1. Vedanta Group Q3 EBIDTA jumps 79% to $882 million

Vedanta Group Q3 EBIDTA jumps 79% to $882 million

Vedanta Resources Group's operating profit almost doubled to $882.3 million for the quarter ended December, while revenue rose 26 per cent to $3.06 billion on the back of higher production volumes mainly zinc.

By: | New Delhi | Published: February 20, 2017 4:54 PM
About zinc, Vedanta Resources said its mined metal production was 2,76,000 tonnes, 21 per cent higher compared to Q3 FY2016 and 44 per cent higher sequentially. (Reuters) About zinc, Vedanta Resources said its mined metal production was 2,76,000 tonnes, 21 per cent higher compared to Q3 FY2016 and 44 per cent higher sequentially. (Reuters)

Vedanta Resources Group’s operating profit almost doubled to USD 882.3 million for the quarter ended December, while revenue rose 26 per cent to USD 3.06 billion on the back of higher production volumes mainly zinc. The metal and mining conglomerate had clocked a revenue of USD 2.45 billion and had recorded an EBIDTA (earnings before interest, taxes, depreciation and amortisation) of USD 493.6 million in the third quarter of fiscal 2015-16. The group’s revenue and EBITDA were up significantly “reflecting benefits of higher commodity prices and production volumes” while gross debt was lower by 300 million in the third quarter, Vedanta Resources said in a statement. Tom Albanese, Chief Executive Officer, Vedanta Resources plc said: “We have made substantial operational progress during the quarter with ramp up of our aluminium, power and iron ore capacities. We are very excited about our Gamsberg zinc project in South Africa where first ore is expected in mid-2018. At KCM, we are committed to the turnaround of this asset and continue to work towards it.”

He said the company’s rising capacity utilisations and the continued focus on costs, alongside stronger commodity prices, enabled it to deliver 79 per cent higher EBITDA and strong free cash flow. “In line with our stated financial strategy to extend near-term maturities and optimise the balance sheet, we successfully issued a $1bn USD bond in January 2017 to pro-actively refinance part of our 2018 and 2019 bond maturities. We are pleased with the strong demand these bonds received, with support from all major markets,” he said.

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The Group saw its mined zinc production from India up 44 per cent q-o-q in line with mine plan while integrated metal production increased q-o-q.

The company said it received environmental clearances for expansion of Zawar and Sindesar Khurd zinc mines and as far as aluminium is concerned it continued ramp up of Jharsuguda-II and BALCO-II smelters while third line of the 1.25 mtpa Jharsuguda-II smelter commenced ramp up in December 2016.

It said supply of coal has commenced from the 6 mtpa coal linkages secured earlier this year.

On power front, 1,980 MW TSPL plant fully operational with 77 per cent plant availability.

In oil and gas, it said Mangala EOR with production level of 55,000 barrels per day recorded 6 per cent higher growth q-o-q which Rajasthan production was impacted by planned shutdown at the Mangala processing terminal.

On iron ore front, it said, the Group achieved full year production cap in January at Goa (5.5 MT ) and Karnataka (2.3 MT ) while received further allocation of 3 MT in Goa for FY2017.

As far as copper was concerned Zambia saw lower integrated volumes due to lower equipment availability and lower grades.

About zinc, Vedanta Resources said its mined metal production was 2,76,000 tonnes, 21 per cent higher compared to Q3 FY2016 and 44 per cent higher sequentially.

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The sequential increase was on account of higher volumes from Rampura Agucha open cast mine in accordance with mine plan and the y-o-y increase was driven by higher volumes from Rampura Agucha underground as well as open cast mines.

“We are on track to achieve stated guidance of higher mined metal production in FY2017 compared to FY2016,” it said.

The company said integrated zinc metal production during the quarter was at 2,05,000 tonnes, up 38 per cent from the previous quarter, and flat y-o-y on account of accretion of mined metal inventory.

Integrated saleable lead production during the quarter was 39,000 tonnes, up 26 per cent sequentially and 10 per cent y-o-y. The y-o-y increase was in line with mined metal production, while the sequential increase was on account of enhanced smelter efficiencies.

The company said integrated silver production during the quarter increased by 10 per cent to 3.79 million ounces from previous quarter and 2 per cent y-o-y.

