2nd UPDATE: Vedanta Enters W Africa With Liberia Iron Ore Stake Buy
08 Agosto 2011 - 3:39PM
Dow Jones News
U.K.-listed, India-focused Vedanta Resources PLC (VED.LN) Monday
became the latest miner to enter the fray over West Africa's vast
iron ore deposits by purchasing a majority stake in Western Cluster
Ltd., a Liberian iron ore exploration company.
Vedanta, through its majority owned Sesa Goa Ltd. (500295.BY)
iron ore unit, has agreed to purchase a 51% stake in Western
Cluster Ltd. for $90 million in cash. Sesa Goa is acquiring the
stake from Elenilto Minerals & Mining LLC, a unit of
Israel-based real-estate developer Engelinvest Group.
WCL won the bid for an iron ore project in Liberia that has
long-life potential with iron ore resources in excess of one
billion metric tons and saleable product of 330 million tons.
With this purchase, Vedanta, a FTSE-100 company, is joining an
iron ore investment bonanza that is taking place in Western Africa.
Mining companies and steel producers from around the world are
flocking to the region to develop large deposits of the steelmaking
raw ingredient in order to export it to fast-growing emerging
economies such as China, where demand for the product remains high
due to the fast-paced process of urbanization and
industrialization.
The purchase marks Vedanta's first iron ore foray out of India.
Vedanta is already present in South Africa, Namibia and Zambia
through zinc and copper investments but at the moment only produces
iron ore in India through its Sesa Goa unit.
ArcelorMittal (MT), the world's largest steel producer and a
large iron ore producer, is already present in Liberia with an iron
ore project that will ship its first commercial product in the
third quarter of this year. Brazil's Vale SA (VALE) and
Anglo-Australian mining titan Rio Tinto PLC (RIO), the world's
largest and second largest iron ore producers respectively, are
also present in neighboring Guinea where they're investing billions
of dollars in mining projects and infrastructure to transport
high-quality iron ore to the coast for export.
P.K. Mukherjee, managing director, Sesa Goa said: "we are highly
delighted with this opportunity to consolidate our iron ore
business. The Western Cluster Project presents an excellent
opportunity for developing a large integrated mining operation and
establish our presence in Liberia and Africa."
Sesa Goa said the project is in close proximity to existing port
infrastructure and access to land for a railway corridor, thereby
giving the company a strong presence in the upcoming iron ore hub
catering to seaborne iron ore trade.
Vedanta' shares were down 5.5% or 78 pence at 1,341 pence a
share while the FTSE 350 mining index was down 4.1%.
-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328;
alex.macdonald@dowjones.com (Peter Evans in London contributed to
this story.)
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