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Vedanta Resources (VED)

  Print      Mail a friend       Annual reports

Monday 15 January, 2007

Vedanta Resources

3rd Quarter Results

Vedanta Resources PLC
15 January 2007

                                                                 15 January 2007

                             Vedanta Resources Plc
            Unaudited Results for the Third Quarter and Nine Months
                             Ended 31 December 2006


• Revenues and EBITDA of $1,760 million and $724 million, up 81% and 174%, 

• Record EBITDA of over $2 billion in the nine months ended 31 December 2006

• New BALCO smelter achieves production at full capacity levels

• Aluminium, zinc and copper production in India significantly higher than in 
  preceding quarter and in the corresponding period last year

Performance Summary

Third quarter ('Q3') revenues were $1, 760.4 million, up 80.6% compared to the
corresponding quarter last year, driven by higher volumes and better price
realisations. EBITDA achieved a record high of $724.3 million in Q3 and
$2,014.8 million in the nine months ended 31 December 2006, representing an
increase of 173.7% quarter-on-quarter and 235.2% year-to date.

Production across all metals in India was significantly higher than the
preceding quarter and in the corresponding prior quarter mainly because of
contribution from newly commissioned projects.


Production at the new Korba II smelter has fully stabilised and reached its full
capacity, after the temporary disruption of pots in May last year due to the
tripping of the power plant. The plant produced over 61,000 tonnes of cast metal
this quarter compared to 44,000 tonnes in the immediately preceding quarter,
equivalent to an annual capacity of 245,000tpa. The existing smelters at BALCO
and MALCO produced about 37,000 tonnes this quarter, in line with their rated
capacity. The captive power plant at Korba continues to operate satisfactorily
and has achieved its highest level of generation in the current quarter, which
had a positive impact on costs.

Q3 revenues were $279.7 million as compared with $117.0 million in the
corresponding period last year on account of higher volumes and better price
realisations. We continue to develop the export market, mainly in South East
Asia and the Middle East, supported by additional volumes from the new smelter.

Q3 EBITDA was $128.8 million, an increase of 301.2% over the corresponding prior
quarter. Unit cash costs in both plants of BALCO have improved over the
immediately preceding quarter mainly due to higher production volumes and
reduced power costs, which offset increases in other input costs. The decline in
global alumina prices has started having a positive impact on costs.

We have obtained the LME registration for the aluminium ingots of the new Korba
smelter under the brand 'BHARATAL'.

Copper - India and Australia

Copper cathode production during Q3 was the highest ever at 86,000 tonnes an
increase of 6,000 tonnes from the immediately preceding quarter mainly due to
the debottlenecking initiatives at the Tuticorin smelter, which has increased
capacity to 400,000 tpa. Production is being steadily ramped up and we expect to
realise rated capacity volumes in the fourth quarter. Mined metal production at
our Australian mines of about 7,000 tonnes is almost at the same level as the
corresponding prior period.

Q3 revenues were $717.5 million as compared with $448.0 million in the
corresponding prior period, primarily due to higher volumes and higher metal
prices. Q3 EBITDA was $92.4 million as compared with $56.9 million in the
corresponding prior quarter, an increase of 62.4% due to higher volumes,
improved TCRC realisation and higher LME prices.

As reported earlier, the reduction in TCRC realisations has started having a
negative impact on EBITDA due to global softening and we expect further
reduction in TCRCs in the fourth quarter

The Indian copper operations have been awarded the 'Best performance award in
non-ferrous metals' by the Indian Institute of Metals. It has also won the
Corporate Silver Award for Manufacturing Excellence in the Metals Category
(Large Facilities) at the India Manufacturing Excellence Awards 2006 awarded by
Frost & Sullivan.

