Billionaire Agarwal Says His Anglo American Approach Made Sense

JOHANNESBURG (Capital Markets in Africa) – Anil Agarwal, the Indian billionaire owner of Vedanta Resources Plc, said a proposed tie up between his Hindustan Zinc Ltd. unit and rival miner Anglo American Plc would have been a good match.

Anglo rebuffed informal approaches from Agarwal in the first half of last year when he contacted it to discuss potential ideas including a combination with the Indian zinc miner he controls through Vedanta, people familiar with the plans said at the time. They were quickly dismissed by Anglo, the people said.

“There was a proposal that Hindustan and Anglo American should merge,” Agarwal said in an interview Thursday at the World Economic Forum in Davos, Switzerland. “It was a good match. One and one wasn’t going to be two, but 11.”

The approach came as Anglo battled a crisis spurred by a commodity rout when it was burdened with debt. Chief Executive Officer Mark Cutifani responded with plans to reshape the business to deal with lower prices, cut borrowings and exit coal and iron ore to focus on more profitable diamond, platinum and copper mines. Cost cuts and assets sales since then, along with a commodities recovery, helped Anglo’s stock end the year up almost fourfold.

Agarwal’s comments in Davos are the first public confirmation that he approached Anglo for merger talks. A spokesman for Anglo declined to comment on Thursday.

The billionaire, who praised Anglo’s “phenomenal” management, said he wouldn’t rule out any future discussions. “It is always good to be thinking better, but at the moment we are not actively talking,” he said.

Vedanta Ownership
Vedanta Resources has interests in zinc, copper, iron ore and energy and is valued at about $3.4 billion. The London-listed firm controls Vedanta Ltd., which in turn owns about 65 percent of Hindustan Zinc, while the Indian government owns 29.5 percent, according to its website.

Agarwal also said he has confidence in Vedanta Resources CEO Tom Albanese, who was chief of Rio Tinto Group when it paid $10.5 million to a consultant in Guinea in 2011 regarding the Simandou iron ore project. Rio’s Alan Davies, who headed the energy and minerals unit responsible for Simandou at the time, was fired last year and the company is investigating the payments. Albanese discussed the payments in e-mails seen by Bloomberg News.

“What’s happening to him is his personal matter,” Agarwal said. “He is very hard working. I have full faith in him.”