Vedanta in $9.6b deal to control Cairn India

London: Vedanta Resources plans to spend up to $9.6 billion (Dh35.25 billion) clinching control of Cairn India, giving billionaire mining magnate Anil Agarwal a slice of India's oil reserves and exposure to surging demand.

Britain's Cairn Energy yesterday said it would sell most of its controlling stake, delivering billions of dollars to shareholders, while Agarwal's Vedanta will join BHP Billiton as the only miner with large oil interests.

India-focused Vedanta will buy between 40 and 51 per cent of Cairn India from Cairn Energy, holder of a 62.4 per cent stake, and will offer to buy up to 20 per cent from other shareholders to give it a stake of between 51 and 60 per cent.

Vedanta said Cairn India, the country's No 4 oil and gas company, has the potential to almost double current production to about 240,000 barrels of oil per day — around a quarter of India's output — allowing it to benefit from rising demand amid industrialisation, economic growth and an expanding population.

The miner expects Cairn India to produce around 200,000 bpd by early 2012.

India's government expects the economy to grow 8.5 per cent this fiscal year, while the country's population is expected to overtake China in the next couple of decades.

"The proposed acquisition significantly enhances Vedanta's position as a natural resources champion in India," said Agarwal, chairman of Vedanta and the group's biggest shareholder with a 61.2 per cent holding.

Vedanta is under pressure over its expansion plans, however.

It has been forced to defend its human rights record over plans to build a bauxite mine in India's Orissa state and an Indian government panel said yesterday that it should not be given permission to mine there.

Shares in Vedanta, which fell 20 per cent last week when news of a Cairn deal broke and raised concerns about funding, were up 4.6 per cent at 1103 GMT. Cairn Energy shares were up 3.3 per cent and at a record high while Cairn India was 6.4 per cent lower.

Vedanta has more than quadrupled in value since early 2009, helped by recovering metal demand and making London resident Agarwal Britain's 10th richest person behind Indian-born steel baron Lakshmi Mittal who tops The Sunday Times Rich List.

Vedanta will hold 31-40 per cent of Cairn India directly and Vedanta-controlled Sesa Goa Ltd, India's largest iron ore exporter, will hold 20 per cent.