Copper - Zambia

During the quarter, KCM produced 35,000 tonnes of copper cathode as compared
with 31,000 tonnes in the immediately preceding quarter but lower than our
expectations. Cathode production at the leaching plant and mining production
from Nchanga were affected by unforeseen environmental issues. While these
issues have now been satisfactorily resolved, steady and cautious steps are now
being taken to bring the leaching plant back to its normal levels of production.
Several debottlenecking measures at the Nkana smelter have enabled us to achieve
a record anode production of about 12,000 tonnes in December 2006.

Q3 revenues were $211.4 million as compared with $188.1 million in the
corresponding prior quarter primarily due to higher prices. Q3 EBITDA was
$79.4 million as compared with $56.8 million, an increase of 39.8%. Operating
costs are still high primarily due to lower mine output and its consequent
impact on production volumes, together with higher maintenance costs incurred
due to the unforeseen shutdown.


The production of mined metal of 128,000 tonnes in Q3 was maintained at the
levels achieved in the corresponding prior period and higher than that of the
immediately preceding quarter by 4,000 tonnes. Production of refined zinc at
93,000 tonnes was up from 79,000 tonnes in the preceding quarter an increase of
17.7% and was significantly higher than the corresponding prior quarter by
24,000 tonnes an increase of 34.8%. Volumes have increased mainly from the
ramping up of the new hydro smelter and going forward in the fourth quarter, we
expect to produce close to our rated capacity of 400,000 tpa.

While production levels have improved significantly over the immediately
preceding quarter, sales of refined zinc have remained at similar levels
compared with Q2, primarily due to a liquidation of Q1 inventories in Q2.

In view of better metal production during the current quarter, sale of zinc
concentrate was restricted to 38,000 dry metric tonnes. We sold 29,000 dry
metric tonnes of lead concentrate.

Revenue was $549.6 million as compared with $202.5 million in the corresponding
quarter last year, primarily due to higher volumes from the new plant and higher
metal prices. EBITDA was $425.2 million as compared with $117.7 million, an
increase of 261.3% over the corresponding quarter last year primarily due to
higher volumes and higher prices.

The National Energy Conservation Award, awarded by the Ministry of Power,
Government of India, in the mineral sector has been awarded to one of the zinc

Projects Update

The alumina refinery at Lanjigarh is in the final commissioning stage and is
expected to be commissioned by March 2007. The Central Ministry of Environment
and Forests have received reports from its various sub-committees and is
expected to give its recommendations shortly to the Supreme Court on the issue
of environmental clearances for developing the Lanjigarh bauxite deposits. We
are hopeful of a positive resolution of this matter in the near future.

The debottlenecking project of the Tuticorin smelter to increase its capacity
from 300,000 tpa to 400,000 tpa has been completed and the smelter is steadily
ramping up. We expect to realise full volumes from the smelter in the fourth

Progress on both the Konkola Deep Mining Project and the 250,000 tpa Nchanga
smelter project is satisfactory and are on course for completion as scheduled.
All major orders have been placed, basic engineering has been completed and site
work is progressing in full swing.

Work on the new 170,000 tpa zinc smelter at Chanderiya is progressing well with
orders for all major lead items placed and construction activity is in full
swing. The project is on track and is expected to be completed by early 2008. We
have also initiated a debottlenecking project at the Chanderiya and Debari zinc
smelters to enhance their capacity by an additional 88,000 tpa. This project is
estimated to cost $169 million and is scheduled for completion by mid 2008.

The greenfield 500,000 tpa smelter at Jharsuguda is progressing well with all
major orders placed and is on schedule for completion as announced.

Preliminary work on the new $1.9 billion greenfield 2400 MW integrated power
project at Jharsuguda has recently commenced. The progress on the project is
satisfactory and a major EPC order for the construction of the power plant has
been placed.

Hindustan Zinc Limited is investing in a Wind Power project with a capacity of
75 MW at an approximate cost of $87 million. Orders have been placed for major
equipment. The project will be progressively commissioned towards end of this
calendar year.

