Vedanta rebounds from 52-week low on buzz to acquire African copper biz from parent

Shares of Vedanta witnessed choppy trade on Wednesday, hitting a 52-week low in early deals as the mining heavyweight witnessed sustained selling pressure in four out of the last five trading sessions. The billionaire Anil Agarwal-led stock has fallen nearly 5% in the last five sessions amid renewed concerns about piling debt of its London-based parent, Vedanta Resources, which has to repay term debt worth $4.2 billion in the FY24. 

Early today, Vedanta share declined 0.7% in opening trade to hit a fresh 52-week low of ₹230.15 on the BSE, after falling 2.7% in the previous session. The stock, however, rebounded 1.8% from the day’s low to touch a high of ₹234.25 in the first hour of trade so far. The market capitalisation stood at ₹86,109 crore at the time of reporting.

Vedanta shares have delivered a negative return of 16.5% in the last one year, while it tumbled 27% on year-to-date. In the past six months, the counter has lost 17%, while it slipped 1% in a month.

The largecap stock, currently, trades 31% lower than its 52-week high of ₹340.75 touched on January 21, 2023.  

The stock price got a boost today amid a report that Anil Agarwal mulls transferring Zambia’s Konkola Copper Mines (KCM) — the country’s largest integrated copper producer — from his group’s holding company Vedanta Resources to Vedanta. In a post on X, formerly known as Twitter, Agarwal says that “KCM can be moved from Vedanta Resources to Vedanta Ltd at the right valuation”.

In his post, Agarwal says that the return of KCM to Vedanta Resources comes at a perfect time. Last week, the Government of the Republic of Zambia, which owns a 20% stake in KCM, allowed Vedanta Resources to take control and operate the copper mines and smelter plant.

"Copper is a key metal for world's decarbonisation. Demand is growing rapidly. In India, growth is over 20% annually. Vedanta acquired KCM in 2004 and made good profits when global copper prices were only $4,000. Now, global copper prices are around $8,500 and technologies are much superior so profitability will be much higher," he tweets.

He further states that there is a need to maximise synergies between KCM and Vedanta's refining or smelter businesses in UAE and India. "We can create a fully integrated copper vertical and eventually, a successful global copper company, like Chile's Codelco and Mexico's Southern Copper. We have other big projects coming up in the copper blocks that we have won in auctions and smelters in international geographies," he says.

According to Vedanta, KCM has reserves and resources of 16 million tonnes of contained copper. It has a copper grade of 2.3% which compares very favourably with the global average of 0.4%. The company believes that KCM will form the backbone of its strategy to vertically integrate in copper which is critical to the energy transition needs of a decarbonising world.

The reinstatement of Vedanta as the majority shareholder with a 79.4% stake in KCM is also a significant step for India at a time when the country’s demand for copper, a critical mineral for the energy transition technologies, is growing at around 25% every year.

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