With mines sector open, Vedanta eyes early-stage prospecting for minerals

Vedanta Ltd will be stepping up early-stage prospecting for minerals to tap the opportunities from the opening up of mining sector.

Prospecting for mineral will be a key area along with oil and gas, which will come into Vedanta’s fold with the merger of Cairn India expected by March 2017.

Vedanta, which floated VedEX earlier this year, an entity for early stage prospecting for natural resources, is keen to look at a diversified range of opportunities, according to Tom Albanese, CEO, Vedanta Ltd.

In an interaction with journalists on Monday, Albanese said the Government amending the MMDR (Mines and Minerals Development and Regulation Act) opens up a wide range of opportunities for Vedanta to strengthen its raw material supply and widen its presence in mining.

“In our mind, we have lots of ideas but the government is yet to open up all minerals,” he said. It had successfully bid for a gold lease in Chhattisgarh earlier this year. It is hoping to tap bauxite options and zinc-lead resources as and when they are available.

“If the geologists put together a good proposal, we will be interested,” he said.

Both zinc and aluminium supplies are critical issues. Zinc demand is being driven by the need for coating and galvanising. But over the last two decades, while the demand has been steady, supplies are dwindling.

The domestic demand is set to take off with increased need for automobile and construction segments. India exports cars that are zinc coated against corrosion, but cars for domestic sales do not get that value addition. Similarly, construction rebars are also not protected. But both these segments are bound to open up.

Similarly, the demand for aluminium is expected to grow twice as that of copper or steel. But the bad news is that aluminium demand is far outstripping supply. India is rich in bauxite, the source of aluminium oxide, which is converted to aluminium. But social issues plague the sector.

As oil prices have stabilised, the capital investment will commence, he said. With the merger of Cairn India, one of the largest independent oil and gas exploration company, with Vedanta, the first priority will be to resume growth in its oil fields, especially those in Rajasthan, Albanese said.

The output from the Mangala field in Rajasthan is about 200,000 barrels a day and has helped to prevent a drop in overall production.

The company is working with ONGC and the benefits and higher production will be seen from 2019 onwards. But in the interim, output is bound to be flat or see a small decline.

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