Commodities Recovery Seen in 2017, Says Billionaire Agarwal

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  • Zinc to bounce back the fastest, followed by aluminum, he says
  • Moody's puts Vedanta on review for possible downgrade

The billionaire chairman of Vedanta Resources Plc, India’s biggest metals producer, says commodities markets will recover next year after a spell of consolidation in 2016.

“This year will be a settling-down time, in 2017 you’ll see things will be different,” Anil Agarwal told Bloomberg TV’s Francine Lacqua and Jonathan Ferro in Davos. “Zinc will recover the fastest and aluminium will be next.”

The firm he founded is the country’s biggest producer of zinc, copper and aluminum, all of which have been battered as China’s appetite for raw materials slowed. Mining companies worldwide have been hammered by the slump in commodities with Glencore Plc and Anglo American Plc selling assets and cutting spending, and producers from Africa to China paring output.

“We’ll be better off than others because our costs are lower and we’re in a geographic location where there is demand,” Agarwal said.

Agarwal was speaking after his group’s debt was put on review for possible downgrade by Moody’s Investors Service. The slowdown in China and the need to cut supply will place an “unprecedented level of stress on mining companies,” the agency said Friday. Vedanta shares have slumped more than 60 percent in London since mid-October to the lowest since at least 2003.

The company has been cutting costs and has reduced overall expenditure by as much as 25 percent, he said.

Agarwal said an offer to buy back bonds went “very well” this week. The company is purchasing debt at a discount to chip away at a $2.9 billion maturity wall in 2016 as the bond market shuns miners because of the rout.

Vedanta gained access to India’s biggest onshore oil field in 2011 after buying a controlling stake in Cairn India Ltd. The merger of the Vedanta Ltd. and Cairn India units will happen by the end of March, Agarwal said.

— With assistance by Martin Ritchie

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