to rapidly develop Gamsberg, one of the largest high quality zinc projects in the world, leveraging our world-class large project development expertise.ÔÇØ
He continued: ÔÇ£Vedanta has consistently demonstrated a track record of successfully integrating and investing in its acquisitions, and we look forward to working with the high quality management team and employees of Anglo American Zinc, Exxaro and the local communities towards growing the business."
Cynthia Carroll, chief executive of Anglo American, added: "The successful sale of Anglo American Zinc for $1,338 million following our announcement in October last year is testament to the high quality of the business and its management team. This agreement represents an important milestone in our strategy to focus on our core commodity businesses and on the delivery of our exciting near term growth from our $17 billion of approved projects.
ÔÇ£I am grateful for the support received from Anglo American ZincÔÇÖs management and employees and I believe they will benefit under the ownership, and with the development plans, of Vedanta.ÔÇØ
The purchase will substantially increase Vedanta's zinc and lead production capacity, increasing annualised production capacity from 1,064 kilotons per annum to 1,462 kilotons per annumÔÇöan increase of 37 per cent.
It also increases Vedanta's total reserves and resources by 76 per cent.
For the year ending 31 December 2009, Anglo American Zinc generated gross revenue of $670 million and operating profits of $154 million. It had gross assets of $845 million, which produced 343 kilotons of zinc metal and 55 kilotons of lead metal.
