Ministry of Mines’ dubious stand against HZL’s proposed acquisition of overseas zinc mines through a Mauritius-based company

 Hindustan Zinc Ltd


Shri Rajiv Gauba

Cabinet Secretary

Dear Shri Gauba,

I refer to my earlier letter dated 7-2-2023 ( raising serious concerns bout HZL’s proposal to buy THL, a Mauritius-based company of Vedanta, indirectly owning majority equity stakes in overseas zinc companies in S.Africa and Namibia.

Belatedly, the Ministry of Mines has filed its opposition to the proposal (, stating that its representatives on HZL’s Board had already recorded their dissent and the Ministry would oppose the proposal at the General Body meeting.

However, as per the wording of the above cited letter, the Ministry has tacitly expressed its consent to the proposal per se by saying, “we would urge the company to explore other cashless methods of acquisition of these assets“. Such an open-ended statement is apparently not supported by an evaluation of the quantum of the zinc deposits at the disposal of the two Vedanta companies in S.Africa and Namibia, an appraisal of the techno-economic viability of extraction of those deposits, an assessment of their quality, their marketability and so on.

In addition, the Ministry ought to have examined  the extent of control over the deposits that HZL would secure by indirectly acquiring a majority stake in the Mauritius-based company. Further, the Ministry should know that THL, being an investment company located in Mauritius, not having any substantive zinc exploration and development activity of its own, is beyond the regulatory reach of the domestic regulatory authorities. Moreover, THL is a company having liabilities of its own, having multiple related party transactions with other Vedanta-controlled companies. Even if HZL were to explore a “cashless” way to acquire the assets, it is possible that such acquisition would add to the net liabilities of HZL.

I am surprised that the Ministry should thus endorse the deal, without examining the implications of HZL linking itself to a Mauritius-based company, from the legal, financial and taxation points of view. The Ministry ought to have consulted CBDT, the Ministry of Corporate Affairs and others concerned, before qualifying its dissent thus.

I feel that the Ministry of Mines should tread carefully in this matter and drop the idea of acquiring THL altogether.

In view of the increasing criticality of zinc as a scarce mineral resource on which public control would be necessary, the government should desist from parting with its residual equity share in HZL.


Yours sincerely,

E A S Sarma
Former Secretary to Government of India


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