With Vedanta Resources (VRL) unwilling to lose its majority stake in Zambia-based Konkola Copper Mines (KCM), plans of UAE-based International Resources Holdings (IRH) to buy a 51% stake in KCM may not materialise. Besides, the company helmed by Anil Agarwal could be reluctant to let go of its majority stake in KCM, as the latter’s operational visibility is improving, according to a report by CreditSights.
“We anticipate VRL to be highly unwilling to lose its majority ownership of KCM, given its track record of being very protective of its majority ownership in its assets. Additionally, improving operational visibility at KCM, continued strength in copper prices and KCM’s high-quality, large-ore reserves could further raise VRL’s reluctance towards a majority stake sale,” it said.
“Considering IRH is reportedly only interested in acquiring a majority stake in KCM, we see a low probability for the deal to go through with IRH,” it said.
Certain media reports had stated that UAE-based IRH had offered to acquire a 51% stake in VRL’s KCM for more than $1 billion. Earlier, reports mentioned VRL was looking to sell a part of its 79.4% stake in KCM and had hired Standard Chartered Bank to lead the transaction.
“We are positively surprised by IRH’s large $1 billion offer for a 51% stake that well exceeded our expectations,” the report by CreditSights said.
The brokerage expects VRL to continue pursuing a minority stake sale in KCM, while it could be challenging due to KCM’s poor operating conditions that could continue for another two-three years.
However, CreditSights expects VRL and its Indian subsidiary and mining major Vedanta (VEDL) to continue seeking strategic stake sales in key assets to address its next debt repayments in 2026-2028. These assets could include KCM’s minority stake sale, Electrosteel Steels and potentially aluminium business and the oil & gas business, Cairn India.
The brokerage firm also reiterated that the worst might be over for VRL, but the London-headquartered firm would face funding shortfalls of $850 million in FY25 and $1.4 billion in FY26.
