Indian jewellery billionaire Rajesh Mehta to buy Australian gold assets
India's biggest jewellery maker, billionaire Rajesh Mehta, wants to
deepen his relationship with Australia's gold industry by buying stakes
in Australian mines and potentially opening retail jewellery stores in
(Rajesh Exports is one of the world's biggest private sector buyers of
gold and sells its products through more than 80 retail stores in India.)
Speaking on a rare visit to Melbourne, Mr Mehta said his company wanted to spend up to $US700 million ($921 million) growing its presence in Australia, with mines the primary focus.
'We have been importing gold from Australia on and off in the past, but now we want to have a formal presence in Australia," he told Fairfax Media.
"We are setting up a subsidiary in Melbourne primarily to look into acquiring interests into the gold sector of Australia, looking at gold mining assets in terms of equity or loan or whatever is feasible for us so we can ensure a reliable and permanent gold supply-line to our company.
"We would also like to invest in the retail jewellery sector in Australia - that is, take the gold from here, process it in India and then supply the jewellery back here in the retail line that we set up here."
The Bangalore billionaire's company, Rajesh Exports, is listed on the Bombay Stock Exchange with a market capitalization of 58 billion rupees ($1.22 billion), and is vertically-integrated through the mining, refining, manufacturing and retailing stages of the gold industry.
The company consumes about 140 tonnes of gold a year, making it one of the world's biggest private sector buyers of gold, and sells its products through more than 80 retail stores in India plus exports to other countries.
For comparison, Australian mines were estimated by Surbiton Associates to produce 284 tonnes of gold last year and the nation ranks as the world's second biggest gold producer behind China.
Mr Mehta would not name the Australian mines nor companies that he was looking at, but said talks with advisers had begun.
"We have met a lot of investment bankers here and we are evaluating the best way to get in, what is the best way to do it, as we are looking at not only taking interest in the gold mining sector but we are also looking at forging a relationship with the largest gold-producing mines to buy and ensure supply from them," he said. "We can be a good consuming partner for them."
The comments follow recent momentum towards a free trade agreement between Australia and India, and last year's visit to Australia by Indian Prime Minister Narendra Modi.
It also comes after two years of regular deal-making in the Australian gold industry, as several foreign gold miners have sold assets to try to reduce their exposure to Australia.
Mr Mehta said the timing was good for an Indian company to be investing in Australia.
"We hear currently there is good government support in Australia and there is encouragement in the other sectors to participate in the gold sector in Australia, plus the time is right because the assets are available at a reasonable price so all these things combined together, we feel it is the right time to get into Australia and acquire some assets and secure our supply lines," he said.
If successful in buying Australian gold assets, Mr Mehta's Indian company would be a rarity in a sector where foreign investment has typically come from North American or Chinese buyers.
Big North American miners such as Barrick Gold and Newmont Mining have owned large numbers of Australia's biggest mines over the past two decades. Chinese investors have shown an appetite to buy some of the nation's smaller, marginal operations such as Norton Goldfields and Focus Minerals.
Surbiton Associates gold expert Dr Sandra Close said: "Foreign ownership has changed over time. At one stage it was South African and North American companies. More recently it has been the Chinese, and while the Indians have not taken a major stake in Australian mines, I know they have been looking around."
Barrick and Newmont have sold several Australian gold mines in the past 18 months, meaning many of those assets are now under the control of ASX-listed companies like Northern Star.
"Foreign control of Australian gold mines peaked near 70 per cent in the early 2000s, but it is now down to about 50 per cent overseas control," said Dr Close.