Vedanta makes solid production improvements in first half

Vedanta Resources posted its production results for the second quarter and half-year to 30 September on Monday, with some solid improvements in its oil and gas division.

The FTSE 250 firm reported strong production at Rajasthan, with Mangala enhanced oil recovery 23% higher quarter-on-quarter, as well as a 17% increase in gas production in Rajasthan.

Mined metal production at its Zinc India division was up 51% and silver production up 21% quarter-on-quarter, with the board claiming H2 production was expected to be significantly higher than H1, as per the mine plans.

In the aluminium arm, its smelters continued to ramp up, with a current production run-rate of 1.1 mtpa excluding trial run production.

The ramp-up was impacted by pot outages at the Jharsuguda-II and BALCO-II smelters in Q2, however.

Vedanta also secured coal linkages of 6 mtpa for its captive power plants through auctions.

In iron ore, mining and shipments from Goa resumed from the end of September, following the monsoon season, and in Copper Zambia, mined metal production was higher quarter-on-quarter due to improved recoveries.

Vedanta said at TSPL Power, the 1980 MW plant was now fully operational with a third 660 MW unit capitalised, and claimed 77% plant availability in Q2.

On the corporate front, the Vedanta Limited - Cairn India merger was approved by shareholders during the period, with the transaction expected to complete in the first quarter of calendar year 2017.

Moody's also upgraded the corporate family rating from B2 to B1, and S&P revised its outlook from stable to positive.

“We have delivered a strong operational performance during the quarter,” said chief executive Tom Albanese.

“We have progressed on our ramp-up of aluminium and though we had some operational challenges, our full year volumes are not expected to be materially impacted.”

Albanese pointed to the higher mined metal production at Zinc India, with the upward trend expected to continue in the second half.

“We are extremely pleased that shareholders have approved the proposed Vedanta Limited - Cairn India merger last month, and we expect the transaction to complete in the first quarter of 2017,” he said.

“This is an important strategic step in simplifying the group.”