Sesa Goa to acquire part of Dempo mining assets

NT NETWORK
Posted on 2009-06-12
PANAJI- In perhaps the biggest ever-corporate deal in the state, Sesa Goa (a renowned mining company) acquired the mining assets of the Dempo Group (including mining leases, mining rights and related infrastructure) on Thursday in Goa in an all cash deal worth Rs 1,750 crore.
Announcing the deal at a press conference late Thursday evening, the chairman and managing director of Dempo Group, Mr Shrinivas Dempo told reporters that the Group decided to exit from the mining sector in Goa. “The decision to exit from mining in Goa was collectively taken by the Dempo family,” he added. Mr Amit Mukherjee and Mr Ashim Bhuwania were present during the media briefing.
He said that this was perhaps the best time to seal the deal and monitise the assets in Goa and use the funds to boost other business activities of the Group and also to explore possibility of venturing into newer activities, which he said were in the planning stages and would be revealed in due course of time.
Mr Dempo, however, said that the Group was not exiting from mining business and that its mining activities would continue in Sindhudurg in Maharashtra state adding that the Group was also exploring mining resources that could be in excess of 100 million tonnes in other parts of the world to meet long-term demand of its customers.
The chairman of Dempo Group further said that its other activities including calcined petroleum coke, pig iron, shipbuilding, food, travel and newspaper industries would continue unhindered and the cash inflow from the deal would be used to boost the business activities in the state.
The deal would be effective from midnight of June 12 and all the 19 mining leases, (including 13 operational and seven virgin) in the state along with related facilities would henceforth be operated by Sesa Goa. The Group’s mine reserves were to the tune of 75 million tonnes and were expected to last for 17 years, he added.
He said that the money from the deal would be used for giving a further boost to educational sector and for philanthropic activities. He also said that his family would look after its other business activities in Goa as it was passionate about the state and was very closely linked to it culturally and socially.
Responding to a question on the status of 1,300 staff of the Group’s mining sector following the deal, Mr Dempo said that Sesa Goa was a responsible company and that it has been very responsible in handling labour and expressed hope that the Group’s staff would be handled well by their new bosses. He also expressed hope that Sesa Goa would also fulfill the contract his firm had with iron ore industries in China and Japan.
He denied that the decision to exit from the mining sector in the state had anything to do with environmental concerns expressed by some people, saying that his family was very concerned about environmental issues and had carried on the mining activities with the active co-operation of the people of Bicholim.
Asked to comment on the Group’s decision to continue with the shipbuilding industry despite having sold the mining business, Mr Dempo said that shipbuilding was a standalone industry and was growing fast. He said that he has plans to expand shipbuilding activities by infusing the funds that he has received from the deal.
The Dempo Group chairman further said that selling all the assets of the mining sector gave the Group more resources, which in turn would help it to expand its other Goa-based companies.
He denied that there ever was business competition among mine owners in the state, adding that the mine deposits in Goa were same (low grade) but that they had some excellent characteristics and hence were bought by the iron ore industries in different parts of the world.