Vedanta charts restructure plan to face volatile commodity markets

The firm, led by Anil Agarwal, has been facing a challenging environment as global commodity prices are undergoing a volatile phase leading to downward pressure on prices, affecting the company's profit and revenue.

"In light of the low LME (London Metal Exchange) prices and premiums we are reviewing restructuring some of our high cost operations in the Aluminium segment," Vedanta Resources said in 

a statement.

EBITDA (operational earnings) for the June quarter was significantly lower and negative at $(1.9) million due to reduced LME and metal premiums and $37 million provision made for RPO for previous years, it added. "The 325 kilo tonne (KT) Korba-II smelter produced 18,000 tonnes during Q1 FY 2015-16 with 83 pots online by the end of the quarter. However, ramp up of further pots has been temporarily put on hold due to the current volatile LME and premium scenario," the London-based firm said.

Spot Main Japanese Port (MJP) aluminium ingot premium has fallen from about $415/tonne in January 2015 to around $100 a tonne due to increased supply from China, Vedanta Resources said.

"Lower LME price and metal premiums in Q1 2015-16 resulted in a decrease in margins. The weighted average premium realised in Q1 2015-16 was $228 per tonne against $455 per tonne realised in Q1 2014-15," it added.

Earlier this week, Vedanta had said the company might be forced to take "some difficult decisions" on jobs to cut costs. "It is a very challenging market situation for aluminium producers in India. We are taking all measures to keep our aluminium business steady and reduce costs. This may result in us taking some difficult decisions," Vedanta CEO Tom Albanese had told PTI when asked whether the company will cut jobs in its aluminium segment. Vedanta's Lanjigarh alumina refinery operated at a high utilisation rate and produced 269,000 tonnes in Q1 2015-16, 15 per cent higher than Q1 of last year, it said.