Mining major Vedanta is taking multiple steps this year to upgrade its margins, from increasing its portfolio of value-added products to sourcing raw materials from captive mines. During its recently completed fiscal year, the company had an EBITDA margin of almost 35%.
The Indian multinational mining company, Vedanta has lately secured two iron ore mines in Odisha through auctions. As per the statement of Sunil Duggal, the Chief Executive Officer of Vedanta Limited, “Once these mines get operational, they will not only secure its iron ore supplies for its steel arm ESL Steel and reduce the raw material cost, but also provide a consistent quality.”
The CEO further stressed by saying that the Vedanta has three coal mines which are anticipated to functionalize one after the other in the next one year. However, following the commercialization of these mines, it was presumed to manage all the coal requirements of Vedanta.
“Moreover, with captive mines activation, the cost of coal will also reduce to more than half for the company”, Duggal added.
The advantage of functionalising the captive coal mines does not restrict to cost reduction in coal procurement, but also will bring relief from unreliable coal shipments, as the supply delay challenges that the industry is countering in the last few months have created anxiety in the sector. Aluminium manufacturing is considered a high power-intensive industry.
Duggal said, “The Company is working on growing its value-added aluminium business to generate over 90% of revenues from 40-42% now.”
Vedanta is advancing towards augmenting its alumina refinery production capacity to 5 million tonnes per annum. This will eradicate the obligation to import alumina; in return, it will help in diminishing the cost of aluminium production by a considerable amount per tonne.
Duggal asserted, “The Company also has a long-term contract with the Odisha Mining Corporation, which has received permission to increase its production. With locally sourced ore, the company can reduce the aluminium production cost by up to $300 per tonne.”
The Chief Executive of Vedanta concludes by saying that with these courses of action and the adding up of the value-added capacity, the margins of the metal and mining giant will be driving substantial from now onwards.
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