AAL Anglo American Plc

By Scott Patterson 

LONDON -- The family trust of the founder of India's largest mining company is investing $2.44 billion in Anglo American PLC, a huge outlay on the British mining company that a year ago was locked in a desperate struggle to right itself from a sharp decline in commodity prices.

The investment will give Volcan Investments Ltd., the family trust of Vedanta Resources PLC founder and chairman Anil Agarwal, ownership of about 12% of Anglo American.

That will make Volcan the second-biggest investor in Anglo American behind Public Investment Corp., South Africa's state-run pension fund, which owns $2.7 billion worth of Anglo's stock, according to FactSet. The next biggest investor is Silchester International Investors LLP, which owns $1 billion worth of Anglo shares, according to FactSet.

The investment could give Mr. Agarwal and his family trust a commanding voice at Anglo American, the world's fifth-largest public mining company by market value. Anglo American "is a great company with excellent assets and a strong board and management team who are executing a focused strategy," he said in a statement.

Volcan said it has no plans to acquire Anglo American, which declined to comment.

The investment is a big vote of confidence in Anglo's fortunes, which revived dramatically in 2016 amid a sharp recovery in commodity prices. Anglo American in February reported a profit of $1.6 billion for 2016, a dramatic rebound from 2015, when it lost $5.6 billion.

Mining companies broadly are in much better shape now than they were two years ago, when a prolonged downturn in commodity prices sent shares tumbling, analysts say. Firms such as Anglo American sold off underperforming mines, shrank workforces and paid down massive piles of debt.

The rebound has brought a reprieve for struggling chief executives such as Anglo American's Mark Cutifani, who a year ago unveiled a plan to sharply reduce the mining giant's assets and cut its workforce by more than half.

Vedanta, led by former Rio Tinto PLC CEO Tom Albanese, is largely focused on Indian mining operations in commodities such as iron ore, copper and zinc. Like other mining companies, it has benefited from the continuing commodity rally. In February, it reported third-quarter earnings before interest, taxes, depreciation and amortization jumped 79% to $882.3 million, on a 50% gain in revenue.

Write to Scott Patterson at scott.patterson@wsj.com

(END) Dow Jones Newswires

March 15, 2017 15:56 ET (19:56 GMT)

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