Vedanta Resources Continues Commitment to South Africa Despite Infrastructure Challenges

August 29, 2023
BY Industry News

India-headquartered mining company Vedanta Resources, led by Chairperson Anil Agarwal, remains committed to investing $1 billion in South Africa in line with its pledge, despite facing obstacles related to infrastructure and energy security.

Vedanta has already made substantial investments in zinc mining operations within South Africa.

Anil Agarwal disclosed that Vedanta's decision to invest in South Africa was influenced by the sentimental attachment of Indian Prime Minister Narendra Modi to the region, as it holds historical significance as the starting point of Mahatma Gandhi's freedom movement.

During a visit with the Prime Minister in 2018, Agarwal pledged to invest $1 billion in South Africa with the aim of creating a significant number of jobs.

To highlight their progress, Agarwal mentioned that Vedanta had already invested $500 million in the Gamsberg zinc mine, where Vedanta holds a 69.6% stake, while Exxaro Resources owns 24.4%, and an employee stock ownership plan owns 6%. This project has injected capital into the region and provided employment opportunities in an area previously lacking substantial job prospects. Through collaboration with the South African government, Vedanta has initiated the development of an industrial hub, harnessing the region's natural and human resources.

"We are prepared to invest another $500 million for a smelter and for producing the final product. The government has been working with us to create an industrial hub in that area because they possess both human and natural resources," Agarwal stated.

He emphasized that while Vedanta is eager to make the additional $500 million investment as quickly as possible, the timing depends on the availability of the necessary infrastructure.

"If I am certain that infrastructure will be provided promptly and will be accessible, I can assure you that we can invest $500 million within 12 to 18 months. However, it all hinges on the power supply and the availability of railroads," he explained.

Vedanta's commitment to social responsibility is evident through its employment of 3,000 individuals, with plans to add another 2,000 jobs upon the completion of the smelter, bringing its total investment to $1 billion.

Nevertheless, Agarwal identified two critical challenges that must be addressed for these plans to succeed: ensuring power security and advancing infrastructure development.

He stressed the importance of a reliable power supply for industrial operations and hinted at Vedanta's interest in renewable energy sources such as solar and wind. Agarwal praised South Africa's potential for renewable power generation and indicated that Vedanta is exploring these options.

"Renewable power has significant potential in South Africa, not only solar but wind as well. We have observed favorable wind velocities. So we are actively pursuing this," he said, highlighting Vedanta's track record as a leading renewable power producer.

Agarwal also expressed the view that State-owned power utility Eskom could improve if it were privatized.

"Eskom can be privatized. Trust me, it has immense potential. At least 50% to 100% more power can be generated. The government should consider this, and speed is crucial because people are suffering," Agarwal commented.

He acknowledged that collaboration between the private and public sectors is essential to overcome infrastructure constraints. Agarwal remains optimistic about South Africa's prospects as an investment destination, citing Vedanta's commitment to retaining major companies in the region.

"I believe that zinc and downstream metal industries have significant potential in South Africa – galvanizing, pharmaceuticals, chemicals – all of these are in demand worldwide, and South Africa can be an attractive production hub, given its entrepreneurial spirit," Agarwal concluded.

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