Vedanta Resources plc
16 Berkeley Street
London W1J 8DZ
Tel: +44 (0) 20 7499 5900
Fax: +44 (0) 20 7491 8440
www.vedantaresources.com31 January 2012
Vedanta Resources Plc Production Report for the Third Quarter and Nine
Months Ended 31 December 2011
Q3 Highlights
Record production volumes of refined Silver and Lead
Commissioned 350 tonne Silver refinery
Improved operational performance at Aluminium division
Completed acquisition of Cairn India
EBITDA of $848 million, including $131 million from Cairn India
Zinc - India
Mined zinc-lead metal production in Q3 was 209,000 tonnes, 6% lower than the corresponding prior
quarter. Refined zinc production was 7% higher at 191,000 tonnes primarily due to improved
throughput and operational efficiencies. Refined zinc production for the nine months ended
December 2011 (“nine month period”) was 569,000 tonnes, 10% higher than the corresponding prior
period.
Lead production in Q3 was a record 29,000 tonnes, 107% higher than the 14,000 tonnes produced in
the corresponding prior quarter primarily due to volumes from the new 100kt Dariba Lead Smelter,
which is ramping up well. The new smelter contributed 11,000 tonnes during Q3 and is expected to
reach about 90% of its rated capacity by the end of the current quarter. Lead production for the nine
month period was 62,000 tonnes as compared with 46,000 tonnes during the corresponding prior
period.
Silver production in Q3 was a record 1.85 million ounces, 37% higher primarily on account of
higher volumes at the Sindesar Khurd (SK) Mine and contribution from the new 350tpa Silver
refinery commissioned during the quarter. Silver production for the nine month period was 19%
higher at 4.94 million ounces.
EBITDA in Q3 was lower at $265.4 million as compared with $332.0 million in the corresponding
prior quarter mainly on account of lower LME prices, partially offset by higher contribution from
silver.
Ramp-up of the silver-rich SK mine is on track to achieve its targeted 2mtpa capacity by the end of
the current quarter. Vedanta Resources plc Page 2 of 7
Production Results for the Third Quarter ended 31 December 2011
Zinc - International
Total production of zinc-lead metal in concentrate and zinc metal was in line with expectations at
105,000 tonnes in Q3, which included 71,000 tonnes of zinc and lead metal in concentrates (MIC) at
BMM and Lisheen and 34,000 tonnes of refined zinc at Skorpion.
During the nine month period, total production of zinc-lead metal in concentrate and zinc metal
was 337,000 tonnes, which included 228,000 tonnes MIC of zinc and lead metal in concentrates
(MIC) at BMM and Lisheen, and 109,000 tonnes of refined zinc at Skorpion.
EBITDA in Q3 was $79.7 million. Prior period performance is not comparable as the acquisition of
these three assets was completed during the December 2010 to February 2011 period.
Iron Ore
During Q3, iron ore sales were 5.04 million tonnes (mt) as compared with 4.78 mt (4.36 mt
excluding Orissa) in the corresponding prior quarter. During the nine month period, sales were
10.83 mt as compared with 11.49 mt (10.02 mt excluding Orissa) in the corresponding prior period.
During Q3, iron ore production was 3.33 mt as compared with 4.70 mt (4.29 mt excluding Orissa) in
the corresponding prior quarter. Volumes were lower due to the ban on mining in Karnataka and
discontinuation of operations at Orissa. During the nine month period, production was 8.84 mt as
compared with 13.31 mt (11.90 mt excluding Orissa) in the corresponding prior period.
EBITDA in Q3 was $200.5 million as compared with $280.2 million in the corresponding prior
quarter mainly on account of higher export duty and lower realization, partially offset by higher
volumes. The export duty on iron ore fines and lumps was increased by the Government of India
from 5% and 15%, respectively, to 20% on both fines and lumps effective March 2011; and this was
recently increased from 20% to 30% with effect from 30 December 2011.
Copper – India and Australia
During Q3, copper cathode production at the Tuticorin smelter was 6% higher at 84,000 tonnes as
compared with the corresponding prior quarter. Copper cathode production for the nine month
period was 9% higher at 245,000 tonnes. Mined metal production at Australia was 6,000 tonnes
during Q3 and 17,000 tonnes during the nine month period.
EBITDA for Q3 was 55% higher at $79.5 million, primarily on account of higher Tc/Rc realizations,
higher volumes and better margins on phosphoric acid sales.
