Renewable energy adoption, record-breaking production, and nearing 10 billion EBITDA target is all about Vedanta’s FY2025

Vedanta Aluminium, India's largest aluminium producer and one of the leading global players in the industry, has garnered worldwide attention this year with its bold moves towards sustainability and highest-ever half-yearly production. Indeed, the company has marked several milestones from the very beginning of the year by securing #Rank 1 as the most sustainable aluminium producer in the esteemed S&P Corporate Sustainability Assessment (CSA) rankings for the assessment period 2023. Then on, Vedanta awed the global aluminium industry with one after another sustainable aluminium production tactics, with an unwavering focus towards shifting to renewable energy.

Image Source: Vedanta Aluminium

The former CEO of Vedanta Aluminium, John Slaven, made a strong opinion by stating, "We are committed to reducing our carbon footprint and embracing clean energy solutions. Coal is no longer the future for our industry."

Shifting to renewable energy is a strategic decision by Vedanta to reduce greenhouse gas emissions, achieve long-term cost savings, and conform to stricter environmental regulations. Some of Vedanta's future goals related to sustainability are as follows:

• 50 per cent of energy consumption from renewable energy sources
• Eliminate carbon footprint by 2050
• Investing in research & development of new sustainable technologies

To accomplish these goals, the company is committed to halting investments in new coal-fired power plants, phasing out outdated and inefficient coal facilities, and redirecting resources towards renewable energy projects. In a strategic move, Vedanta is also implementing measures to prevent disruptions during this transition by investing in energy-efficient technologies and optimising its processes.

In concern to Net Zero by 2050, the former CEO John Slaven had once said in one of his interviews with AL Circle that “We have adopted a two-fold strategy of reducing and offsetting our carbon footprint to advance towards our target of achieving Net Zero by 2050. We are reducing our carbon footprint by increasing the quantum of renewables in our energy mix, achieving higher efficiencies in resource utilisation, and transitioning to low-carbon energy sources such as biofuels. In addition, we are also offsetting our carbon footprint through afforestation efforts near our assets.”

He also said: “Further, we will not be adding additional coal-fired capacity to our existing power portfolio to support growth in our metal production volume. All our additional power requirements will be met through renewable energy. With this aim, we have already entered into long-term agreements to source an initial 1335 MW of renewable energy to kickstart our decarbonisation efforts. Within our operations, we are also leveraging technologies such as the Industrial Internet of Things to monitor emissions, curb material wastage and conserve energy usage.”

Strategic moves towards sustainability goals

1. In early April, Vedanta Limited, Lanjigarh, launched an advanced Energy Management System across its power plant to monitor the energy performance parameters of 120 critical electrical assets, in a bid to enhance energy efficiency levels. This digitalisation effort is expected to result in enhanced functional optimisation and increased automation of the refinery operations.
2. In the same month, Bharat Aluminium Company Limited (BALCO), a part of Vedanta Aluminium, inducted its first Bogie Open Bottom Rapid Discharge (BOBRNHSM2) Rake within its operations, in a bid to achieve efficient and sustainable supply chain of raw materials. This addition will accelerate the speed of operations while reducing emissions as each rake will replace the need for nearly 120 trucks. Again in October, Vedanta Aluminium installed the Bogie Open Bottom Rapid discharge railway wagon with pneumatic door opening actuators (BOBRN) into the logistics system for coal transportation at its smelters in Jharsuguda, Odisha and Korba, Chhattisgarh.
3. As part of its strong commitment to shifting to renewable energy, Vedanta Aluminium has added biomass briquettes to its fuel mix for power generation at its world-class alumina refinery in Lanjigarh, Odisha. The company uses 20 tonnes of biomass briquettes per day, which potentially helps reduce the unit's greenhouse gas (GHG) emissions by more than 10,000 tonnes of CO2 equivalent each year.
4. Vedanta this year also deployed 22 additional electric forklifts at its smelter operations in Jharsuguda, Odisha, to expand its fleet of electric lithium-ion forklifts to 66 units and bolster the decarbonisation journey. The forklifts, featuring faster and safer battery charging capabilities, are deployed across Vedanta Aluminium's units in Jharsuguda and Lanjigarh in Odisha, as well as BALCO smelter in Chhattisgarh. They reduce greenhouse gas emissions by approximately 2,500 tonnes of CO2 equivalent annually and minimise diesel consumption with estimated savings of over 8.4 lakh litres per year.
5. Very recently, Vedanta Aluminium signed a 5-year natural gas deal with GAIL Gas Limited, a subsidiary of GAIL (India) Limited. This agreement is expected to come into effect at the end of 2025, significantly reducing carbon footprint and minimising CO2 equivalent emissions by 47,292 tonnes annually, advancing Vedanta's ongoing journey towards achieving Net Zero emissions by 2050.

Impacts on Vedanta's aluminium output

Vedanta's well-planned transition to renewable energy casts no shadow over its operational output, as indicated by the aluminium output volume in H1 FY2024-25. For the period mentioned, Vedanta has achieved the highest-ever half-yearly production, totalling 1.205 million tonnes, following an output of 609,000 tonnes in Q2, up by 2.18 per cent from 596,000 tonnes in Q1 FY2025. Year-on-year, Vedanta's aluminium production in Q2 FY2025 experienced an increase of 2.53 per cent from 594,000 tonnes.

In the full-year FY2023-24, Vedanta's aluminium production amounted to 2.37 million tonnes, up by 3 per cent Y-o-Y. Upon continuing the ongoing trend of aluminium production for the rest of the fiscal year FY2025, the company's metal output will exceed the prior year's level at the end of the year.

Vedanta reported an enhanced operational result for H1 FY2025, disclosing a 10 per cent Y-o-Y increase in power sales supported by higher generation from thermal plants.

The company also disclosed a Y-o-Y jump of 21 per cent in its H1 alumina output.

Financial results

Mining major Vedanta Limited reported a profit of INR 5,603 crore for Q2 FY2025 ended September 30, 2024, which was 55.4 per cent higher than INR 3,606 crore in Q1 FY2025. Revenue in Q2 stood at INR 37,171 crore, up by 5.5 per cent Y-o-Y from INR 35,239 crore.

An EBITDA in the July-September period was INR 9,828 crore, close to Vedanta's long-term goal of $10 billion EBITDA, comprised of $4.2 billion from aluminium, $2.7 billion from zinc and silver, and $0.9 billion from oil and gas.

Vedanta's present aluminium selling prices

Vedanta is currently selling its aluminium ingot at INR 257,250- 277,250 per tonne, effective from December 4, and trading aluminium billet at INR 266,250 per tonne. Vedanta's aluminium wire rod price is currently hovering around INR 266,750-275,750 per tonne.

Future project

On August 28, Vedanta's chairman, Anil Agarwal, announced on his LinkedIn posts that the company plans to establish two industrial parks, one for aluminium and one for silver and zinc. Ensuring timely raw materials and renewable energy supply for these industrial parks, Mr Agarwal also mentioned that these parks would run on a non-profit basis.

He wrote, "For India, industrial parks are a good way to achieve scale in different sectors and across the value chain. They will be transformative not just for entrepreneurs but also employees and workers who can avail of best-in-class townships and facilities that will come up around the cluster."

At present, Vedanta operates one aluminium park in Jharsuguda, which houses aluminium smelter and power plants. The park is designed to attract downstream companies to set up their plants and develop a complete aluminium ecosystem.