IMG to vet Vedantas offer for stakes in HZL, Balco

Written by fe Bureau | New Delhi | Updated: Sep 12 2012, 06:52am hrs
The Cabinet Secretariat has asked mines ministry to discuss metal major Vendantas offer to buy stakes in Hindustan Zinc and Bharat Aluminium Company (Balco) with the inter-ministerial group (IMG) before sending it for approval.

The Cabinet Secretariat has asked us to get the Vedanta proposal vetted by the inter-ministerial group first. We are discussing that, Vishwapati Trivedi, mines secretary, said on Tuesday. Vedanta on Monday sweetened its offer to buy stake into Hindustan Zinc and Bharat Aluminium.

Its shareholders recently cleared its proposal to pay R21,635 crore 25% more than the earlier offer to buy 29.5% stake in Hindustan Zinc, and 49% in Balco. The proposal was later sent to the mines ministry which forwarded it to the Cabinet Secretary.

The London Stock Exchange-listed company had acquired 51% stake in Balco in 2001 and 64.9% stake in Hindustan Zinc during 2002-2003. In January, it had offered R15,493 crore for buying 29.5% in HZL, and R1,782 crore for the Balco stake.

The deal, when completed, would help the government to meet over 72% of its R30,000 disinvestment target. Trivedi said there was no deadline for it to be sent to the Cabinet as a consensus has to be reached first at the IMG which would have officials from the finance, mines and other ministries.

The mines ministry is also looking at reducing export duty on certain grades of iron ore. The idea, Trivedi, said was to sell the lower grade of the iron ore such as fines, which are not being used by the domestic steel companies. We have not decided how much and when but we are considering a reduction in lower grades of iron ore. We are yet to send a note on this to any other ministry, he said.

The iron ore exports attract a 30% duty. The mines ministry's views on lowering this may not go well with the steel ministry, which has been insisting on having such measures to control the export of iron ore.