The Centre is planning to oppose Hindustan Zinc’s proposal to buy the global zinc assets of Vedanta Ltd for $2.98 billion.

The government, which has a 30 per cent stake in Hindustan Zinc that it eventually intends to sell, is likely to vote against the proposal to acquire the Vedanta assets because of high valuations.

Billionaire Anil Agarwal is keen to use the proceeds from the sale of his Vedanta’s zinc assets to trim the ballooning debt of the ultimate parent company: Vedanta Resources Ltd.

The Vedanta group’s holding company has bonds worth $4.7 billion maturing in the next three-and-a-half years.

Last month, Hindustan Zinc agreed to buy the assets of THL Zinc Ltd Mauritius from its parent in a phased manner over 18 months.

THL operations include Black Mountain Mining Pty in South Africa and Skorpion Zinc Pty in Nairobi.

Vedanta had disclosed that subject to the receipt of timely regulatory approvals, the transaction is likely to be completed in a phased manner over a period of 18 months.

It had pointed out that the proposed transaction will unlock value, monetise the zinc assets and create substantial synergies for both THLZ and HZL.

However, a Bloomberg report quoting sources said the government is likely to vote against the Vedanta plan for Hind Zinc on concerns ranging from high valuations to it being a related party transaction.

The report added that the plan was pushed through even after government officials refused to approve it and that the central government is trying to nudge Hindustan Zinc to withdraw the proposal.

Shares of Hindustan Zinc on Tuesday ended at Rs 331.40 on the BSE, a drop of 2.21 per cent from its previous close of Rs 338.85.

As of December 31, 2022, Vedanta held nearly 64.92 per cent of HZL’s equity.

In a clarification to the stock exchanges on Tuesday, HZL said the proposed transaction was also approved by its board of directors on January 19 on the recommendation of the audit committee, subject to the receipt of requisite regulatory approvals including shareholder’s approval.

According to the company, following the acquisition, it will have the combined reserves and resources of over 1,000 million tonnes of zinc ore and 65 million tonnes of metal across India and Africa.

Roadblock

■ Vedanta plans to sell its global zinc assets to Hind Zinc for $2.98bn

■ Centre has a 30% stake in Hind Zinc. Will oppose the deal because of high valuations

■ Deal is a related party one, another area of concern