Our petition against the High Court’s closure order was recently heard by the Supreme Court on 17
January 2012. We are implementing the improvement measures recommended by the Tamil Nadu
Pollution Control Board and the smelter continues to operate as per the stay granted by the Supreme
Court. The case is next listed for hearing on 28 March 2012.
The first 80 MW unit of the captive power plant at Tuticorin is scheduled for commissioning in the
current quarter. Vedanta Resources plc Page 3 of 7
Production Results for the Third Quarter ended 31 December 2011
Copper – Zambia
During Q3, production of mined metal was 24,000 tonnes. Integrated copper cathode production
was 37,000 tonnes, 9% higher than the corresponding prior period, which included 10,000 tonnes
from the tailing leach plant (TLP). Total finished copper production was 51,000 tonnes, 7% lower
than the corresponding prior period due to a fall in custom smelting production, which was
affected by an annual shutdown of the Nchanga smelter during the quarter.
During the nine month period, production of mined metal was 76,000 tonnes. Total copper cathode
production was 9% lower at 153,000 tonnes, while integrated copper production was 5% higher at
105,000 tonnes, which included 34,000 tonnes from the TLP. Custom smelting production was 30%
lower at 48,000 tonnes.
EBITDA in Q3 was $67.7 million as compared with $143.4 million in the corresponding prior period
mainly on account of lower LME prices and a provision for higher power costs.
The Nchanga East Concentrator was commissioned in January 2012 and trials are underway. The
second cobalt recovery furnace and the Nchanga West Concentrator are expected to be
commissioned in the current quarter and Q1 FY 2012-13, respectively. At KDMP, work is
progressing on schedule, and bottom shaft loading is expected to be completed by Q3 FY 2012-13.
Aluminium
Aluminium production in Q3 was 170,000 tonnes, which includes production of 107,000 tonnes at
VAL Jharsuguda and 63,000 tonnes at BALCO. The Lanjigarh refinery has ramped up well and the
alumina production at Lanjigarh was a record 236,000 tonnes and 687,000 tonnes during Q3 and the
nine month period, respectively.
Cost performance at VAL Jharsuguda improved over Q2, which previously had higher costs due to
the pot outage in Q1 and a heavy monsoon in the coal mining areas during Q2. COP of hot metal
produced at VAL Jharsuguda was INR 103,130 per tonne ($2,004 per tonne) as compared with INR
117,045 per tonne ($2,554 per tonne) in the preceding quarter. COP of hot metal produced at
BALCO was stable in Rupee terms at INR 96,170 per tonne ($1,880 per tonne) as compared with
INR 97,588 per tonne ($2,133 per tonne) in the preceding quarter.
EBITDA in Q3 was $3.6 million, significantly lower than the $76.3 million in the corresponding
prior quarter, primarily due to lower LME prices and mark to market (MTM) losses on foreign
currency borrowings for working capital on account of the depreciation of the Indian Rupee.
The first metal tapping from the 325 ktpa aluminium smelter at Korba is now scheduled for Q2 FY
2012-13. The first unit of the 4x300MW captive power plant at BALCO will be synchronised in Q1
FY 2012-13. The 211mt coal block at BALCO received approval from the Environment Appraisal
Committee (EAC) in November 2011 and we continue to work towards obtaining the remaining
approvals. Vedanta Resources plc Page 4 of 7
Production Results for the Third Quarter ended 31 December 2011
Energy
In Q3, power sales were 1,766 million units. This included 1,559 million units sold by the 2,400MW
Jharsuguda power plant, as compared with 245 million units in the corresponding prior period.
EBITDA in Q3 was $22.7 million as compared with $8.0 million in the corresponding prior quarter.
The increase in sales and EBITDA was mainly on account of power sales from the first two units of
the 2,400 MW Jharsuguda power plant.
The third unit of the 2,400MW Jharsuguda power plant is currently producing under trial run. The
Talwandi Sabo Power Project is on track for synchronization of the first unit in Q4 FY 2012-13.
135MW of the 150MW wind power expansion project has been commissioned and the remaining is
expected to be completed in Q4. Post completion, our wind power generation capacity will be
273MW.
Oil and Gas
We successfully completed the acquisition of Cairn India on 8 December 2011, and now hold a
58.5% stake on a fully diluted basis.
Cairn India reported an average daily gross operated production of 169,580 barrels of oil equivalent
(boe) for the quarter, with working interest production at 98,969 boepd. This comprised 125,122
bopd from Rajasthan, 36,567 boepd from Ravva and 7,890 boepd from the CB/OS-2 block. Of this,
the gross production post completion of the acquisition was 4.07 million barrels of oil equivalent
(mboe) and the working interest production was 2.37 mboe.
