VED Vedanta

By Scott Patterson 

The family trust of the founder of India's largest mining company plans to ramp up its investment in Anglo American PLC by as much as $2 billion, making it the biggest investor in the British mining company that has benefited from a recovery in commodity prices.

The investment follows a $2.44 billion investment in March by Volcan Investments Ltd., the family trust of Vedanta Resources PLC founder and Chairman Anil Agarwal, putting its stake in Anglo American at about 20%. While the new stake is likely to ramp up speculation that the billionaire mining titan has plans to take over Anglo American, Mr. Agarwal's trust said it has no plans to make an offer to acquire the Anglo in the future.

The second-biggest Anglo investor, Public Investment Corp., South Africa's state-run pension fund, holds about 13% of the company, according to FactSet. Anglo American shares have gained about 9% since Mr. Agarwal made his initial investment in March.

"We are encouraged by the performance of Anglo American since our original investment earlier this year," Mr. Agarwal said in a statement.

A spokesman for Anglo American declined to comment.

The investment, which will be made over the next few weeks, is a strong sign of support for Anglo's management and its chief executive, Mark Cutifani. Fueled by rebounding commodity prices, the U.K.-listed mining company posted net income of $1.4 billion in the first half of 2017, compared with a net loss of $813 million for the same period last year.

"There's still a lot more to do," Mr. Cutifani said on a call with reporters after reporting second-half earnings in July. In a surprise move, Anglo American reinstated its dividend for the first half after having suspended payouts in 2015.

Just two years ago, Anglo American and other mining company appeared on the brink as commodity prices tumbled and China's red-hot economy, the world's biggest consumer of natural resources, cooled off. Mr. Cutifani launched an ambitious program to slash operations and exit loss-making coal and iron-ore businesses and cut the firm's workforce by more than half. But a rebound in coal and iron-ore prices has put such plans on the shelf.

Vendanta, founded by Mr. Agarwal, is largely focused on Indian mining operations in commodities such as iron ore, copper and zinc. It has also benefited from the rebound in coal and iron-ore prices, posting earnings before interest, taxes, depreciation and amortization for the quarter ended June 30 up 48% from the previous year. Revenue for the period gained 32%.

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

(END) Dow Jones Newswires

September 20, 2017 13:59 ET (17:59 GMT)

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