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Informist, Friday, Jan. 31, 2025

--Vedanta: Balco smelter expansion in progress, to go live Apr-Jun

--CONTEXT: Comments by Vedanta's mgmt in post-earnings analyst concall

--Vedanta:Geotechnical hurdles in zinc overseas mine to take time to resolve

--Vedanta: Oct-Dec zinc overseas EBITDA declined QoQ due to lower pricing

--Vedanta: Current rate of royalty to parent unchanged

NEW DELHI – The massive improvement in Vedanta Ltd.'s subsidiary Vedanta Zinc International Ltd.'s operating costs, which fell 31% on year to $1,182 per tonne in the December quarter, may not sustain going forward. It will range between $1,200 per tonne and $1,300 per tonne going forward, Vedanta's management said at an earnings conference call with analysts and investors on Friday.

Going forward, the operating cost of the international zinc operations will be lower than a year ago when it was in the range of $1,600 per tonne to $1,700 per tonne, but "perhaps not quite as good as $1,100," the management said.

The lower cost of production in the overseas zinc subsidiary and higher volume resulted in a year-on-year increase in earnings before interest, tax, depreciation, and amortisation to INR 3.54 billion in Oct-Dec from INR 620 million. Sequentially, however, the EBITDA declined 6.3%.

The management said the sequential decline was on account of lower pricing. This was in contrast to the rise in volume and prices on the London Metal Exchange. The international production of mined zinc by the subsidiary rose to 46,000 tonnes in the December quarter from 44,000 tonnes a quarter ago and the average zinc price on the LME rose to $3,050 per tonne in the December quarter from $2,779 per tonne in the September quarter.

The management, however, said the variance could be due to a timing issue pertaining to the sales and prevailing prices.

The international zinc operations of the company went through a "weak patch" in 2023 and 2024, the management said. There were some geotechnical challenges relating to the underground zinc mines which caused severe production constraints, the management said.

The process to resolve the challenges will take the whole of the current calendar year to complete, according to the management. Only after that the mining pits in the affected mines can start producing, aiding the overall international zinc output of the company.

Giving an update on expansion plans, the management said the domestic aluminium smelter in Vedanta's subsidiary Bharat Aluminium Co. Ltd. was in an advanced stage with commissioning targeted in Apr-Jun. The rolled products capacity at Bharat Aluminium has been doubled to 100 kilo tonnes per annum, making the company the second-largest producer of rolled products by capacity in India, the management said.

Addressing a query on the royalty paid to parent Vedanta Resources, the management said there has been no change in royalty fees. The royalty agreement with the parent company is long-term and will expire in 2028, the management said.

On Friday, shares of Vedanta ended 2.1% up at INR 441.40 on the NSE.  End

Edited by Saji George Titus

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