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Vedantaindiaoperationssitevisit ironoresesagoapresentation-28sep2012
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Vedantaindiaoperationssitevisit ironoresesagoapresentation-28sep2012



Vedanta India Operations Site Visit - Sesa Goa - iron ore presentation - 28 sep 2012

Vedanta India Operations Site Visit - Sesa Goa - iron ore presentation - 28 sep 2012



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Vedantaindiaoperationssitevisit ironoresesagoapresentation-28sep2012 Vedantaindiaoperationssitevisit ironoresesagoapresentation-28sep2012 Presentation Transcript

  • 1SESA GOA LIMITEDPK Mukherjee, CEOInvestor & Analyst Site Visit28 September 2012
  • 2This presentation contains “forward-looking statements” – that is, statements related to future, not past, eventsand may be interpreted as „forward looking statements‟ within the meaning of applicable laws and regulations.In this context, forward-looking statements often address our expected future business and financialperformance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”“should” or “will.”Forward–looking statements by their nature address matters that are, to different degrees, uncertain. Actualresults might differ substantially or materially from those expressed or implied. Important developments thatcould affect the company‟s operations include a downtrend in the iron ore, steel, pig iron & met coke industry –global or domestic or both, significant changes in political, economic, business, competitive or regulatoryenvironment in India or key markets abroad and from numerous other matters of national, regional & globalscale including but not limited to natural calamity, tax laws, litigations, Government policies & regulations,fluctuations in interest and or exchange rates of Indian Rupee, etc. Any forward-looking information in thispresentation has been prepared on the basis of a number of assumptions, which may prove to be incorrect.This presentation should not be relied upon as a recommendation or forecast by Sesa Goa Ltd. The viewsexpressed herein may contain information derived from publicly available sources that have not beenindependently verified; no representation or warranty is made as to the accuracy, completeness or reliability ofthis information. We do not undertake to update our forward-looking statements.Cautionary statement and disclaimer
  • 3IRON ORE SCENARIO View slide
  • 4Long term demand continues to be robustUrbanisation is expected to continue at a rapid pace(billion people)34%52%67%Urban PopulationRural PopulationSource: UN (World Urbanization Prospects, the 2011 Revision), SecondaryResearchLong term demand will remain intact World urbanization is increasingrapidly; Chinese population migrationis at its highest and India is alsofollowing in the distance 60-80 million people added to citieseach year; roughly equal to thepopulation of France or Germany Up to three billion more middle-classconsumers will emerge in the next20 years. Long term commodity demand willbe driven by the Urbanisation andIndustrialisation of India and ChinaWorld urbanisation will drive steel demandfor decades View slide
  • Iron ore – seaborne trade is buoyed by China Global iron ore seaborne trade andSteel is expected to increase at CAGRof ~8.7% and ~4.5% respectively. Demand is driven by the crude steelproduction of China which is set tocross 1 billion tonne mark by 2019. Drivers Urbanization Increasing per capita steelconsumption in emergingeconomies Growth in Interior China Constraints− Potential Protracted globalslowdown− Slowdown in China− China steel demand maturing020040060080010001200140016002000 2011 201970+617 687+829 1,516Chinese seaborne Iron ore trade(million tonnes)Source: Metalytics 2Q,2012Note: Excludes allowance for land-based imports from neighbouring countries5
