Vedanta lines up $3 bn India expansionPublished by MAC on 2006-02-20
Vedanta lines up $3 bn India expansion
by Ruchi Ahuja / New Delhi
20th February 2006
Aluminium capacity to go up from 400,000 to 900,000 tonnes by 2010.
Vedanta Resources Plc plans to invest $3 billion for expanding its aluminium, copper and zinc production capacities in India by 2010.
“We have a defined growth path. Of this amount, $2 billion will be spent on increasing the annual capacity of aluminium. The rest will be for enhancing copper and zinc capacities,” said Vedanta Director (corporate strategy) Dhanpal Jhaveri.
After this, Vedanta’s annual aluminium capacity will increase from 4 lakh tonnes to 9 lakh tonnes by 2010.
“We intend to produce 5 lakh tonnes annually at our Orissa unit by the end of the second phase of expansion,” said Jhaveri.
The annual capacities of copper and zinc will go up to 7 lakh tonnes each by the end of 2009. At present, the company annually produces 5 lakh tonnes of copper and 4 lakh tonnes of zinc.
The company, Jhaveri said, had enough funds for the expansion.
It had an initial public offer in 2003, then a bonds issue and recently, a convertible bonds issue. “Apart from this, we have internal accruals and are hopeful that, amid rising prices of metals globally, the company will remain cash-rich in the years to come,” he said.
The company has already invested $2 billion for aluminium production in India after buying Bharat Aluminium Ltd (Balco) and setting up new smelters.
A part of the fresh investment will also be for new technology, which is expected to bring down the aluminium production cost to less than $900 a tonne.
At the Balco unit, the smelter is old and thus the production cost comes to $1,400 a tonne.
At present, Vedanta has 40 per cent share of the Indian market in copper, 17 per cent in aluminium and 15 per cent in zinc.
“Globally, we plan to annually produce 1 million tonnes of aluminium and copper each and 1 million tonnes of zinc and lead put together,” he added.
But Jhaveri expressed concerns over the limited exploration undertaken by Indian mining companies, “inadequate” impetus provided by the government for exploration and the absence of any guarantee to a company getting a mining licence after exploration.