Vedanta, Anglo's Agarwal Says S. Africa `Makes Business Sense'
(Bloomberg) -- Anil Agarwal, the founder of resources company Vedanta Ltd. and also the biggest shareholder in Anglo American Plc, says investing in South Africa and the continent “makes the most business sense.”
Agarwal was speaking at the official opening of Vedanta’s Gamsberg zinc mine in South Africa’s Northern Cape province Thursday. The company has invested $400 million in the operation and plans to spend a further $1 billion as it contemplates higher output and a refinery-smelter complex. Vedanta bought the resource from Anglo in 2011.
The comments show confidence in an economy in which investment slumped during years of legislative and policy uncertainty under the previous administration. Things have improved since Cyril Ramaphosa became president in February 2018 and foreign direct investment has begun to recover from the 11-year low it reached in 2017.
Ramaphosa appointed Gwede Mantashe, another former labor unionist like the president, as mines minister. Mantashe has resolved a dispute over black-ownership rules, giving mining companies more certainty on their investments. Both attended the Gamsberg opening.
“I look at the business angle, I don’t look at the sentiment angle,” Agarwal said, adding that Vedanta was able to easily obtain 17 licenses in six months in the country.
While Anglo exited some higher-cost operations in South Africa following a collapse in commodity prices in 2015, it is now doubling down on its cash-generating assets there. It’s spending $2 billion developing underground deposits at Venetia, the biggest investment in a South African diamond mine in decades. Another $4 billion will be invested in iron ore, manganese and coal over the next five years.
Founded in Johannesburg in 1917 to exploit the world’s biggest gold field, Anglo today mines platinum, coal, diamonds and iron ore in South Africa.
©2019 Bloomberg L.P.