Tata Chemicals Ltd, as part of its plans to secure raw material supplies and enhance its presence globally, is acquiring assets one after the other. The company's managing director R. Mukundan seems to be lapping up opportunities to grow the company into a significant global player in its area of business.
In the latest buyout foray, Gusiute Holdings (UK), a wholly owned subsidiary of Tata Chemicals has entered into an agreement with Canadian potash miner EPM Mining Ventures Inc to acquire 30 per cent stake in the company for $16 million (Rs 73 crore).
EPM Mining Ventures Canada said that it would use the proceeds for further evaluation of its properties and for general working capital purposes. This investment will be controlled by a stepdown subsidiary named Valley Holdings Inc. In May this year, Valley Holdings had acquired 33 per cent stake in EPM Mining Ventures, USA.
R Mukundan, MD, Tata Chem
EPM Mining is an exploration-stage potash development company with main focus on the Sevier Dry Lake in Utah, US. The company holds lease for 95,172 acres granted by the US government. EPM also holds 40 per cent stake in Emerald Peak Minerals, which controls 6,409 acres of land leased from the state of Utah contiguous to the federal land leases held by EPM.
In April this year, Tata Chemicals had picked up 25 per cent stake in a greenfield, portbased, ammonia-urea fertiliser manufacturing complex in the Republic of Gabon in Africa for $290 million (Rs 1,320 crore). The promoters are setting up a 1.3 mtpa urea plant. The Stream 1 in which Tata Chemicals has picked up stake is expected to be commissioned in three years. Tata Chemicals is aiming to hold a significantly higher stake in Stream 2. About 25 per cent of the output would be reserved for Indian markets for sales through Tata Chemicals' network.
Tata Chemicals has a significant presence in Kenya, South Africa and Morocco and this project will further enhance its presence in the African continent. This plant is likely to be one of the lowest-cost urea manufacturing facilities in the world and it would enable the company to move the products at cheaper rates to targeted markets in Africa, North America, Latin America and India. Prior to this in December 2010, Tata Chemicals' wholly owned subsidiary Brunner Mond, UK, had acquired 100 per cent stake in British Salt for 93 million pounds (Rs 700 crore).
British Salt is the UK's leading manufacturer of pure dried vacuum salt products and commands 50 per cent market share in the UK. The company owns brine wells in the UK with residual life of 50 years. Tata Chemicals acquired this company to secure long-term brine supplies for its Brunner Mond operations.
Apart from the core business of salt manufacturing and supplying, British Salt is also active in the gas storage business that has guaranteed cash flows. Before this, in October last year, Tata Chemicals had acquired the Grown Energy Ltd for $1.10 million. This company is exploring bio-fuel opportunities in Mozambique.
Earlier this month Tata Chemicals said that it would invest Rs 800 crore in the next few years in acquisitions and capacity enhancement.
Courtesy: Mail Today