Home » Money

Sesa-Sterlite to focus on bauxite sourcing, Goa mining this fiscal

Thursday, 19 June 2014 - 8:00am IST | Place: Mumbai | Agency: DNA

Tom Albanese, the newly appointed chief executive officer of Sesa Sterlite, has identified sourcing bauxite for its aluminium operations and resumption of mining in Goa as some of his top operational priorities for the current fiscal, in the company's annual report for 2013-14.

Sesa Sterlite, the country's largest natural resource company, needs bauxite for its 1 million tonne per year alumina refinery at Lanjigarh in Odisha.

Despite scarcity of ore bauxite, the refinery has been operating at around 60% as it sources nearly 1.5 million from Balco's mines, and 1 mt from other states including Gujarat and Andhra Pradesh. The refinery was set up in Odisha in the belief that bauxite would be sourced from Niyamgiri. However after years of legal battles, the Supreme Court declined to gave the forest clearance to mines in Niyamgiri, keeping interest of local tribes in mind.

"The bauxite for this (Lanjigarh refinery) is to be supplied by the state government as per our existing Memorandum of Understanding. On behalf of Vedanta, I reiterate that we will not consider developing any bauxite resources including the Niyamgiri mines without the consent of the local communities," Albanese said in the report.

Even though the company does not have sufficient captive feed currently, it has been operating aluminium smelters at Jharsuguda, in Odisha, and Korba, in adjoining Chhattisgarh. Due to several other production efficiency measures it has been able to produce aluminium at lower half of the cost curve, despite the higher cost of purchased bauxite and alumina, the CEO claimed.

On resumption of mining at Goa, he said, "We are currently working with the Goa government and the Ministry of Environment and Forests to obtain necessary approvals to restart mining in Goa, and hope to start production after the monsoon season this year."

In April, the Supreme Court lifted iron ore mining ban, capping annual production at 20 million tonne. The apex court, however, said all leases including, Sesa Sterlite's leases which were operating under second deemed licence since 2007, were illegal, and hence needed fresh environmental approvals.

"I will also focus on driving further the already successful businesses, and this will include maximising exploration and optimising production at the Rajasthan oil and gas block and a proper transition of the Rampura Agucha mine at Zinc India from open-cast to underground in the next few years," Albanese said explaining his other two top priority areas.

The Vedanta Group company's major focus next fiscal would be generating free cash flows and reducing leverages.

"Right now, our primary objective is to de-leverage from cash flows that the business is generating as our capital intensive projects are nearing completion and ramping up production. Currently, we are working on the low-risk projects at the high-margin businesses of oil & gas and zinc, which have significant cash generation from existing operations, and cash balances. As we consider future investment opportunities, these decisions will be based on rigorous capital allocation and we will continue to evaluate all available options for capital deployment," newly appointed executive chairman Navin Agarwal said in the report.

Sesa Sterlite's gross debt as on March 31, 2014, stood at Rs 80,566 crore, comprising long term loans of Rs 68,381 crore and short-term working capital loans of Rs 12,185 crore. The company had cash and liquid investments of Rs 50,797 crore as on March 31, which is mostly invested in debt related mutual funds, bank deposits and bonds.


Jump to comments