The government is looking to sell a part of its residual 49 per cent stake in Balco through a public offer and is engaging with the firm’s promoter Vedanta to withdraw arbitration and facilitate the stock exchange listing of the company, Dipam secretary Tuhin Kanta Pandey said.

The ministry of mines and the department of investment and public asset management (Dipam) have held "preliminary talks" with Vedanta Ltd — the promoters of erstwhile public sector company Balco, he said. Balco has to withdraw a 2009 arbitration case it filed against the government over a valuation dispute of the residual stake.

“We have talked (with Balco promoters) at the preliminary level. We will engage with them in detail. If we have to do a public listing, they (Vedanta) will have to withdraw the case. If they agree then we can move forward,” Pandey said.

The government wants to sell part of its 49 per cent stake in Balco in the initial public offering (IPO) before eventually exiting the company. A stock exchange listing would give an idea of the fair valuation of Balco.

The government had in 2001 sold a 51 per cent stake in the then state-owned Bharat Aluminium Company Ltd (Balco) to Sterlite Industries Ltd, a subsidiary of Vedanta Ltd, for Rs 551 crore. The remaining 49 per cent is with the Government of India.

The deal had a call option in the shareholder agreement which allowed Sterlite Industries to acquire a residual 49 per cent stake from the government by March 2004. When Sterlite offered Rs 1,099 crore in 2004 for buying the residual stake, the government rejected it as a Comptroller and Auditor General (CAG) report had said that Balco’s valuation should be higher.

Following this, Anil Agarwal-led Vedanta Group initiated arbitration against the government in 2009.

The Balco arbitration exercise is the same as that of Hindustan Zinc (HZL) in which Vedanta had initiated arbitration against the government in 2009, but the Supreme Court in November 2021 allowed the government to proceed with the open market sale of its29.5 per cent stake in the zinc company, instead of selling the stake to the promoters of the company.