India: UltraTech Cement is seeking clarification from the Indian government over the transfer of limestone reserves as part of its deal to buy two integrated cement plants in Madhya Pradesh from Jaypee Group, according to HT Media. A clause in the Mines and Minerals (Development and Regulation) Act 2015 barring the transfer of mines that were not allotted through auctions is delaying mergers and acquisitions (M&As) in the mining sector.
According to a clause in the new Act, transfer of the mining licence is allowed only for mines that have been auctioned. Most of the operational limestone mines in India were allotted and not auctioned. The Act allows for these reserves to be auctioned in the future. However, legal experts are divided on whether this clause will apply retrospectively.
UltraTech agreed to buy Jaiprakash Associates' cement plant with a clinker capacity of 2.1Mt/yr and a cement grinding capacity of 2.6Mt/yr at Bela in Madhya Pradesh in December 2014. It then agreed to buy a second plant at Sidhi with a clinker capacity of 3.1Mt/yr and a cement grinding capacity of 2.3Mt/yr. The deal included access to the limestone reserves in Madhya Pradesh.
The new legislation is also expected to affect Lafarge's sale of its east Indian assets to Birla Corp.