The Mangala field in the Rajasthan block is consistently producing at the currently approved
plateau rate of 125,000 bopd since August 2010. Post its production start-up in August 2009, the
Mangala Processing Terminal (MPT) has processed more than 70 mmbbls of crude oil, which has
been sold to government-owned and private refiners.
The Bhagyam field, the second largest of the 25 discoveries made so far in the Rajasthan block,
commenced production on 19 January 2012. The reservoir and facilities will entail a gradual ramp
up to reach the currently approved plateau of 40,000 bopd. The commissioning of Bhagyam is a key
milestone towards achieving the targeted production rate of 175,000 bopd by end FY 2011-12.
On the exploration front, Cairn India had two successive discoveries in the Sri Lanka Block SL-2007-
01-001 frontier exploration drilling programme. Following this success, Cairn India has notified the
government of Sri Lanka of its intention to enter the second phase of exploration.
We have consolidated Cairn India into our financial statements from 8 December 2011, and
accordingly have accounted for revenues and EBITDA from Cairn India of $155.4 million and
$131.0 million, respectively. Vedanta Resources plc Page 5 of 7
Production Results for the Third Quarter ended 31 December 2011
Production Summary (Unaudited)
(in ‘000 tonnes, except as stated)
Quarter ended 31 December Nine Months ended 31 December
Particulars 2011 2010 Change 2011 2010 Change
Zinc India
Mined metal content 209 222 (6%) 607 609 0%
Zinc - refined 191 178 7% 569 519 10%
Lead - refined
1 29 14 107% 62 46 35%
Silver (in ‘000 ounces)
2
1,852 1,351 37% 4,940 4156 19%
Zinc International
3
Skorpion - Refined Zinc 34 13 - 109 13 -
BMM and Lisheen - Mined Metal 71 - - 228 - -
Iron Ore
4
(in million tonnes)
Sales 5.0 4.8 4% 10.8 11.5 (6%)
Goa 4.4 3.7 18% 8.4 8.4 (1%)
Karnataka 0.6 0.6 2% 2.4 1.6 55%
Orissa - 0.4 (100%) - 1.5 (100%)
Saleable Ore Produced 3.3 4.7 (30%) 8.8 13.3 (34%)
Goa 3.3 3.4 (4%) 7.8 9.3 (15%)
Karnataka 0.1 0.9 (92%) 1.0 2.7 (62%)
Orissa - 0.4 (100%) - 1.4 (100%)
Copper- India / Australia
Copper - Mined metal content 6 4 50% 17 18 (6%)
Copper - Cathodes 84 79 6% 245 224 9%
Copper – Zambia
Total Copper Cathodes 51 55 (7%) 153 169 (9%)
Integrated 37 34 9% 105 100 5%
Custom 13 21 (38%) 48 69 (30%)
Alumina
Lanjigarh 236 147 61% 687 522 32%
Aluminium
Total Aluminium Production 170 168 1% 492 470 5%
Jharsuguda 107 103 4% 308 277 11%
Korba II 63 65 (3%) 184 193 (5%)
BALCO 270 MW power sales
(in million units)
382 418 (9%) 1,192 1,192 0%
Energy (in million units)
Total Power Sales 1,766 497 - 4,617 1049 -
SEL5
1,559 245 - 3,964 294 -
MALCO and HZL Wind Power 207 251 (18%) 653 756 (14%)
Oil and Gas
6
(in mboe)
Oil / Condensate - Gross 4.07 - - 4.07 - -
Oil / Condensate - Working Interest 2.37 - - 2.37 - -
1. Includes captive consumption of 1,730 tonnes in Q3 FY 2011-12 vs. 1,746 tonnes vs. Q3 FY 2010-11, and 4,469 tonnes during the nine month period
vs. 4,558 tonnes during the corresponding prior period.
2. Includes captive consumption of 295,000 ounces in Q3 FY 2011-12 vs. 297,000 ounces vs. Q3 FY 2010-11, and 758,000 ounces during the nine
month period vs. 771,000 ounces during the corresponding prior period.
3. Skorpion was acquired in Q3 FY 2010-11. BMM and Lisheen were acquired in Q4 FY 2010-11.Numbers are post acquisition.
4. Iron ore is reported on dry metric tonne basis
5. Including production under trial run of 428 million units in Q3 FY 2011-12 vs. 245 million units in Q3 FY 2010-11, and 717 million units during
the nine month period vs. 294 million units during the corresponding prior period.
