By Alex MacDonald
The chief executive of U.K.-listed, India-focused Vedanta
Resources PLC (VED.LN), M.S. Mehta, said Thursday that he expects
to restart iron ore mining operations in the Indian state of
Karnataka this June and doesn't expect the current ban on iron ore
exports to affect its profitability given strong, latent demand for
the steelmaking raw ingredient within the state.
A mining ban in the Indian states of Karnataka and Goa have
significantly dented the company's iron ore profitability in the
last financial year due to lower volume sales. Vedanta's iron ore
sales dropped 81% to 3 million tons in the fiscal year ending March
31, 2013, prompting iron ore earnings before interest, taxes,
depreciation and amortization, a key earnings metric, to fall 88%
during the same period to $84.2 million.
The mining ban in the state of Karnataka was lifted in April and
Mr. Mehta now hopes to start mining in the state in June this
year.
"At this moment there is no permission for [iron ore] export.
But we don't anticipate need for that because there is a
significant latent potential demand of iron ore within the state of
Karnataka itself," he noted.
As a result, he said, the export ban "will not impact us
financial or business wise."
The iron ore mining ban in the state of Goa, however, remains in
place. the state of Goa suspended iron ore mining in September
2012. Vedanta is currently seeking to have the suspension
lifted.
Separately Mr. Mehta also said he expects the closure of the
Lanjigarh alumina refinery in the Eastern Indian state of Odissha
to be temporary. The company is working with the state-owned Orissa
Mining Corporation to secure alternative sources of bauxite while
the OMC continues to work on securing rights to mine a bauxite
deposit in the nearby Niyamgiri hills. The project has been the
focus of a protracted legal battle that has been elevated to the
supreme court. A decision is expected in five months once the local
village council has rendered its verdict on whether the project
should be developed.
Mr. Mehta said "we believe people to take a balanced view" about
the project's development.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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