We believe that we have the following competitive strengths:
A leading diversified and the largest non-ferrous metals and mining company in India
Vedanta is a leading diversified and the largest non-ferrous metals and mining company in India based on revenue. We have substantial market share across the copper, zinc and aluminium markets in India. We are India’s largest iron ore producer-exporter by volume in the private sector. Specifically,
- Sterlite is the leading custom copper smelter in India based on production volume in fiscal 2008, and according to International Copper Promotion Council, India had a 42.6% primary market share by sales volume in India in fiscal 2008;
- HZL is India’s only integrated zinc producer, had a 79.7% market share by volume in India in fiscal 2008, according to ILZDA, and was the world’s fifth largest zinc mining company in 2007 based on mine production and is one of the top ten lead mining companies by production volumes worldwide, according to Brook Hunt;
- Vedanta, through its subsidiaries BALCO and MALCO, is the second largest primary producer of aluminium in India with a 31.0% primary market share by volume in India in fiscal 2008, according to AAI. BALCO was the fastest growing primary producer of aluminium in India in fiscal 2007 based on quantity of aluminium produced as a result of the ramp-up in production at its 245,000 tpa Korba aluminium smelter. BALCO’s 245,000 tpa Korba smelter was in the lowest cost quartile in terms of all aluminium smelters operations worldwide in 2007, according to Brook Hunt; and
- Sesa Goa was India’s largest producer-exporter of iron ore in the private sector by volume in fiscal 2007, according to the Federation of Indian Mineral Industries. Sesa Goa accounted for approximately 10.5% of India’s total iron ore exports and 1.4% of the world trade in iron ore in fiscal 2007, according to the Goa Mineral Ore Exporters’ Association. It has operations in the States of Goa, Karnataka and Orissa and, being strategically located in India, is well positioned to benefit from the continued growth of the Asian economies, including China. Our acquisition of Sesa Goa has further diversified our business and allowed us to participate in the strong growth in the iron ore sector.
High quality assets and resources making us a low-cost producer
We believe that our business has assets of global size and scale. Our costs of production in our Indian copper, zinc and aluminium businesses are competitive with those of leading metals and mining companies in the world, which we believe is enabled by our high quality assets, operational skills and experience and the integrated nature of our operations. Specifically:
- Sterlite’s Tuticorin smelter was one of the top ten custom copper smelters worldwide in 2007, according to Brook Hunt, and the largest in India by production volume in fiscal 2008. In 2007, Sterlite’s Tuticorin smelter was also in the lowest cost quartile in terms of all copper smelting operations worldwide and its Tuticorin and Silvassa refineries had the seventh and eighth lowest costs of production, respectively, of all copper refining operations worldwide, according to Brook Hunt. Brook Hunt projects that we will be the world’s eighth largest refined copper producer on a production volume basis in 2008.
- HZL’s operations are fully integrated with its own mining and captive power generation capacities. HZL was the world’s fifth largest zinc mining company in 2007 based on mine production and is also one of the top ten lead mining companies by production volume worldwide, according to Brook Hunt. HZL’s largest zinc mine, Rampura Agucha, was ranked third in the world in 2007 in terms of contained zinc deposits on a production basis and the fourth largest on a reserve basis, according to Brook Hunt. HZL was in the lowest cost quartile in terms of all zinc mining operations worldwide in 2007 and the fourth largest producer of zinc worldwide and HZL’s Chanderiya smelter was the third largest smelter on a production basis worldwide in 2007, according to Brook Hunt. Brook Hunt projects that HZL will be the world’s largest integrated zinc mining and smelting company on a production volume basis in 2008.
- Our aluminium business’ operations are fully integrated with respect to their power requirements through their captive power plants. BALCO’s 245,000 tpa Korba smelter was in the lowest quartile in terms of all aluminium smelter operations in 2007, according to Brook Hunt. BALCO recently received a coal block allocation of 211.0 million tonnes for use in its captive power plants. In March 2007, Vedanta Aluminium began the progressive commissioning of a 1.4 mtpa greenfield Lanjigarh alumina refinery project and an associated 90 MW captive power plant. The Lanjigarh alumina refinery has started production from a single stream operation and produced 267,000 tonnes of alumina in fiscal 2008.
We are seeking to further lower our costs across all of our operations. Factors contributing to our success in lowering our costs of production include:
- our focus on continually reducing manufacturing costs and seeking operational efficiency improvements;
- our building and managing captive power plants to supply a substantial majority of the power requirements of our operations; and
- our access to relatively large and inexpensive labour and talent pools in India and Zambia.
We view strict cost management and increases in productivity as fundamental aspects of our day-to-day operations and continually seek to improve efficiency.
Industry-leading growth profile
We possess a strong portfolio of greenfield and brownfield projects that we intend to pursue:
- Copper segment: KCM is expanding its smelting and mining capacities. KCM is constructing a new 300,000 tpa smelter at Nchanga, which we expect to commission in mid-2008. KCM is developing the KDMP, which is expected to increase KCM’s Konkola mine copper ore output to 7.5 mtpa and be completed in 2010.
- Zinc segment: In April 2008, HZL announced $900 million of expansion projects to increase its total lead-zinc capacity to 1,065,000 tpa with fully integrated mining and captive power generation capacities. These projects include:
- establishing two brownfield smelters which are expected to increase the production capacities of zinc and lead by approximately 210,000 tonnes and 100,000 tonnes, respectively, at Rajpura Dariba in the State of Rajasthan, both of which are expected to be completed by mid-2010;
- expanding ore production capacity at the Rampura Agucha mine from approximately 5 mtpa to 6 mtpa and at the Sindesar Khurd mine from approximately 0.3 mtpa to 1.5 mtpa. HZL is expected to start mining activity at the Kayar mine, which is expected to have a production capacity of approximately 0.3 mtpa. These projects are expected to be completed by early 2012;
- setting up a captive power plant with a capacity of 160 MW at Rajpura Dariba, which is expected to be completed by mid-2010; and
- increasing silver production from the current levels of approximately 100 to 120 tpa to approximately 500 tpa, primarily from the Sindesar Khurd mine where silver occurs at approximately 200 parts per million (“ppm”).
- Aluminium segment: Vedanta Aluminium is building a greenfield 500,000 tpa aluminium smelter, together with an associated 1,215 MW captive power plant, in Jharsuguda in the State of Orissa, in two phases of 250,000 tpa each. Commissioning of the first phase commenced in May 2008, a year ahead of schedule, and will be progressively commissioned during fiscal 2009. Work has commenced on the second phase and we expect it to begin commissioning in 2010.
- Power segment: We are executing our plan to enter the commercial power generation business with Sterlite Energy’s construction of a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is expected to be progressively commissioned from December 2009. We have obtained coal block allocations of 112.2 million tonnes from the Ministry of Coal to support this facility. In addition, BALCO entered into a memorandum of understanding in October 2006 with the Government of Chhattisgarh, India and the CSEB to build a thermal coal-based 1,200 MW power facility, along with an integrated coal mine, in the State of Chhattisgarh.