Forbes Spl: Anil Agarwal aims for 10% of world iron ore

The first move came out of the blue. In April 2007, Anil Agarwal, the scrap dealer-turned-metals billionaire who runs Vedanta Resources, paid $1 billion to buy Sesa Goa , an iron-ore company. By all accounts, it appeared like straying from its core business. Vedanta had always been known for copper, aluminium and zinc and this entry into iron ore sent confusing signals to investors. There was also this feeling that Agarwal may have overpaid for Sesa Goa, just to wean it away from rival suitors steel baron Lakshmi Mittal and the Mumbai-based A.V. Birla group. Vedanta’s stock plunged in the next two sessions of trade, reflecting investor disapproval.

The second move came in June 2009. Vedanta acquired another iron ore business in Goa, this time from V.S. Dempo. A name probably better known for football than iron ore, Dempo nevertheless was welcomed gleefully by Vedanta investors. The stock shot up in value. It was a striking contrast to their mood just two years earlier. It was a clear sign the investors were at last beginning to make sense of Agarwal’s game plan.

What had seemed a random acquisition at first glance was actually the first step in a calculated strategy being put in place by Agarwal. Tie in the two acquisitions and the picture becomes clear. Today, the mine-scape of Goa is being changed forever by Agarwal who is slowly but steadily taking over a dominant position there. His interest in iron-ore mining, which started at zero in 2007, is set to reach 50 million tonnes per year by 2012. And this is just one detail in a grand global plan that the shrewd businessman is unraveling.

Ask Anil Agarwal about it and he first underplays it: “I don’t look at the nitty gritty of business these days. I focus on the big picture.”

Nevertheless, for someone who claims to stay away from the details, Agarwal rattles them off pretty nicely. He wants to become the fifth largest metals and mining company in the world by 2012. He wants India to account for a tenth of all global production of copper, aluminium and zinc and his operations in the country to account for all that share. In iron ore, his latest passion, he wants to control 10 percent of the world’s reserves. His investment bill? Rs. 95,000 crore in the lightening span of three years. That’s Rs. 87 crore each day.

He talks as if these plans are already cast in stone and it is just a matter of execution. Then, what is he going to do as the group patriarch? Agarwal offers a dry laugh for a response. There is work to do, he says. “I am going to see to it that all my plans get executed by their deadlines,” he adds. In short, for the first time in nearly three years of thinking big, Agarwal is folding up his sleeves to get to work.