Multinational Indian miner Vedanta Ltd. (NSE: VEDL) is selling its zinc assets to a unit of the company, Hindustan Zinc, in a US$2.98 billion all-cash deal.
Vedanta Ltd. and Hindustan Zinc are part of the London-based Vedanta Resources group. According to Bloomberg Intelligence, Vedanta Resources has about US$900 million of notes due in the first six months of this year.
In a filing, Vedanta Ltd. said its zinc assets are held by its subsidiary, THL Zinc Ventures, and consist of shares in Black Mountain Mining Ltd. in South Africa (69.6%) and THL Zinc Namibia Holdings Ltd. (100%).
Black Mountain Mining has two underground shafts-Deeps and Swartberg-and a processing plant. Both shafts produce copper and lead, with silver as a by-product. Deeps also produces zinc. The Namibian holdings include the Skorpion zinc mine and a refinery.
Mumbai-headquartered Vedanta Ltd. noted that the proposed transaction "will unlock value, monetize the said zinc assets and create substantial synergies for both THLZ and HZL."
The transaction will occur in a phased manner over an 18-month period.
Hindustan Zinc-India's largest and the world's second largest zinc-lead miner-owns lead-zinc mines and smelter complexes as well as sulphuric acid and captive power plants in northwest India. The company is headquartered in Udaipur in India's state of Rajasthan.
Parent Vedanta Resources is primarily owned by Indian billionaire Anil Agarwal, the company's chairman.
In November, credit rating agency Moody's downgraded the corporate family rating (CFR) of Vedanta Resources on debt concerns. CFRs are long-term ratings that reflect the likelihood of a default on a corporate family's debt and obligations.