Vedanta’s aluminium production up 39% to 1.1 million tonnes in the three quarters of FY2018

Vedanta Resources has released both the production and financial results for Q3 FY2018 ended 31 December 2017.

Vedanta reports 445,000 tonnes of aluminium production in Q3 FY2018, up 40% YoY and 11% QoQ as a result of complete ramp up at the Jharsuguda-II smelter following the ramp up in Balco II smelter in Q1. Production excluding trial run stood at 427,000 tonnes in Q3 FY2018 with an exit monthly run rate of 1.8 tpy.

Jharsuguda-I has ramped up all the 228 pots affected by the April 2017 outage are fully ramped up and are currently operational. Jharsuguda-II has ramped up 2 potlines and in line-3, 193 pots are operational and will be fully ramped-up by Q4 FY2018.  Line-4 continues to be under evaluation.

Production cost for hot metal in Q3 FY2018 increased 36% YoY to US$ 1,945 per tonne, driven by increase in raw material prices,  commodity inflation across imported alumina, coal, caustic and carbon, currency appreciation and one-off revival costs related to pot outage. The cost of hot metal was 5% higher QoQ due to continued input commodity inflation.

The temporary closure of five power units in Jharsuguda by the State Pollution Control Board had resulted in temporary power import and impacted the power costs. The power plants were restarted in September and November.

Restrictions imposed by Coal India had resulted in low coal linkage realisation and the demand-supply imbalance on domestic coal supplies resulted in continued disruptions in domestic coal availability for the captive power plants in Q3 FY2018.

For the first three quarters of FY 018, Vedanta achieved a record aluminium production of 1.1 million tonnes, 39% higher YoY. During this period, revenue was US$ 2,475 million, 77% higher compared to corresponding prior period.

Vedanta is of the view that since Coal India increased the coal prices, effective 9 January, better coal linkage realization and third party quality control will help to marginally reduce the coal costs. The company expects to produce 1.5 to 1.6 million tonnes of aluminium (excluding trial run production) in FY2018 and CoP in Q4 FY2018 is expected to be in the range of $1,850-1,900 per tonne.

As for alumina results; the Lanjigarh refinery produced 287,000 tonnes of alumina in Q3 FY2018, 7% higher QoQ driven by improvement in operational performance, however, 12% lower YoY due to a temporary issues with rail logistics. In the first three quarters of FY2018, alumina production was 4% lower at 859,000 tonnes, due to lower bauxite dispatches. With the ramp-up in refinery and expected improvement in bauxite logistics, alumina production for the full year is expected at 1.2-1.3 million tonnes, slightly lower than the previous guidance.