Vedanta continues to invest in additional copper and aluminum production capacity to meet demand in India

Interim results for the first six months of the financial year from FTSE 100 mining group Vedanta Resources (LSE: VED) did little to appease shareholders this morning. During the period Vedanta continued to invest in its operations which helped the group boost production capacity across its operations. However the increased production could not offset the effect of weaker metal prices earlier this year, which has led to a decline in revenues of over 40%. Investors appear to have latched on to the weaker revenue figures, on the London Stock Exchange (LSE) shares in Vedanta fell more than 5% on the open. During the half Vedanta’s group revenue was approximately $3bn, with earnings of $746m representing an EBITDA margin of 25%. Basic earnings per share (EPS) equated to 68.5 cents, as such Vedanta have proposed an interim dividend at 17.5 cents per share. According to the statement Vedanta continues to be well funded, the company has a ‘strong’ balance sheet with net debt of $969m and liquid investments of $6bn; during the year to date Vedanta has raised over $3bn. During the period the company expanded production across all its metal groups, notably reaching a Company record level of Silver production with 2.63 million ounces production in the first half of the year. Vedanta’s aluminium production has also been on the rise with the company’s new 500 thousand tonnes per annum (ktpa) smelter continuing to ramp-up following its commissioning earlier in the period. Similarly the group announced its plans to commission a new 400ktpa expansion to its Indian based Tutcorin copper smelter in 2011, the smelter project will also include a 160 megawatt (MW) power plant. According to Vedanta, the decision has been driven by ‘rapidly growing’ copper consumption in India and the strategic need to lower overall smelting costs. In support of the company’s Indian operations Vedanta also decided to reactivate the 1,980 MW power plant at Talwandi commercial power project. The Talwandi project will be fully completed within the earlier estimated capex of $2.15bn and it’s expected to be commissioned 2014. In his accompanying statement Vedanta Chairman, Anil Agarwal commented on the international metal producer’s growth outlook going forward: “Crucially, in a period when many of our peers were cutting back production and investments in growth, I am pleased to report continuing investment and volume growth across all commodities. Whilst we appear to be witnessing the early signs of economic recovery globally, I believe that our company remains very well placed to grow throughout the commodity cycle.”