Sterlite may buy into Zambia copper mine

The Anil Agarawal-controlled Sterlite Industries has emerged as the "preferred bidder" for picking up a stake in the Konkola Copper Mines, the largest copper mine in Zambia.

Sterlite was among the four companies shortlisted to pick up a stake in the Konkola mine, the Zambian government said. Sterlite did not respond on the issue.

Sterlite's initiative is significant because the private sector is not allowed to own copper mines in India. This has forced companies like Sterlite and Indo Gulf to scout for mines abroad.

The reserves of the Konkola mine could not be ascertained. The mines incurred huge losses in 2002 after the exit of its erstwhile equity partner, the US-based Anglo American.

The investment brought in by the new equity partner in the Konkola mine is expected to be used to modernise and improve production.

Sterlite already has two mines outside India, in Tasmania and Australia. These meet a substantial part of the requirements of Sterlite's smelter plant in Tuticorin.

Sterlite, which is India's largest copper producer with a marketshare of over 40 per cent, is hiving off this business into a separate company.

Analysts see this as a move to shield the copper business from the risks associated with its proposed expansion into the aluminium business following the acquisition of Bharat Aluminium Company.

Sterlite is doubling its copper smelting capacity to 300,000 tonnes. Rival Indo Gulf, which has now been merged with Hindalco, is also expanding capacity to around 240,000 tonnes. Hindalco has a large copper mine in Australia and is looking for more.