Vedanta held out hopes of a quick resumption of iron ore mining in India and played down concerns over its standing in Zambia, where it has become embroiled in a dispute over job cuts.
Anil Agarwal, who controls the diversified London-listed mining group, said that court permission to resume iron ore extraction in Karnataka could be given as soon as next week. Most iron ore mining there has been on hold since 2011, and in Goa since last year, following concerns over illegal extraction.
MS Mehta, Vedanta’s chief executive, said that iron ore production could add $700m-$800m to annual earnings before interest, tax, depreciation and amortisation. “A ramp-up is not an issue – we are in a state of readiness,” he said. Ore from Karnataka would be mainly used domestically.
Vedanta shares dropped sharply in London after the group swung from six-month net income of $174m a year ago to a net loss of $217m, which the company said was accentuated by rupee depreciation leading to higher mark-to-market foreign exchange losses.
The group, which recently hired former Rio Tinto chief executive Tom Albanese, as also come under fire in Zambia, where plans to cut 1,500 of 18,000 jobs at its copper mining operations have attracted sharp criticism from President Michael Sata. He has threatened Vedanta’s licence and the head of the local business has had his work permit revoked.
Vedanta said that it would still try to improve the underperforming Zambian business, where operating profits fell 84 per cent against the same period a year ago. “We have suggested that we need to rationalise it . . . we are engaging with the government and we will find a solution,” said Agarwal.
Agarwal said Albanese’s experience could help Vedanta “sweat its assets better” and restructure where needed. “Tom is working with me on strategy we can do better and make two and two make five,” he said.
Operating profits for the six months fell 23 per cent to $1.1b on revenues that fell from $7.5b to $6.2b. Revenues were lower across all of Vedanta’s operations with the exception of its Indian zinc business. The ebitda margin, excluding some smelting operations, remained solid, falling from 47 per cent to 44.5 per cent. Vedanta raised its interim dividend 5 per cent to 22 cents a share.
Vedanta reorganised its unwieldy corporate structure during the period. Agarwal said that a remaining piece would be the acquisition of more of Hindustan Zinc, expressing confidence that the government would reach a deal to sell its 29.5 per cent stake to Vedanta. “The government is favourable . . . I think there will be a solution,” he said.
Shares closed down 6.69 per cent to 955.5p.