Vedanta Resources Plc, controlled by billionaire Anil Agarwal, will cut its spending program by as much as $2 billion over the next two years after failing to get clearance to mine bauxite at Niyamgiri in India’s Orissa state.
The capital expenditure revision “will have an impact of between $1.5 billion and $2 billion,” Chief Executive Officer Mahendra Singh Mehta said on an analyst conference call today. “These numbers are very tentative as of now; these numbers will be developing as we go forward.”
Vedanta has suspended work on its Lanjigarh alumina refinery expansion as a result, and deferred the first metal tapping at the Jharsuguda-II and Korba smelter projects, the London-based company said today in a statement.
The plan to mine Orissa’s bauxite, used to make aluminum, would help reduce raw-material costs at its refinery. On Aug. 10 the company won state approval for a 375 billion-rupee （$8.47 billion） expansion to increase smelting and refining capacity sixfold. Later that month India’s Environment Ministry dismissed the mining plan on concern it would affect tribes and wildlife.
While Vedanta is in talks with the Orissa government to get alternative sources of bauxite, the refinery will continue to operate at 1 million tons a year with ore from Bharat Aluminium Co. and others, the company said in the statement.
Anglo Zinc Deal
Vedanta produces copper, iron ore and zinc, as well as aluminum. It reported record-high zinc and aluminum output in the quarter ended Sept. 30, with zinc rising 25 percent from a year earlier to 176,000 metric tons, and aluminum climbing 35 percent to 162,000 tons. The company agreed in May to pay Anglo American Plc $1.34 billion for zinc mines in Africa and Ireland.
“Key growth in zinc will come from the portfolio purchased from Anglo American,” Liberum Capital Ltd. wrote in a note to investors. “With deal completion earmarked for the end of the calendar year, we include these assets as of fiscal year 2012.”
Vedanta fell 30 pence, or 1.4 percent, to 2,193 pence at the 4:30 p.m. close in London trading, the biggest decline in a week.
Iron ore output was stable in the quarter, at 3.2 million tons, while sales of the steelmaking material increased 25 percent to 2 million tons, Vedanta said.
Production at the company’s Tuticorin smelter in India totaled 68,000 tons, 25 percent lower than a year earlier, because of a planned 22-day maintenance shutdown that began June 22, it said.
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