Shares of mining major Vedanta zoomed over 11 per cent after it reported strong zinc, silver and aluminium production in the September quarter. The company also reported lower production costs in zinc and aluminium.
The company’s iron ore production in Karnataka was at 0.8 million tonnes (mt), compared with 0.3 mt in the September quarter of 2014. Production in Goa started last quarter and is expected to ramp up in the second-half of 2015.
Alumina output increased at its Lanjigarh plant, up 20 per cent year-on-year. Aluminium metal production increased 5 per cent in total, helped by the Jharsuguda-II plant. The cost of producing the metal was $1,599 and $1,674 per tonne at Jharsuguda-I and Korba–I respectively; this is lower than the $1,740 and $2,089 per tonne respectively for the same period in 2015. Costs were lower mainly on account of depreciation of the Indian rupee, lower alumina and other costs.
Oil & gas production increased 6 per cent year-on-year in the September quarter with outputs from its off-shore assets - Ravva and Cambay - higher by 19 per cent year-on-year.
Refined zinc output increased 17 per cent and 24 per cent year-on-year respectively during the quarter and for the first-half of 2015. The cost of zinc production, excluding royalty, dipped sequentially to $771 per tonne in the September quarter from $802 per tonne. Silver output increased 39 per cent year-on-year during the quarter.
But international zinc operations lagged. Output dipped 20 per cent year-on-year while production costs increased to $1,477 per tonne from $1,409 per tonne in the June quarter of 2016 due to a ramp-down in low-cost mines.
Copper cathode production was lower by 6 per cent year-on-year at 94,000 tonnes in the recent quarter, due mainly to a smelter shutdown for maintenance. Output may be lower in the current quarter as well due to a shutdown in late September.
The stock has been under pressure since last month after Standard and Poor's downgraded the credit rating for its London-based parent Vedanta Resources PLC to 'BB-'. The rating agency’s cautious view was possibly from the company’s high debt (Rs 77,700 crore on a consolidated basis as of March 2015), falling cash flows due to softness in commodity prices, and uncertainty over the proposed merger of its Indian arms – Vedanta and Cairn India.