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INDIA BUSINESS WORLD - 16th April To 30th April - 2009
VEDANTA PICKS UP 9.5% IN CANADA'S HUDBAY MINERALS
ANIL Agarwal-controlled Vedanta Resources has bought 9.5% stake in a Canadian mining company, setting the stage for yet another takeover battle in North America, its second in the past one year. Vedanta paid about $80 million for the stake in Hudbay Minerals, an integrated miner, with revenue of about Canadian$900 million. The move pits the home-grown resources company directly against Quadra, another Canada-based miner which recently bought 3.7% stake in Hudbay and claims to have the support of the Hudbay management.
A Vedanta spokesperson confirmed the purchase by Amsterdambased subsidiary Lakomasko BV, but declined to comment any further. The move comes comes weeks after Vedanta submitted a $1.7-billion bid for Asarco, a US copper miner. Grupo Mexico, Asarco’s former owner, has rivalled Vedanta’s bid with its own offer of about $1.3 billion.
Hudbay’s board recently said it was exploring options to sell the company to a potential suitor after a new management led by a hedge fund took charge. According to agency reports, Hudbay has hired TD Securities to look for buyers. It is also learnt that mining companies from China are looking at Hudbay.
“Hudbay is essentially a zinc smelter with a high copper content," people close to the development said on condition of anonymity as they are involved in the potential deal.
"It operates both zinc and copper mines and is an ideal target as prices of metals are now coming down,” they added. Hudbay has recently expressed its intention to develop existing mines which would require huge investments.
Prices of resources have fallen after a three-year boom and are expected to recover due to a revival in demand from markets such as China and India. This is also the reason that large Indian steel companies such as Tata Steel and the Jindals are scouting globally for raw material assets to buy at current prices.
With Hudbay, Vedanta could buy efficient smelters and access to markets in central America. Hudbay has concentrators and metal production facilities in northern Manitoba and Saskatchewan in Canada, the Fenix nickel project in Guatemala, a zinc oxide production facility in Ontario again in Canada, the White Pine Copper Refinery in Michigan, US. It also owns the Balmat zinc mine and concentrator in New York State. Hudbay’s Lalor zinc deposit near Flin Flon, Canada and the Fenix nickel deposit in Guatemala require large investments currently.
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