Continuing focus on asset optimisation and reducing the cost of production
We are currently in the lowest cost quartile in terms of cost of production in our Indian copper smelting and refining business and our zinc mining operations, and we intend to continue to improve our production processes and methods and increase operational efficiencies to further reduce our costs of production in all our businesses. Our current initiatives include:
- seeking improvements in operations to maximise throughput and plant availability to achieve production increases at our existing facilities with minimum capital expenditures to optimise our asset utilisation;
- reducing energy costs and consumption, including through continued investment in advanced technologies to reduce power consumption in the refining and smelting processes and in captive power plants to provide the required power;
- increasing automation to reduce the manpower required for a given level of production volume;
- a strong exploration effort seeking to increase the reserves, particularly in our zinc and iron ore businesses;
- continuing to improve recovery ratios such that more finished product is obtained from a given amount of raw material;
- reducing purchase costs, including by entering into long-term contracts for raw materials, making investments in mining operations and optimising the mix of raw material sourcing between long-term contracts, mining operations and the commodities spot markets to address fluctuations in demand and supply;
- securing additional sources of coal through coal block allocations and coal linkages for use in power plants;
- seeking better utilisation of by-products, including through adding additional processing capabilities to produce end-products from the by-products that can be sold at higher prices and help lower the cost of production of our core metals; and
- reducing greenhouse gas emissions from our operations through various projects.
Recent successes as a result of these initiatives include:
- increased production volume in all of our metal businesses from fiscal 2007 to fiscal 2008, particularly in BALCO;
- a 17.0% year-over-year increase in production at Sesa Goa in our first year of ownership of the company;
- added 46.3mt of reserves and resources at HZL with 4.0mt contained metal in FY2009 and;
- stable cost of production in most of our businesses notwithstanding inflationary cost pressures across the mining and metal industry generally, particularly with respect to logistics and energy costs.
