Buoyed by lower alumina and coal costs, diversified metals and mining conglomerate Vedanta Ltd is aiming to keep its aluminium manufacturing cost below USD 1400/MT in the second half (December-March) period of this fiscal.
In its guidance for the September quarter, Vedanta said, its aluminium making cost stood at USD 1473/MT in the April-September period whilst its production cost declined to USD 1462/MT in the September quarter. The fall in aluminium making cost was on the back of lowering alumina and coal costs.
Vedanta would also be aided by using power from its own sources. It has permission from the state power regulator- Odisha Electricity Regulatory Commission (OERC) to draw up 1800 Mw power from its 2400 Mw power station at Bhurkamunda, close to its aluminium smelting faclility, without paying cross subsidy charges.
Vedanta is going for a disciplined ramp up of its aluminium smelters at Jharsuguda and the Balco (Bharat Aluminium Company) unit at Korba (Chhattisgarh) as it eyes a production figure of 1.1 MnT this year. Its production in the first half of FY17 was 0.54 MnT. Ramp-up plan in this period was impacted by power outages at its second smelter at Jharsuguda and Korba. Of the 168 pots affected at Jharsuguda, 26 pots have been restarted and the rest are being repaired. At the Balco unit, 167 pots were impacted and they are scheduled to be put in order in Q4 (January-March quarter).
Abhijit Pati, chief executive officer (aluminium business) at Vedanta was not available for comments.
To back its aluminium expansion plan, Vedanta is also going for ramp up its alumina refining capacity at Lanjigarh. The company has resumed the refinery’s second stream operations in this fiscal with a production target of 1.4 MnT. It has pegged the alumina making cost at USD 250/MT.
Vedanta is working towards viability of its alumina refinery. It has pleaded to the Odisha government to make arrangements for alternative bauxite supplies from any of the mines owned by Odisha Mining Corporation (OMC). Moreover, Vedanta is also making efforts to start mining from three laterite mines alloted by the state government. These mines contain small quantities of bauxite.
At the end of the September quarter, aluminium business had eight per cent share to Vedanta resources’ EBITDA (earnings before interest, taxes, depreciation and amortisation) mix.
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