Indian firm to purchase Irish mine for $308m

INDIAN MINING company Vedanta Resources has agreed to acquire the Lisheen lead and zinc mine in Co Tipperary for $308 million from Anglo American.

This is part of a larger transaction that will involve Vedanta acquiring Anglo American’s global zinc operations for $1.338 billion. The assets in Ireland, Namibia and South Africa will be bought by Hindustan Zinc, a related entity of Vedanta, and paid from the company’s cash resources.

The transaction is subject to regulatory approval, which is expected over the next 12 months.

Lisheen, which employs about 370 workers, is due to wind down in 2014. Analysts yesterday speculated that Vedanta could seek to sell on Lisheen quickly, possibly to mining rival Xstrata, which is involved in a joint venture with Minco on lead and zinc licences at Pallas Green in Limerick.

Xstrata last year proposed a merger with Anglo American but the deal fell through.

In a note to clients yesterday, mining analysts at Liberum Capital in London said: “Given Lisheen’s relatively short mine life and proximity to one of Xstrata’s undeveloped zinc assets (Pallas Green), we see a logical outcome being a sale to Xstrata.”

No comment was available yesterday from Vedanta on its long-term plans for Lisheen. Lisheen produced earnings before interest, tax, depreciation and amortisation (Ebitda) of $72 million on revenues of $301 million in 2009. This compared with Ebitda of $39 million on revenues of $285 million in the previous year.

Lisheen accounted for 45 per cent of Anglo’s zinc revenues last year and 34 per cent of its Ebitda.

Vedanta is a FTSE-100 company controlled by India billionaire Anil Agarwal. It has annual revenues of $6.6 billion and employs more than 30,000 staff.

Lisheen began production in 1999 and is one of the biggest zinc mines in Europe. It started out as a joint venture between listed Irish resource minnow Ivernia West and Anglo American. Anglo eventually assumed total ownership of the Irish mine in 2003. More than two million tonnes of ore a year is shipped from the mine.