Jeweller Rajesh Exports buys refiner Valcambi for $400 million

By Rajendra Jadhav

MUMBAI (Reuters) - Jeweller Rajesh Exports Ltd has agreed to buy Swiss company Valcambi, the world's largest gold refiner, for $400 million to secure raw material supplies at lower prices and add technological expertise to expand operations at home.

Rajesh Exports, the world's largest gold jewellery maker, will next year raise the capacity of its Indian refinery to 200 tonnes per year from 80 tonnes now with the help of Valcambi's technology, its chairman Rajesh Mehta told Reuters on Monday.

Rajesh Exports sealed the all-cash deal after a global sales process conducted by Valcambi's owners, led by U.S.-based Newmont Mining Corp that has a 60.6 percent stake in it and will continue to supply Valcambi with raw material for the next five years.

"Valcambi can fulfil entire gold requirement of India," Mehta told a news conference, adding the deal will help it get gold bars at lower prices.

India is the world's biggest consumer of gold, with annual demand hovering around 900 tonnes per year. Valcambi has the capacity to refine as much as 1,600 tonnes of gold a year, nearly double India's annual consumption.

Credit Suisse, which once owned Valcambi, will fund nearly 30-35 percent of the acquisition cost, Mehta said and the remainder would come from Rajesh Exports' internal accruals.

"Valcambi has world class refining technology. So it will help the Indian company in setting up or expanding refining capacity if it wants," said analyst Bhargava N. Vaidya of B.N. Vaidya Associates.

DIRECT SUPPLY

Over the past three years, Valcambi has on average refined and sold 945 tonnes gold and 325 tonnes silver per year.

"Nearly 50 percent of our gold bars lands in India through direct and indirect channels like banks. Now we can sell gold bars to many more customers directly," Valcambi Chief Executive Michael Mesaric told Reuters.

Valcambi's senior management team, including Mesaric, will join Rajesh Exports to help the ownership transition and future expansion, the Indian company said.

Mesaric said in the statement that Valcambi would look to use Rajesh's technical expertise to produce innovative gold products in the European markets.

Shares of Rajesh Exports ended 1.6 percent higher at 540.85 rupees after hitting a lifetime high of 549.70 rupees earlier in the day. The shares have nearly quadrupled so far in 2015.

(Additional reporting by Aman Shah; Editing by Richard Pullin and Susan Thomas)