In line with the on-going expansion to reach 1.2 mtpa mined metal production capacity, environmental clearances were received for Sindesar Khurd expansion of ore production capacity from 3.75 mtpa to 4.5 mtpa and for Zawar mine to 4 mtpa.

The cost of production excluding royalty was higher at USD 861 per tonne compared to USD 796 per tonne in Q3 FY2016 and USD 809 per tonne in Q2 FY2017. The increase was

It said the increase was primarily on account of additional excavation at Rampura Agucha underground, change in global waste to ore ratio, higher mine development, input commodity inflation (primarily coal and met coke), and lower by-product credits driven by lower sulphuric acid prices, which were partially offset by higher volumes, better average grades and cost optimisation initiatives in procurement and commercial functions.

About oil and gas it said for Q3 FY2017, average gross production across assets was lower at 1,81,818 barrels of oil equivalent per day (boepd), primarily due to planned maintenance shutdown in Rajasthan and natural decline in offshore assets.

Gross production from the Rajasthan block averaged 1,54,272 boepd for the quarter, lower mainly due to the planned maintenance shutdown at the Mangala Processing Terminal which will help maintain asset integrity and improve the plant performance.

“We had encouraging results from the Mangala Enhanced Oil Recovery (EOR), driven by enhanced well productivity and production optimization activities. The production from EOR increased to an average of 55 kboepd in Q3 FY2017 from 52 kboepd in Q2 FY2017,” it said.

Continued reservoir management including production optimisation helped maintain steady production from Bhagyam and Aishwariya. Gross production from Development Area-1 (DA-1) and Development Area-2 (DA-2) averaged 141,177 boepd and 13,095 boepd, respectively.

On iron ore, the company said, at Goa production was 2.3 million tonnes (MT) and sales were 2.7 MT during the quarter. In Karnataka, the production was 0.4 MT and sales were 1 MT. Sales were higher than production in both Goa and Karnataka due to sales from opening inventory.

It said during Q3 FY2017, production of pig iron was 5 per cent higher y-o-y at 1,54,000 tonnes due to higher plant availability post debottlenecking.

Iron ore revenue for the quarter, it said was at USD 209 million, significantly higher compared to Q2, primarily due to the ramp up at Goa in Q3 post monsoon and higher iron ore prices. Price realisation at Goa in Q3 FY2017 was USD 40.7 per tonne compared to USD 32.5 per tonne in Q2 FY2017.

About Copper India, the company said the Tuticorin smelter produced 102,000 tonnes of cathodes during Q3 FY2017, up 15 per cent y-oy. During Q3 FY2016, volumes had been lower on account of flooding in the state and unplanned shutdowns.

Copper Zambia it said during Q3, mined metal production was 21,000 tonnes, 33 per cent lower y-o-y, due to lower production from Nchanga underground which was placed on managed care and maintenance in Q3 FY2016, lower trackless equipment availability at Konkola mine, throughput constraints at the mills and lower feed from reclaimed tails at Tailings Leach Plant.

“During Q3, we commenced trial mining at the Nchanga underground mine and initial results for recovery and mining productivity are promising,” it said adding, the plan is to ramp-up the annual ore production to a rate in excess of 2 million tonnes.

About aluminium it said the first line of the 1.25 mtpa Jharsuguda-II smelter was impacted by a transformer failure incident in mid- January. Rectification work is in process and 80 pots of the 336 pots are currently operational.

The first line is expected to be ramped up by Q1 FY2018 post rectification, it said adding, the second line is fully ramped up and is expected to be capitalised in Q4 FY2017. The ramp up of the third line of the smelter has commenced in end December 2016, with 42 pots operational and is expected to be fully ramped up by Q2 FY2018.

The rolled product facility at BALCO, which was temporarily shut-down last year, successfully re-commenced its operations in Q2 FY2017 following optimisation of its cost structure, and produced 6,100 tonnes during the quarter.

The two streams of the Lanjigarh refinery operated during the quarter and produced 3,28,000 tonnes in Q3 FY2017, 12 per cent higher than Q2 FY2017.

On power front it said sales were higher y-o-y due to the commissioning of additional power units at TSPL and BALCO over the last one year. Power sales from TSPL increased with all three units being operational.

In Q3 FY2017, the three units operated at an availability of 77 per cent. “The Power Purchase Agreement with the Punjab State Power Corporation Limited (PSPCL) compensates us based on the availability of the plant,” Vedanta said.

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