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Miner Vedanta continues with its recovery on robust profits
November 11, 2017
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LONDON: Diversified miner Vedanta Resources said it sees further upside for zinc prices as it announced a 37.4 per cent rise in half-year profit on Friday.

A rebound in metals prices has prompted the miner to expand production of zinc and aluminium, enabling it to continue its recovery after being particularly hard hit by the commodities slump that ended early last year.

The company, which is searching for a new chief executive after the departure of Tom Albanese in August, benefited as zinc prices leapt by more than a third on average in the six months to Sept. 30.

Interim Chief Executive Kuldip Kaura said in a call with media that he sees further upward pressure on zinc prices as the gap between demand and supply is expected to continue for “some more”.

The company, which mines zinc in India, South Africa and Namibia, said earnings before interest, tax, depreciation and amortization rose to $1.69 billion in the six months ended Sept. 30, marginally below analysts’ estimate of $1.71 billion.

Operating profit from its zinc business surged nearly 80 per cent, as zinc production mined in India jumped 42.1 per cent, and the company said its mined production for the full year ending in March would be higher than the previous year.

Vedanta says one of its attractions for investors is its exposure to the fast-growing Indian market, where its unit Vedanta Ltd owns and operates Hindustan Zinc Ltd.

The miner said any growth plans will be focused on India, but it would look at other opportunities as they arose. Kaura dismissed speculation Vedanta could be seeking a tie-up with Anglo American in which Vedanta Chairman Anil Agarwal has bought a nearly 20 per cent stake. Kaura reiterated that was Agarwal’s personal investment on behalf of his family trust.

As the mining sector seeks ways to gain exposure to expected demand from electric vehicles, Kaura also said Vedanta should complete research into producing battery-grade cobalt over the next 3-6 months. The car industry’s push towards electric vehicles has been creating a burgeoning market for cobalt, which is mostly a byproduct of copper and nickel production.

Vedanta had told Reuters in August it was studying how to produce cobalt suitable for batteries from its Zambian copper mines.

Reuters

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