Diversified mining and metals giant Vedanta Ltd has unveiled a USD 10 billion three-year capital expenditure plan to vastly increase its aluminium, zinc, and energy business. The investment, intended to take advantage of India's industrial surge, is expected to drive the company's medium-term annual EBITDA to the USD 8-10 billion mark, with aluminium being a major driver of the growth.
_0_0.jpg)
Image source: https://vedantaaluminium.com/
Aluminium as a key growth driver
The lion's portion of this investment is going into its aluminium business, which Vedanta estimates will add about USD 4 billion to its future top line earnings. The expansion strategy, aggressive in scope, calls for doubling the capacity of its alumina refinery to 5 million tonnes a year (MTPA) by FY26 and boosting its aluminium smelting capacity to 3.1 MTPA by FY28. This will make Vedanta one of the biggest primary aluminium producers globally outside China.
The keystone of Vedanta's plan is backward integration to take greater control of the whole value chain, from mining bauxite and coal to captive power generation and final smelting. Self-reliance will boost the firm's cost leadership and protect it from fluctuations in global commodity prices, as outlined in a recent interview with Vedanta Aluminium's CEO.
Betting on India's future industrial growth
The capex strategy also plans a significant boost in merchant power capacity to 4.78 gigawatts. This is of high importance for the aluminium vertical, as smelting is a very power-hungry process, and having access to cheap, reliable power is essential to keeping production costs competitive.
The investment boosts the Indian government's "Make in India" programme by betting on a domestic market where demand for major commodities such as aluminium is predicted to increase by 6-7 per cent per year up until 2030. Vedanta is committing its resources to making high-value products for this demand, an investment reiterated by its recent investments in downstream facilities, including the new low-emission casthouse at its Jharsuguda mega-smelter.
By funnelling a significant majority of its capex into the aluminium value chain, Vedanta is not only investing in India's growth story but also strategically positioning itself to be a cost-competitive dominant player in the global arena.
Also read: Upstream Weekly - Aluminium on the Moon, China’s 86% import surge & US tariff shockwaves
Responses
