Vedanta strategic priorities in Africa - Mining Indaba 2013


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Presentation by Mr. Kishore Kumar, CEO of Vedanta Zinc International at Mining Indaba 2013

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Vedanta strategic priorities in Africa - Mining Indaba 2013

  1. 1. Vedanta Resources plcStrategic Priorities in AfricaInvesting in African Mining Indaba 2013
  2. 2. Cautionary Statement and DisclaimerThe views expressed here may contain information derived from publicly available sources that have not beenindependently verified.No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of thisinformation. Any forward looking information in this presentation including, without limitation, any tables, chartsand/or graphs, has been prepared on the basis of a number of assumptions which may prove to be incorrect. Thispresentation should not be relied upon as a recommendation or forecast by Vedanta Resources plc ("Vedanta").Past performance of Vedanta cannot be relied upon as a guide to future performance.This presentation contains forward-looking statements – that is, statements related to future, not past, events. Inthis context, forward-looking statements often address our expected future business and financial performance,and often contain words such as expects, anticipates, intends, plans, believes, seeks, or will. Forward–looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertaintiesarise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations ininterest and or exchange rates and metal prices; from future integration of acquired businesses; and fromnumerous other matters of national, regional and global scale, including those of a environmental, climatic, natural,political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual futureresults to be materially different that those expressed in our forward-looking statements. We do not undertake toupdate our forward-looking statements.This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation ofan offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Vedanta or anyof its subsidiary undertakings or any other invitation or inducement to engage in investment activities, nor shallthis presentation (or any part of it) nor the fact of its distribution form the basis of, or be relied on in connectionwith, any contract or investment decision.Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 2
  3. 3. Vedanta: A Global Diversified Natural Resources Major Vedanta Resources plc. listed on the FTSE in 2003 World-class portfolio of large, structurally low-cost, scalable assets with long life R&R Invested over US$4 billion in Africa since 2005 Committed to sustainable development, supporting local communities and contributing to the economies of the areas where we operateVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 3
  4. 4. Tier-1 Diversified Asset Portfolio R&R Positioning Target Capacity Life1 Sustainable Cost Position Largest integrated zinc-lead Zinc India producer 1mtpa 25+ Lowest Quartile One of the largest undeveloped 2 Zinc Intl. zinc deposits in the world 400ktpa 20+ Lower Half One of the largest silver Silver producers 16mozpa 25+ By-product India’s largest privates sector oil 3 Oil & Gas producer 260kboepd 17 Lowest Quartile Largest Indian iron ore producer- Iron Ore4 exporter developing large 20.5mtpa 4 18 Lowest Quartile deposit in Liberia World class fully invested 5 Copper Zambia operation 400ktpa 24+ Lower Half Strategically located large scale Currently Lower Half; Lowest Aluminium 2.3mtpa assets Quartile with Captive Bauxite Large, Low-Cost, Long-Life, Scalable AssetsNote: 1. At capacity as per R&R as at 31 March 2012; 2. Includes Gamsberg; 3. Capacity expected for the assets that are currently producing, subject toapprovals 4. Excluding Liberia; 5. Mine life of Konkola DeepsVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 4
  5. 5. Industry leading growth trajectory… Strong financial profile supported by diversified cash flow generation Delivering industry-leading production growth driven by substantially invested projects Recent acquisitions provide additional growth options EBITDA (US$mn) Free Cash Flow (US$mn) Underlying EPS (USc/share) +42% CAGR +32% CAGR +29% CAGR 5,353 3,128 209 323 335 27 FY2004 FY2012 FY2004 FY2012 FY2004 FY2012 proforma proforma proformaNote: FY2012 numbers are proforma with Cairn India for full yearVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 5
  6. 6. …and continued commodity diversification FY2004 Proforma FY2012 FY2011 (IPO) with Cairn India for Full Year Power Aluminium 2% 3% Oil & Gas Power Aluminium Copper 38% 4% 7% 13% Copper Iron Ore 19% Aluminium 33% 16% Copper 29% Zinc India 55% Zinc-Int. Zinc India Zinc India 3% 34% 23% Iron Ore Zinc-Int. 14% 7% EBITDA: $323mn EBITDA: $3.6 bn EBITDA: $5.4bn +10x +16xVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 6 6
  7. 7. Emerging footprint in Africa Africa  Largest zinc producer in Africa Operations  Among top 3 copper producers  Large iron ore assets in Liberia  $2.6bn in Zambia Capital Investment  Two large projects – Liberia iron ore and Gamsberg zinc deposit  One of the largest in Zambia Contribution to fiscus  Contribute d 2.8% of GDP in Namibia in 2011 Contribution  Community programmes benefiting to Society 150,000 people across 3 countries  Largest private-sector employer in Employees Zambia Vedanta has invested more than US$4 billion in AfricaVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 7
