MUMBAI (Commodity Online):India’s mining major Vedanta group is all set to buy Cairn Energy’s 51% of Indian operations for up to $8.5 billion.

Edinburgh-based Cairn said the deal would result in a substantial return of cash to shareholders. It added it would also use the cash from the proposed sale for other exploration and drilling programmes.

Vedanta Resources is emerging as an exceptional diversified mining company with a world class resource base. The company’s principal operations are in India, Zambia and Australia. The major metals produced are aluminium, copper, zinc and lead.

The company is LSE-listed diversified FTSE 100 metals and mining firm, and India’s largest non-ferrous metals and mining company based on revenues. The firm is primarily engaged in copper, zinc, aluminium and iron ore businesses, and are also developing a commercial power generation business.

Cairn India has a market capitalisation of $14bn and is the fourth largest oil and gas company in India. The company said it is delighted to announce the proposed disposal of a significant shareholding in Cairn India in line with its objective of adding and realising value for shareholders.

Last week, Cairn confirmed it was in talks with Vedanta to sell its Indian interests, which include one of the country’s biggest oil and gas production developments in Rajasthan.

Vedanta said: “The proposed acquisition significantly enhances Vedanta’s position as a natural resources champion in India. Cairn India’s Rajasthan asset is world class in terms of scale and cost, delivering strong and growing cash flow.”

Analysts said the deal demonstrates Vedanta’s desire to become a major player in the oil and gas sector. It currently specialises in metals production.

With this deal, Vedanta is looking to become a company with the scale of something like mining giant BHP Billiton. It shows the company wants to be become a major resources player.