  • 6CHINAExisting Supply (2011)Forecast (2019)Global seaborne iron ore supplySupply from Africa New force of Iron ore hub Country Specific risks +34bt R&R in West Africa Infrastructure constraint –port, rail, etc.Supply from Brazil Vale to increase +150mt Other players +110 mt Infrastructure constraint -Port, Rail, etc. Regulatory scenarioSupply from Australia BHP, RIO, FMG and others. Delays and capex overruns Challenges- port, rail, etc. Changing regulatoryscenarioSupply from India Regulatory scenarios Advantage of proximity toChina Potential to tap the gap ofsupply and demandMultiple constraints affecting existing supply and restraining the expansion plansSource: Metalytics 2Q, 2012,Secondary Research3315556625579924641046Note: Figures indicate iron ore available for exports in mt
  • 7Indian iron ore mining scenarioCurrent Issues Export Duty (Currently at 30%) Royalties and Taxes (MMDR) Mining and Export ban in Karnataka Shah Commission, CEC, etc. Temporary Suspension of Mining in Goa Imposition of Stamp Duty in Goa Goa‟s Draft Mineral Policy Timing / Monsoon transport restriction, GoaSesa’s StrengthsGoa Still cost competitive for exports Infrastructure improvements in progress Visibility for lease renewals Curbing illegal mining, via various measuresKarnataka Clarity emerging with Category A, alreadypermitted to operate Sesa received an approval for 2.29 mtpafrom CEC (against 6 mpta capacity); CEC approved R&R for 21 mines (18 inCategory A, 3 in Category B)Well placed to serve thegrowing demandSource: IBM, 2005Note: Map not to scaleGOAFavourable for Mine to Jettytransport (Avg. 15 kms)Low cost due to rivertransportationLow grade ore – fit forexportKarnatakaLow cost operationsFavourable domestic marketUnfavourable for exports atcurrent prices / duties /freightOrissaHigh grade ore, suitable toIndian steel producersUnfavourable for export atcurrent prices / duties /freightCEC – Central Empowered Committee,MMDR – Mines & Mineral (Development and Regulation)
  • 9Where we operateSesa Goa is well placed to capitalise the global seaborne demandINDIAIron Ore Operations1. Codli Mines, Goa2. Sonshi / Surla Mines, Goa3. Bicholim Mines, Goa4. A Narrain Mine, KarnatakaPig Iron & Met Coke Operations5. Pig Iron Plant, Goa6. Met Coke Plant, GoaPower Plant, GoaLIBERIAIron Ore Project7. Bomi Hills, WCL8. Bea Mountain, WCL9. Mano River, WCL10. Manrovia PortNote: Map not to scale
  • 10Mine ProcessingPlantBundar Sea PortTranshipperLoading atport by MOHPProspectingBlasting/DrillingDozingLoading/HaulingDry ScreeningWet Processing/Tailing disposalDrying of oreHauling/LoadingMother vesselMid–streamloading16 KMS2.5 KMSGoa operations
  • 11Karnataka operationsMine ProcessingPlantRailway YardMangalore Port Goa JettyDry ScreeningProspectingBlasting/DrillingDozingLoading/Hauling Railway Yard1 KM16 KMS429 KMS290 KMS75 KMS
  • 12Competitive operationsGoa OperationsCost Competitive for Sea borne trade─ Lowest quartile cost position*─ Integrated infrastructure with Proximity toport and river logistics─ Well placed to handle cost pressuresReserves and Resources─ +20 year mine life at current capacity─ Aggressive exploration in progressCapacity constraints─ Mine-to-River road capacity bottleneck─ Transport Restrictions - Timing / monsoon─ Logistics debottlenecking in progress─ Environmental clearance for new capacityKarnataka OperationsCost Competitive on domestic supplies─ Well placed to serve nearby steel mills─ Dedicated logistics infrastructureo Existing public railway sidingo Additional Dedicated Railway Sidingof 3 mtpa started in 2011Reserves and Resources─ +11 year mine life at current capacity─ Aggressive exploration in progressCapacity constraints─ CEC approved provisional capacity at2.29 mtpa against 6 mtpa EC─ Logistics capacity in place for 6mtpaalong with a dedicated railway sidingof 3 mtpa*excluding export duty
  • 13Maintaining cost leadership….10090807060504030201000 200 400 600 800 1,000 1,200Port CostsRoyalties & Export DutiesInland TransportPelletizingProcessingMiningSesaGoa:Lumps,FinesRioTintoAustralia:Lumps,FinesVale:Lumps,FinesCSN:Lumps,Fines&PFBHPBilliton:Lumps,FinesNMDC:Lumps,FinesCVGFerrominera:Lumps,FinesKumbaIronOre:Lumps,FinesFortescueMetals:FinesCliffs:Lumps,Fines&PFMetalloinvest:PelletFeedMetinvest:PelletFeedSamarco:PelletsMetalloinvest:PelletsVale:PelletsU.S.Steel:PelletsLKAB:PelletsArcelorMittal:PelletsCliffs:PelletsFOB Cash Costs for 2012 - Saleable Mine and Pellet Production by CompanyUS$/drytonneCumulative Forecast Production - wet MtSource: Metalytics, September 2012
