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THURSDAY, AUGUST 13, 2009

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* Posted: Thu, Aug 13 2009. 12:55 AM IST
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Iron ore market has definitely bottomed out
Vedanta Resources Plc. chairman Anil Agarwal says that the firm was well placed to win the Asarco Llc bid
Shereen Bhan / CNBC-TV18

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Mumbai: Metals and mining company Sterlite Industries India Ltd, which is competing with Grupo Mexico SAB de CV to acquire Asarco Llc, says it has put in its final bid and won’t raise it further. Sterlite raised its bid to $1.5 billion (Rs7,260 crore), while Grupo Mexico’s revised bid stood at $2 billion. Anil Agarwal, chairman of Vedanta Resources Plc., which owns Sterlite, said in an interview that it was well placed to win the bid. Edited excerpts:

Future plans: Vedanta Resources chairman Anil Agarwal says he wants to see Sesa Goa become the third largest iron ore firm in the world. Abhijit Bhatlekar / Mint

Future plans: Vedanta Resources chairman Anil Agarwal says he wants to see Sesa Goa become the third largest iron ore firm in the world. Abhijit Bhatlekar / Mint

Why did you raise the Asarco bid? People are focused only on the cash bid being raised but with the cash and the bonds put together, have you not raised the bid amount significantly?

We have raised almost about 10-15% altogether... but that is our final offer and we believe that it is the best offer we can put on the table.

Given that you have always considered this a fairly strategic asset, would you be content to walk away even if there is a marginal upbeat by Grupo Mexico which pips you to the post at the last moment?

As far as we are concerned, we have looked at this asset and we believe that we can turnaround this asset. It has a good potential for us to look into. But at this point of time, I think we are very well placed. If that does not happen, it is fine with me.

Do you think your bid should be the winning bid?

I believe that because the stakeholders are favouring us and that is how the indication is coming and we believe that is what is going to happen.

What signals are you getting from China because for last few days, there has been a little bit of turbulence in the commodity market on talk of tightening by China, overheating in the Chinese market? Are those concerns justified?

I have been saying that the commodity price is going to be flat.

All the commodity prices are still about 40-50% lower from peak, so maybe it has moved up for about 10-15% on some demand, some growth story in China and some parts of India, but I don’t foresee any reason for prices to move up significantly as far as the commodities of copper, aluminium or zinc are concerned.

Do you expect any major correction because many of these commodities have gone up between 80% and 100% year-to-date? Do you see the possibility of a 15-20% kind of correction in either of these two, copper or aluminium?

It has gone up 35-40%. Mines are a scarce commodity and it is very difficult to have an opening of a new mine or a new production to come up. I don’t foresee any major correction to take place.

If you do manage to buy Asarco at this current bid, given where copper prices are right now, do you think the deal will immediately be EPS (earnings per share) accretive?

I think so, because it is already making a profit and there is a potential and we can improve a lot in the operation and I am positive about it.

Give us one word on iron ore and what signals you are getting from that market. Given recent negotiations and where deals have been struck, would you say that the iron ore market has bottomed out?

I think so. Iron ore market has definitely bottomed out. We have seen very good signals, prices are moving up and the cost of production has gone up very high of some of the mines. So in iron ore, the prices have moved up and I believe that they are going to sustain on these levels.

By when will Sesa Goa Ltd start showing year-on-year growth in revenues and profits?

I have a vision that it should be the third largest iron ore company in the world, which should start producing 50 million tonnes and going forward to 100 million tonnes. I am looking forward to it and it is going to happen.

India has a tremendous resource. I have seen Australian droughts year after year and they have alternative resource which is a natural resource and they have grown with that and sustained. I think India is going to do the same thing. We have a tremendous natural resource and if we do it properly, I think we will be able to overcome this calamity.

cnbctv18@livemint.com
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