Vedanta releases Production reports for the First Quarter FY 2016

Vedanta Resources Plc releases Production reports for the First Quarter FY 2016. Vedanta reports record quarterly aluminium production and continued high utilisation rate at Lanjigarh alumina refinery.

Tom Albanese, Chief Executive Officer, Vedanta Resources plc, said: "In Q1 we saw continued volatility in commodity prices…. We continue to focus on improving efficiency, costs, and enhancing production across our well-invested asset base… Our diversified business model supported by strong operating strengths and structurally low cost assets will enable robust long term returns to stakeholders."

Highlights for the aluminium segment are given below:

The Lanjigarh alumina refinery operated at a high utilisation rate and produced 269,000 tonnes in Q1 FY2016, 15% higher than Q1 of last year. Production at the 500kt Jharsuguda-I and 245kt Korba-I smelters remained stable.

Hot metal cost at Jharsuguda-I was lower at US$1,597 per tonne compared to US$1,636 per tonne in Q1 FY2015, but higher than US$1,547 per tonne in Q4 FY2015 due to higher coal and Renewal Purchase Obligation (RPO) costs. Hot metal cost at Korba was at US$1,837 per tonne, in line with US$1,834 per tonne in Q1 FY2015 but higher than US$1,822 per tonne in Q4 FY2015 due to higher coal and RPO costs.

Spot MJP ingot premium has declined from c. $415/mt in January to c. $100/mt due to increased supply from China. Lower LME price and metal premiums in Q1 FY2016 resulted in a decrease in margins. The weighted average premium realised in Q1 FY2016 was US$228 per tonne against US$ 455 per tonne realised in Q1 FY2015.

In light of the low LME and premiums, the company is reviewing restructuring some of our high cost operations in the Aluminium segment.

EBITDA for the quarter was significantly lower and negative at US$(1.9) million due to reduced LME and metal premiums and $37 million provision made for RPO for previous years.

The 325kt Korba-II smelter produced 18,000 tonnes during Q1 FY2016 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 1.25 million tonnes Jharsuguda-II smelter produced 20,000 tonnes in Q1 FY2016. Discussion are going on with the government authorities for using power from the 2400 MW power plant for further pot ramp up of the first line of 312 kt at this smelter. The company expects the ramp up to commence in Q3 FY2016.

Mining at the Chotia Coal block will be started in Q2 FY 2016. Discussion are going on with the Government on getting approval for Gare Palma IV coal block subsequent to the directions issued by the Delhi High Court. Both these coal blocks will feed the power plants at BALCO.