03 AUGUST 2015Business Standard
Vedanta Aluminium focuses on restructuring; ramp up plans stalled for now
Edited by : AL CIRCLE
3 min read
Anil Agarwal led Vedanta Resources said it is planning to restructure high-cost operations in aluminium segment and has suspended ramp-up at its plant due to volatile commodity market.
The mining conglomerate has been facing a challenging environment as global commodity prices are undergoing a volatile phase leading to downward pressure on prices, affecting the company's profit and revenue.
"In light of the low LME (London Metal Exchange) prices and premiums we are reviewing restructuring some of our high cost operations in the Aluminium segment," Vedanta Resources said in a statement.
EBITDA (operational earnings) for the June quarter was significantly lower and negative at USD (1.9) million due to reduced LME and metal premiums and USD 37 million provision made for RPO for previous years, it added.
"The 325 kilo tonne (KT) Korba-II smelter produced 18,000 tonnes during Q1 FY 2015-16 with 83 pots online by the end of the quarter. However, ramp up of further pots has been temporarily put on hold due to the current volatile LME and premium scenario," the London-based firm said.
Spot Main Japanese Port (MJP) aluminium ingot premium has fallen from about USD 415/tonne in January 2015 to around USD 100 a tonne due to increased supply from China, Vedanta Resources said.
"Lower LME price and metal premiums in Q1 2015-16 resulted in a decrease in margins. The weighted average premium realised in Q1 2015-16 was USD 228 per tonne against USD 455 per tonne realised in Q1 2014-15," it added.
Earlier this week, Vedanta had said the company might be forced to take "some difficult decisions" on jobs to cut costs.
"It is a very challenging market situation for aluminium producers in India. We are taking all measures to keep our aluminium business steady and reduce costs. This may result in us taking some difficult decisions," Vedanta CEO Tom Albanese had told PTI when asked whether the company will cut jobs in its aluminium segment.
Vedanta's Lanjigarh alumina refinery operated at a high utilisation rate and produced 269,000 tonnes in Q1 2015-16, 15 per cent higher than Q1 of last year, it said.
Production at the 500 KT Jharsuguda-I and 245 KT Korba-I smelters remained stable, it added.
Hot metal cost at Jharsuguda-I was lower at USD 1,597 per tonne in Q1 2015-16 compared to USD 1,636 per tonne in Q1 FY 2014-15, but higher than USD 1,547 per tonne in Q4 2014-15 due to higher coal and Renewal Purchase Obligation (RPO) costs.
Hot metal cost at Korba was at USD 1,837 per tonne, in line with USD 1,834 per tonne in Q1 2014-15 but higher than USD 1,822 per tonne in Q4 2014-15 due to higher coal and RPO costs, it said.
The mining conglomerate has been facing a challenging environment as global commodity prices are undergoing a volatile phase leading to downward pressure on prices, affecting the company's profit and revenue.
"In light of the low LME (London Metal Exchange) prices and premiums we are reviewing restructuring some of our high cost operations in the Aluminium segment," Vedanta Resources said in a statement.
EBITDA (operational earnings) for the June quarter was significantly lower and negative at USD (1.9) million due to reduced LME and metal premiums and USD 37 million provision made for RPO for previous years, it added.
"The 325 kilo tonne (KT) Korba-II smelter produced 18,000 tonnes during Q1 FY 2015-16 with 83 pots online by the end of the quarter. However, ramp up of further pots has been temporarily put on hold due to the current volatile LME and premium scenario," the London-based firm said.
Spot Main Japanese Port (MJP) aluminium ingot premium has fallen from about USD 415/tonne in January 2015 to around USD 100 a tonne due to increased supply from China, Vedanta Resources said.
"Lower LME price and metal premiums in Q1 2015-16 resulted in a decrease in margins. The weighted average premium realised in Q1 2015-16 was USD 228 per tonne against USD 455 per tonne realised in Q1 2014-15," it added.
Earlier this week, Vedanta had said the company might be forced to take "some difficult decisions" on jobs to cut costs.
"It is a very challenging market situation for aluminium producers in India. We are taking all measures to keep our aluminium business steady and reduce costs. This may result in us taking some difficult decisions," Vedanta CEO Tom Albanese had told PTI when asked whether the company will cut jobs in its aluminium segment.
Vedanta's Lanjigarh alumina refinery operated at a high utilisation rate and produced 269,000 tonnes in Q1 2015-16, 15 per cent higher than Q1 of last year, it said.
Production at the 500 KT Jharsuguda-I and 245 KT Korba-I smelters remained stable, it added.
Hot metal cost at Jharsuguda-I was lower at USD 1,597 per tonne in Q1 2015-16 compared to USD 1,636 per tonne in Q1 FY 2014-15, but higher than USD 1,547 per tonne in Q4 2014-15 due to higher coal and Renewal Purchase Obligation (RPO) costs.
Hot metal cost at Korba was at USD 1,837 per tonne, in line with USD 1,834 per tonne in Q1 2014-15 but higher than USD 1,822 per tonne in Q4 2014-15 due to higher coal and RPO costs, it said.
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