6. Accounted as a subsidiary from 8 December 2011. Numbers are post acquisition.
Note: Iron Ore sales include captive consumption of 0.05 million tonnes in Q3 FY 2011-12 vs 0.11 million tonnes in Q3 FY 2010-11, and 0.17 million
tonnes during the nine month period vs. 0.30 million tonnes during the corresponding prior period. Vedanta Resources plc Page 6 of 7
Production Results for the Third Quarter ended 31 December 2011
Financial Summary (Unaudited)
(in $ million)
Particulars Quarter ended 31 December Nine Months ended 31 December
2011 2010 % Change 2011 2010 % Change
Revenue
Zinc 786.9 604.1 30% 2,453.4 1,485.8 65%
- India 528.4 574.9 (8%) 1,706.2 1,456.6 17%
- International
1
258.5 29.2 - 747.2 29.2 -
Iron Ore 526.3 489.9 7% 1,153.7 1,197.6 (4%)
Copper 1,380.8 1,499.4 (9%) 4,501.2 3,681.8 22%
– Zambia 383.5 476.1 (8%) 1,306.0 1,336.3 (2%)
– India/Australia 997.2 1,023.3 (3%) 3,195.1 2,345.5 36%
Aluminium 446.7 463.5 (10%) 1,379.1 1,265.4 9%
Energy 101.0 26.6 280% 328.3 82.0 300%
Oil and Gas 155.4 - - 155.4 - -
Others and
Eliminations
2
2.5 (15.4) - (19.0) (63.1) -
Total 3,399.6 3,068.1 11% 9,952.1 7,649.5 30%
EBITDA
Zinc 345.1 340.6 1% 1,206.8 796.9 51%
- India 265.4 332.0 (20%) 923.1 788.3 17%
- International
1
79.7 8.6 - 283.7 8.6 -
Iron Ore 200.5 280.2 (28%) 507.5 712.9 (29%)
Copper 147.2 194.9 (25%) 552.9 477.7 16%
– Zambia 67.7 143.4 (53%) 311.9 317.3 (2%)
– India/Australia 79.5 51.5 54% 241.0 160.4 50%
Aluminium 3.6 76.3 (95%) 94.6 232.8 (59%)
Energy 22.7 8.0 184% 73.4 30.9 138%
Oil and Gas 131.0 - - 131.0 - -
Others and
Eliminations
2
(1.7) (9.6) - (6.4) (12.2) -
Total 848.4 890.4 (5%) 2,559.8 2,238.9 14%
1. Skorpion was acquired in Q3 FY 2010-11. BMM and Lisheen were acquired in Q4 FY 2010-11. Numbers are post acquisition.
2. Includes unallocated corporate expenses
Note: Previous year figures related to captive power plants have been reclassified Vedanta Resources plc Page 7 of 7
Production Results for the Third Quarter ended 31 December 2011
For further information, please contact:
Investors
Ashwin Bajaj
Senior Vice President – Investor Relations
Vedanta Resources plc
ir@vedanta.co.inTel: +91 22 6646 1531
Media
Gordon Simpson
Finsbury
Tel: +44 20 7251 3801
About Vedanta Resources plc
Vedanta Resources plc (“Vedanta”) is a London listed FTSE 100 diversified global natural resources
major. The group produces aluminium, copper, zinc, lead, silver, iron ore, oil & gas and commercial
energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Liberia, Ireland, Australia
and Sri Lanka. With an empowered talent pool globally, Vedanta places strong emphasis on partnering
with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness
and growth. For more information, please visit
www.vedantaresources.com.
Disclaimer
This press release contains “forward-looking statements” – that is, statements related to future, not
past, events. In this context, forward-looking statements often address our expected future business
and financial performance, and often contain words such as “expects,” “anticipates,” “intends,”
“plans,” “believes,” “seeks,” “should” or “will.” Forward–looking statements by their nature
address matters that are, to different degrees, uncertain. For us, uncertainties arise from the
behaviour of financial and metals markets including the London Metal Exchange, fluctuations in
interest and or exchange rates and metal prices; from future integration of acquired businesses; and
from numerous other matters of national, regional and global scale, including those of a political,
economic, business, competitive or regulatory nature. These uncertainties may cause our actual
future results to be materially different that those expressed in our forward-looking statements. We
do not undertake to update our forward-looking statements.
Mar 31 Jan 2012 09:34