India-focused mining group Vedanta plans to list its Zambian copper business on the London stock exchange to unlock value, raising $1.1 billion to expand output at the unit, it said on Tuesday.
The global offering will consist of existing and new shares in Konkola Copper Mines (KCM), the second-biggest integrated copper producer in Africa, a statement said.
“The IPO will provide investors with an opportunity to participate in the growth of this integrated and pure play copper company with the liquidity of a London listing,” Kishore Kumar, chief executive of KCM’s holding company Konkola Resources, said.
Vedanta has an indirect stake of 79.4 percent in KCM, with the remaining interest owned by ZCCM Investments Holdings, majority owned by the Zambian government. KCM will also have a listing in the Zambian capital, Lusaka.
“The company (KCM) intends to use the expected net proceeds of the global offer of at least $1.1 billion towards the funding of its capital expenditure programme,” Vedanta said.
Its shares were down 2.2 percent at 0825 GMT, against a 0.9 percent fall in London’s blue-chip FTSE 100 index.
KCM is aiming to more than double output to 400,000 tonnes a year by 2014, from 173,000 tonnes in Vedanta’s financial year to the end of March 2010, and to cut integrated cash costs to below $1 per pound from $1.80.
KCM has 20,777 employees and third-party contractors, making it the largest private employer in Zambia.
Vedanta said on Thursday it was working on possible listings of its Sterlite Energy and KCM units to release billions of dollars of hidden value after posting a weaker-than-expected jump in first-half profits.
Tuesday’s statement did not say what KCM was expected to be valued at in the IPO, but a newspaper report last month said a flotation could set a value of 4 billion pounds ($6.46 billion).
KCM has 404.8 million tonnes of proved and probable mineral reserves, with contained copper of 6.52 million tonnes.