  8. 8. Konkola Copper Mines Substantial high  688.9 Mt of copper reserves & resources, 13.6 Mt of contained Cu grade resources  Konkola underground mine grade of 3.55% with 24+ years mine life and reserves  New 300+ktpa Nchanga smelter; New East and West Mill Well invested concentrators; Second Cobalt Recovery Furnace production  Konkola Deep Mining Project (KDMP) mid-shaft loading commissioned facilities in April 2010 and waste hoisting from bottom-shaft commissioned in October 2012  Growth in copper production from 200 kt production in FY2012, Substantial targeting production of 400+ ktpa through brownfield expansion production growth  Further cost reduction and stabilisation: targeting sustainable cost and cost reduction performance of <$1.50/lb C1 integrated cash costs Strong working  The largest private employer in Zambia in terms of the number of relationship with employees and third-party contractors Zambian government  Zambian Government remains an important shareholder of KCM  Committed to training and developing the local workforce Valued local  Local communities: Numerous health, education and welfare partner programmesVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 8
  9. 9. Konkola Copper MinesKonkola Deep Mining Project Nchanga Smelter Konkola resource one of the highest grade,  Direct-to-blister flash smelter commissioned Tier 1 copper ore bodies in 2008 to replace older, less efficient smelter At ~1.5 km, newly commissioned shaft is one  99.6% sulfur capture rate makes it second of deepest in the copper industry most environmentally friendly smelters Mid-shaft loading commenced in April 2010 in the world Waste hoisting from bottom-shaft commenced  Process recoveries at 98.6% and fossil fuel in October 2012 consumption down ~69% Ore hoisting from bottom-shaft expected to  Only smelter that can recover cobalt from begin within next 6-9 months conventional Cu concentrateVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 9
  10. 10. Black Mountain MiningBMM has been in production for over three Gamsberg, one of the largest undevelopeddecades zinc deposits in the world Underground operation, mining a polymetallic  Potential to produce 400ktpa zinc over a 20 orebody year life of mine at Gamsberg North Production rate of 1.7Mtpa ore hoisted Sequential flotation plant produces c.83kt of Asset Resources (mt) Grade Zn zinc, lead, copper and c.1.6 million troy ounces Gamsberg North 154 6.3% Gamsberg East 32 9.8% of silver in conc. Asset Reserves Reserve Reserve Resources (mt) Grade Grade (mt) Zn Pb Black 8.2 2.5% 2.8% 63.81 MountainPriorities Drilling of Swartberg deposit in order to extend the life of operation Gamsberg feasibility study for large open pit mine & concentratorNote: 1. Swartberg depositVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 10
  11. 11. Skorpion ZincSkorpion Zinc is the only zinc refinery in Gergarub DepositAfrica  Zinc-lead sulphide deposit Largest integrated zinc operation in Africa  Discovered in 2008, located close to Ore to finished metal beneficiation within Skorpion Zinc operations Namibia  Co-exploration agreement with Rosh Pinah Refinery capacity of 150ktpa of Special High Zinc Corp. Grade Zinc Asset Reserves Reserve Resources (mt) Grade (mt) Zn Skorpion 6.5 9.7% 2.6Priorities Investment in exploration in order to extend the life of operation Gergarub feasibility study Skorpion Refinery Conversion feasibility study  Convert the current plant to treat sulphide ore/concentratesVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 11
  12. 12. Western Cluster LimitedWest Africa – the next Major Iron Ore hub Asset Type Resources Potential to develop into a 100mtpa Iron Ore Mano River Brownfield 80mt exporting region Bea Mountain Greenfield 923mtWestern Cluster Limited c.1bn ton resource across 3 deposits, 70-140 Bomi Hills Brownfield 50mt km from port 48 000m of drilling and aeromagnetic survey completed in 2012  c.3x upside to earlier 1bn tonnes resource estimate  Capex flexibility, proximity to port, low opex ($30-35/t)  Potential for ramp-up to 27mtpaPriorities Scoping and feasibility studies of the facilities at the port of Monrovia First shipment expected in FY2014Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 12
  13. 13. Sustainability – integral to our business 1. Responsible 2. Building 3. Adding and stewardship strong sharing value relationships  Embed sustainable development into every aspect of what we do  To improve our health and safety performance for a safer, more secure and healthier environment  To contribute further and in a more targeted way to local communities  To continue to manage and minimize our impact on air, water and land  To maintain a dialogue with stakeholders to help us further understand what is needed to help support a sustainable society and planet Robust Sustainability Governance StructureVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 13
  14. 14. Social and community partnerships are key to success Health Education Partnership with Govt of Namibia to upgrade  Support for FET College – O’Kiep, N Cape clinic in Rosh Pinah  Training and skills development at Skorpion 80% reduction in malaria prevalence in areas  Bursaries at local and Indian University surrounding KCM operations  Sponsored apprenticeships KCM operates 2 hospitals and 5 clinics  Karas Regional Science Fair Free cataract surgery for surrounding  KCM operates 2 child care centres and 2 communities in Northern Cape trust schools with over 1,800 students in ZambiaVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 14
  15. 15. Social and community partnerships are key to success Sustainable livelihoods Capacity building Brick making facility, Pella, Northern Cape  Partnership with DBSA to build capacity in Skorpion - Karas Goat Project local (Khai-Ma) municipality in Northern Cape Cattle and goat rearing programs for communities in which KCM operates  Support for NGOs (Hope for Life) Brick making facility, Pella, Northern Cape  Partnership with Department of Social Development, Poffadder, Northern CapeVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 15
  16. 16. Strategic Priorities in Africa  Deliver industry-leading production growth across our portfolio  Continue to add reserves and resources to drive long-term value  Deliver projects on schedule with zero accidents and best quality  Pursue attractive investment opportunities in areas of strategic focus and competence  Partnering with government and communities associated with our operation to make a lasting positive contribution Growth and Long-Term Value Creation with a Focus on SustainabilityVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013 16