Vedanta cuts aluminium production cost to $1852 per tonne during September quarter

As the aluminium prices on the London Metal Exchange (LME) entered the bearish zone, Vedanta Limited reduced the cost of its production (CoP) during the September quarter of FY20 to $1,852 per tonne. The LME prices (as on November 14) hovered at $1,756 per tonne for the cash buyer. At this price point, 10 per cent of the global aluminium smelters are incurring cash losses.

Vedanta’s aluminium CoP during the first half (April-September) of FY20 was even lower at $1,810 per tonne, down 9 per cent from $1,990 in the corresponding period last year. Vedanta’s near term target is to reduce aluminium CoP to $1,500 per tonne. Earlier, Vedanta had planned to cut its CoP to $1,700 per tonne by the end of this financial year.

Ajay Dixit, chief executive officer (CEO) of Vedanta’s aluminium and power vertical had said: “We are putting in place a plan to reduce our production cost by the end of this year. The work to this effect has already started.”

However, on the other hand, Vedanta achieved cost efficiency in aluminium backed on the higher production at its Lanjigarh alumina refinery in Odisha, as well as enhanced availability of coal from linked sources and its captive supplies. The alumina production at the Lanjigarh refinery grew year-on-year by 18 per cent to 0.41 million tonnes.

Currently, Vedanta is receiving 50 per cent of its requirement from local bauxite sourcing. The commercial mine at Kodingamali is supplying 70 per cent of its bauxite ore excavation to the refinery under a long-term supply agreement with Odisha Mining Corporation (OMC) for sourcing two million tonnes of bauxite.

On coal initiatives, Vedanta's captive coal mine- Chotia is on course to achieve its peak rated capacity of one million tonnes per annum (mtpa). That apart, Vedanta plans to ramp up supplies from linkages by participating in Tranche V and VI of coal auctions. It is targeting coal security of 90 per cent, up from 72 per cent now.