 "A bird flies by the Vedanta office building in Mumbai")
Mining giant Vedanta Resources has resorted to “aggressive cost reduction” and “workforce reduction” in its aluminium segment amid subdued and volatile market conditions globally.
The Anil Agarwal-led mining conglomerate said a sharp rise in Chinese exports had led to short-term market saturation and the cost of the metal in the global market suggests over 50 per cent of world capacity is at a loss, based on current prices at the London Metal Exchange plus premium. Vedanta is taking bold decisions in the current low price environment.
The ramp-up of the first line of the 312 kilo tonne capacity at Jharsuguda will commence in the September quarter, it added. The company also said it was shutting its rolling business at Bharat Aluminium Company.
The firm has also resorted to partial capacity reduction at its Lanjigarh Alumina refinery, it said in a presentation.
To deal with the current market conditions, Vedanta said it has resorted to "aggressive cost reduction drive through operational efficiency, workforce reduction, product mix optimisation, procurement and synergies across locations."
It added that the industry body Aluminium Association of India is engaging with Indian government on increasing import duty in light of surging imports.
Vedanta said it will "...Continue to focus on optimising assets, maintaining positive free cash flow and delivery of strategic priorities" through a "series of initiatives to reduce costs, maintain financial strength and complete debt refinancing well in advance."
Last month, Vedanta Aluminium said it had started the closure process of one of its production stream, which would lead to the Lanjigarh facility's output declining to half and impacting up to 2,000 jobs.
The mining giant attributed the closure to the collapse in aluminium prices and lack of bauxite availability from Odisha.
Vedanta Resources' Indian arm Vedanta Ltd last month also announced that aluminium prices globally had collapsed in the past few months and the current indications were that the trend would continue.
As per Aluminium Association of India data, in last three years, LME prices have come down by 35 per cent to USD 1,660 per tonne in June, 2015 from a peak of USD 2,555 a tonne in June 2011.
Shares of Vedanta Ltd today fell by 0.20 per cent to settle at Rs 99.65 apiece on the BSE.
