Govt may okay Vedanta’s Rs.17k-cr offer
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"They have been sounding us out. We have had two rounds of discussions over the past month and the government has been asking us whether we can conclude the deal by the fiscal year end," he told FE. The government holds minority stakes of 29.5% in HZL and 49% in the unlisted Balco. Vedanta's revenues in the year to March 2012 was $14 billion while net debt stood at $10 billion. Vedanta has already taken shareholder approval for its bid to buy the residual stake.
Agarwal said the group was in talks with the ministry of mines for accessing bauxite from the state-owned Nalco to produce aluminium. The company has been unable to source bauxite from Niyamgiri Hills to feed its 1 million tonnes per annum alumina refinery at Lanjigarh, Orissa, and has served a notice on the state government that it will shut down the plant on December 5, 2012.
The Lanjigarh refinery needs 10,000 tonnes of bauxite every year. "The country is full of bauxite," Agarwal said. "It is up to the government to allocate this."
On the approval for further exploration of oil in Rajasthan with Cairn India, Agarwal said no decision has as yet been made on its application for further exploration. Once the approval is given, Cairn can ramp up production from the current 175,000 barrels per day to 300,000 barrels per day within a period of two to three years. Once the clearances come through, based on the terms of the production sharing contract and a $100 per barrel price, the government stands to gain around $30 billion (of this, $8 billion goes to the Rajasthan government) over 20 years, or around $15billion on a net present value basis, assuming a discount rate of 10%.
Commenting on the state-wide ban on iron ore mining in Goa, where the group's Sesa Goa is located, Agarwal pointed out it was a colossal loss for the country since the mining industry in Goa contributed Rs 7,750 crore annually to the central and state budgets while employing 400,000 people. The closure of the industry meant the country would end up losing $4 billion worth of forex each year – against a potential of 600 million tonnes of iron ore development in a year, India produced only 169 million tonnes last year. "The only way India can provide employment is through industry and if we carry on denying industry permissions, it will keep industry away and we will remain an import-dependent economy," Agarwal observed.