Production Summary (Unaudited)

                                              (in '000 tonnes, except as stated)
                              Q31                  Q21    Nine Months*
                        2006-07   2005-06  Change 2006-07 2006-07 2005-06 Change
Alumina                      69        78  -11.5%      77     220     220   -
Aluminium                    98        60   63.3%      79     253     142  78.2%
Copper India/
Mined metal content           7         8  -12.5%       7      22      26 -15.4%
Copper - Cathode             86        75   14.7%      80     224     198  13.1%
Copper - Rods                41        41      -       47     127     121   5.0%
Copper Zambia
Mined metal content          21        28  -25.0%      25      65      83 -21.7%
Copper - Cathode             35        46  -23.9%      31     105     127 -17.3%
Zinc - Mined Metal          128       127    0.8%     124     384     347  10.7%
Refined Zinc                 93        69   34.8%      79     253     192  31.8%
Equivalent Gold (oz)**   12,911                     2,828

*  Q3 - third quarter ended 31 December 2006 and 2005, respectively, Q2 - Second
   quarter ended 30 September 2006, Nine Months - Nine month period ended 
   31 December 2006 and 2005, respectively

** Quantities of equivalent gold represent production in Q3 and in Q2 for the 
   post acquisition period of one month to 30 September 2006, and are not 
   directly comparable with the corresponding prior periods

Financial Summary (Unaudited)

                                                (in $ million, except as stated)
                             Q31                   Q21     Nine Months1
Revenue                2006-07   2005-06  Change  2006-07 2006-07 2005-06 Change
Aluminium                279.7     117.0  139.1%    238.4   675.9   272.8  147.8%
Copper - India/          717.5     448.0   60.2%    717.5 1,907.7 1,044.4   82.7%
Copper Zambia            211.4     188.1   12.4%    235.1   699.6   493.1   41.9%
Zinc                     549.6     202.5  171.4%    527.9 1,431.1   474.4  201.7%
Others                     2.2      19.1 (88.5%)      0.1    50.6    74.6 (32.2%)
Total                  1,760.4     974.7   80.6%  1,719.0 4,764.9 2,359.3  102.0%

Aluminium                128.8      32.1  301.2%     70.3   265.2    69.7  280.5%
Copper - India/           92.4      56.9   62.4%     96.5   304.1   138.4  119.7%
Copper Zambia             79.4      56.8   39.8%    118.4   323.8   147.1  120.1%
Zinc                     425.2     117.7  261.3%    424.1 1,128.7   241.7  367.0%
Others                   (1.5)       1.1    -        (7.9)   (7.0)     4.2    -
Total                    724.3     264.6  173.7%    701.4 2,014.8   601.1  235.2%

* Q3 - third quarter ended 31 December 2006 and 2005, respectively, Q2 - Second
  quarter ended 30 September 2006, Nine Months - Nine month period ended
  31 December 2006 and 2005, respectively

For further information, please contact:
Sumanth Cidambi                           [email protected]
Associate Director - Investor Relations   Tel: +44 20 7659 4732/+91 22 6646 1531
Vedanta Resources plc

James Murgatroyd                          Tel:  +44 20 7251 3801
Robin Walker

About Vedanta Resources plc

Vedanta Resources plc is a London listed diversified metals and mining group.
Its principal operations are located throughout India, with further operations
in Zambia, Australia and Armenia. The major metals produced are aluminium,
copper, zinc, lead and gold. For further information, please visit


This press release contains 'forward-looking statements' - that is, statements
related to future, not past, events. In this context, forward-looking statements
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contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,'
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matters that are, to different degrees, uncertain. For us, uncertainties arise
from the behaviour of financial and metals markets including the London Metal
Exchange, fluctuations in interest and or exchange rates and metal prices; from
future integration of acquired businesses; and from numerous other matters of
national, regional and global scale, including those of a political, economic,
business, competitive or regulatory nature. These uncertainties may cause our
actual future results to be materially different that those expressed in our
forward-looking statements. We do not undertake to update our forward-looking

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