  • 14Continued focus on explorationReserves–Resources Growth “Sustained and Accelerated”* At current rated capacity, excluding Liberia# Liberia R&R – 330mt in equivalent salable ore capacityIncreased R&R Base3.5 XIn last five yearsMine Life*+18years203240275 306374330#0100200300400500600700800LiberiaIndia70430627524020331 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 31 Mar 12
  • 15Value addition business2802505606250100200300400500600700Met Coke* Pig Iron2007 2012kt Doubled the capacity post Vedanta acquisitionPig Iron India‟s largest producer of low phosphorouspig iron First to introduce low phosphorous foundrygrade pig iron in India Sinter plant of 800kt capacity is alsoprogressing well to be commissioned inQ3FY13Met Coke Developed and owns a technology for non-recovery coke making Received European and an Indian Patent forthis technologyNew blast furnace of 450m3 capacity wascommissioned in August 2012Met Coke expansion has also been commissionedin August 2012*Second battery of new Met Coke plant istemporarily suspended under direction of GSPCBGSPCB – Goa State Pollution Control Board
  • 17Aeromagnetic survey confirms strong mineral potential‒ Aggressive drilling in progress at Bomi Mine‒ ~25,000 meters of diamond & RC drillingcompleted as on 31 August 2012‒ Exploration in Bea Mountain to begin in Q3FY13‒ Exploratory drilling and test work in progress forfirst JORC resource statement expected in nextquarter for Bomi
  • 18Advantages of being in Liberia....Resource Rich Area‒ Three mining assets – Bomi, Mano and Bea Mountain‒ Estimated resource base of about 330 mt (Saleable ore)‒ Potential to increase at-least by 3x post exploration‒ Mining concession area of 285 kmsWest Africa the next Major Iron Ore hub‒ +34bt of Iron Ore resources identified in West Africa‒ Liberia has a potential to develop a 100 mtpa Iron Oreexporting regionFavourable Logistics‒ Time & cost advantage (low opex : ~US$30-35/t)‒ Existing port infrastructure: Priority rights to two Piersat Monrovia port; one pier is in working condition andone needs a re-build‒ Rights to re-build rail corridor to port‒ Maximum distance of 140 kms from portsMDA states no variation in taxes for next 15 years.Distance to port (unit: kms)Source: Company data, secondary research
  • 19Significant developments underway5.09.027.02014FirstShipment2015 2016 2017ExitCapacityExitCapacityExitCapacityExplorationFirst JORC R&R byQ3FY13 for BomiDrilled ~25,000m ason 31 Aug‟12, BomiResults areencouraging as theMetallurgical test arein progressingAeromagneticsurvey: Over 9 kmsstrike length at BeaEnvironmentClearance receivedfor explorationESIA approvals formine/plant/rail/portare progressing wellNecessaryclearances for Bomi,Mano and Bea areunderwayMining&ProcessingDeveloping mining &processing facility atBomiPurchase & orderingof miningequipments,processing plants,etc. are underwayDesign engineeringfor mines/process/rail infrastructureunder progressLogisticsDeveloping Road,Rail and PortLogisticsRail – old line exits;needs a complete re-buildPort – Existing twopiers needs repairLarge storage area isavailable to dispatchNote: All numbers are in million tonnes (dmt); years mentioned are financial years (April- March)
  • 21Health Safety and Environment Our aim is to reach & sustain Zero Harm 62% reduction in LTIFR in last five years All our units are ISO 9001, ISO 14001, OHSAS18001 certification* & SA 8000# Regular medical check ups - 937 medicalexaminations conducted in FY2012 Approach to best practice in health, Safety,Environmental and corporate social responsibility Sesa publishes its Sustainable reports incompliant with GRI G3 A+ level reporting. 1.210.86 0.8100.511.522.52007 2008 2009 2010 2011 2012* Except newly acquired assets at WCL, Liberia, GEPL and South Mines of SRL# certified only for Sesa Goa units excluding SRL, SMCL, GEPL and WCL.Lost Time Injury Frequency RateSanquelim Reclaimed MineLTIFR reduced by62%In last five years
  • 22~ half a million lives touched...
  • 23SummarySesa remains competitive in extremely challenging environmentLow cost operationsFocus on exploration; continue to add more than depletionLiberia driving the next phase of growthEmbed sustainable development into every aspect
  • 24Unearthing the future…