Vedanta Faces Calls for US$783mn Write-down in Troubled THL Zinc Subsidiaries: Viceroy Research
Moneylife Digital Team 22 August 2025
Anil Agarwal-led Vedanta Ltd (VEDL)’s international zinc subsidiaries face a collective impairment of about US$783mn (million), alleges US-based short-seller Viceroy Research LLC, citing stalled projects, misallocated funding, and insolvency risks across its African assets.  
 
The report, released on Friday, examines Vedanta’s THL Zinc Ltd and its subsidiaries, including the Black Mountain Mine (BMM) in South Africa and the defunct Skorpion Complex in Namibia. Viceroy claims Vedanta has used capital raised against these assets to redeem its own preference shares, instead of deploying funds into promised expansion projects
 
According to the report, the THL group has raised US$600mn in equity and US$782mn in debt since FY22-23. "This is nearly three times the amount required to complete the US$466mn Gamsberg Phase 2 project and more than double the combined cost of Gamsberg Phase 2, the US$200mn Skorpion smelter conversion, and the US$37mn Gamsberg Magnetite plant."
 
However, despite this fundraising, progress across projects has been dismal. Viceroy says, "Vedanta has failed to invest meaningfully in promised expansion projects. Instead, much of the capital was diverted upstream to redeem Vedanta’s own preference shares, originally issued to finance the Skorpion acquisition, leaving the assets underfunded and deteriorating."
 
Viceroy claims that while these funds were sufficient to cover the combined costs of Gamsberg Phase 2, the Skorpion smelter conversion, and the Gamsberg Magnetite plant, each project remains stalled. Gamsberg Phase 2 is already four years behind schedule and only 68.5% complete; the Skorpion conversion project has not even begun and is considered technically unfeasible; and the Magnetite plant, first announced in 2014, remains unfinished more than a decade later. Instead of progressing, Viceroy alleges the mines have been left to deteriorate, while Vedanta portrays them as growth projects close to completion in order to avoid recognising losses.
 
 
The research group highlights that the THL group is now 'more than fully encumbered', with BMM pledged twice over to different lenders and the group saddled with nearly US$800mn in debt, costing about US$76mn annually in interest
 
"As of FY24-25, it held only US$71mn in cash, enough to cover less than six months of free cash flow losses. BMM accounts for most of this cash while the Skorpion complex has been reduced to generating minimal revenue from a guesthouse and scrap sales." 
 
Viceroy’s site visits described Skorpion as a 'scrapheap', with slope failures, abandoned infrastructure, and no industrial power supply since 2021.
 
On valuations, Viceroy estimates BMM is worth just US$319mn, compared to the US$1.02bn (billion) carrying value on Vedanta’s balance sheet, implying a US$713mn impairment. Skorpion, carried at about US$80mn, is deemed to have no realisable value at all. The report warns that Vedanta has capitalised expenses to disguise losses and continues to avoid recognising impairments that it believes are unavoidable.
 
 
“To avoid recognising material impairments, Vedanta must begin honestly funding its international zinc projects, despite their delays, cost overruns, and lack of economic viability. Vedanta has neither the capacity nor willingness to do so,” the report concludes. The findings raise questions for Vedanta Resources Ltd, the promoter of VEDL, about transparency and governance, particularly as global investors scrutinise mining valuations more closely.
 
Viceroy has called on whistleblowers with information on Vedanta or its affiliates to approach regulators and offered to act as an intermediary to protect them from retaliation. The research group, which has previously issued critical reports on mining and energy companies, said it published the findings in the public interest and believes Vedanta’s disclosures misrepresent the true state of its international zinc business.
 
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