HZL’s board of directors approved the acquisition of zinc assets from THL Zinc Ventures, a subsidiary of Vedanta Ltd, on January 19.
According to a Mint report, the Centre may ask Hindustan Zinc Ltd (HZL) to consider alternatives to cash, such as share swaps, rights issues, or warrants, for the $2.98 billion acquisition of Vedanta’s zinc assets. According to the Centre, the cash reserves should not be used for the party-related transaction.
“We understand that the company needs to acquire mines in order to grow its business, but this should not be done with cash. There are these options available to the company. We will not allow the government to use cash reserves for a related-party transaction because it is a stakeholder in the company “Mint was informed of the development by an official who was aware of it.
HZL’s board of directors approved the acquisition of zinc assets from THL Zinc Ventures, a subsidiary of Vedanta Ltd, on January 19. After the transaction is completed, THL Zinc will become a wholly owned subsidiary of HZL. The deal violated minority stakeholder rights, according to mines ministry rules.
Vedanta owns 64.9% of HZL, while the Centre owns the remaining 29.5%.
According to the report, the Centre intends to sell its stake in HZL and has written to the markets regulator opposing the transaction.
In a recent interview, HZL CEO Arun Misra stated that the transaction was necessary because HZL cannot limit its size and capacity to where it is today. India’s annual zinc consumption is 650,000-680,000 tonnes, with a 3-4 percent increase expected. HZL produces 800,000 tones per year.
The deal is expected to be approved within the next 18 months.