World Street Journal, Sept 10, 2008
LONDON -- Vedanta Resources PLC, an India-focused metals and mining company, said it will invest $9.8 billion to boost its aluminum-smelting capacity in a bid to become one of the world's biggest producers of the metal.
London-listed Vedanta said it aims to increase capacity to 2.6 million metric tons a year by 2012, up from the 396,000 tons it produced in the fiscal year ended in March.
"Upon completion, Vedanta is expected to be Asia's largest and among the top five integrated producers of aluminum world-wide," the company said. The world's biggest aluminum producers include Rio Tinto's Alcan, Russia's United Co. Rusal and Pittsburgh-based Alcoa Inc.
Vedanta's investment plans will focus on projects in India, where the bulk of its operations are. Of the total investment, $5.65 billion will be spent expanding the capacity of the Jharsuguda II project; $2 billion will be spent on the Korba III project, and the remaining $2.15 billion will be invested in expanding the Lanjigarh project.
Vedanta, which has a market capitalization of about £4.5 billion ($7.92 billion), also said the company will be restructured into three commodity-focused divisions: copper, zinc and lead; aluminum and energy; and iron ore. The restructuring will simplify Vedanta's corporate structure, eliminate conflicts of interest, and increase efficiency, the board said. The restructuring is expected to be completed by March.
Merrill Lynch said, "Inasmuch as this is finally a step toward simplification of the group shareholding structure, we view this transaction as a positive."
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