India: Vedanta Iron ore Production Plunge in Q1FY’19 Amid Goa Mining Ban

Vedanta Resources – one of the major metal and India’s largest iron ore exporter in FY18 has observed a decrease in its iron ore production by 56% Y-o-Y in Q1 FY19. Its production of saleable ore has come down to 1.4 MnT in Q1’FY19 compared to 3.2 MnT in Q1 FY18. However, on the quarterly basis, iron ore production decreased by 18% as it was 1.7 MnT in Q4FY’18.

Production from Goa fell 89% Y-o-Y -: In Q1 FY19, Vedanta’s saleable iron ore production from Goa mines stood at 0.2 MnT against 2.2 MnT in Q1 FY18, down sharply 89% Y-o-Y. On a quarterly basis also it has come down significantly by 87% to 1.5 MnT in Q4FY’18.

Production volumes come down sharply from Goa miners owing to cancellation of mining operations at 88 mining lease post 15th Mar’18 by the Supreme court Judgment on 7th Feb’18 until fresh environmental clearances granted. Besides, increase in high-grade iron ore demand from Chinese mills due to environmental issues led to a further decline of low-grade iron ore exports from Goa.

Vedanta’s Iron ore production from Karnataka increased in Q1FY’19-:
In Q1FY19, Vedanta’s iron ore production from Karnataka increased significantly and stood at 1.2 MnT against 0.1 MnT in Q4FY’18.  On Yearly basis, production from Karnataka increased by 8% against 1.1 MnT in Q1’FY’18.

Vedanta’s iron ore exports drop 52% in Q1FY19-:
According to customs data maintained with SteelMint, Vedanta marked the largest exporter for the quarter Q1 FY19 at 0.77 MnT, down 52% as against 1.59 MnT in Q4 FY18.

Vedanta iron ore production/sales summary-:

Fig in MnT
Source: Company reports, BSE filings

The company has set iron ore production guidance at 4.5 MnT p.a. in Karnataka for FY19 and nil for Goa. In FY18, Vedanta’s iron ore production from Karnataka was recorded at 2.2 MnT. Vedanta’s iron ore mining allocation in Karnataka doubled to 5.4 MnT pa.