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Miningindaba2013vedanta strategicprioritiesinafrica20130206


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Presentation at Mining Indaba 2013 about strategic priorities in Africa

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Miningindaba2013vedanta strategicprioritiesinafrica20130206

  1. 1. Vedanta Resources plcStrategic Priorities in AfricaInvesting in African MiningIndaba 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.2Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  3. 3. Vedanta: A Global Diversified Natural Resources Major3 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$4 billion in Africa since 2005 Committed to sustainable development, supporting local communities and contributing to theeconomies of the areas where we operateVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  4. 4. Tier-1 Diversified Asset PortfolioPositioning Target CapacityR&RLife1 Sustainable Cost PositionLargest integrated zinc-leadproducer 1mtpa 25+ Lowest QuartileOne of the largest undevelopedzinc deposits in the world400ktpa 20+2Lower HalfOne of the largest silverproducers16mozpa 25+ By-productIndia’s largest privates sector oilproducer260kboepd317 Lowest QuartileLargest Indian iron ore producer-exporter developing largedeposit in Liberia20.5mtpa418 Lowest QuartileWorld class fully investedoperation400ktpa 24+5Lower HalfStrategically located large scaleassets2.3mtpaCurrently Lower Half; LowestQuartile with Captive BauxiteZinc IndiaZinc Intl.SilverIron Ore4Copper ZambiaAluminiumNote: 1. At capacity as per R&R as at 31 March 2012; 2. Includes Gamsberg; 3. Capacity expected for the assets that are currently producing, subject toapprovals 4. Excluding Liberia; 5. Mine life of Konkola DeepsLarge, Low-Cost, Long-Life, Scalable AssetsOil & Gas4Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  5. 5. 5Note: FY2012 numbers are proforma with Cairn India for full yearIndustry leading growth trajectory…3235,353FY2004 FY2012proformaEBITDA (US$mn)+42% CAGRFree Cash Flow (US$mn)3353,128FY2004 FY2012proforma+32% CAGRUnderlying EPS (USc/share)27209FY2004 FY2012proforma+29% CAGR Strong financial profile supported by diversified cash flow generation Delivering industry-leading production growth driven by substantially invested projects Recent acquisitions provide additional growth optionsVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  6. 6. …and continued commodity diversification6Aluminium16%Copper29%Zinc India55%EBITDA: $323mnAluminium3%Copper13%Zinc India23%Zinc-Int.7%Iron Ore14%Oil & Gas38%Power2%FY2004(IPO)Aluminium7%Copper19%Zinc India34%Zinc-Int.3%Iron Ore33%Power4%EBITDA: $3.6 bnFY2011+10xProforma FY2012with Cairn India for Full YearEBITDA: $5.4bn+16x6Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  7. 7. Emerging footprint in Africa7Vedanta has invested more than US$4 billion in AfricaAfricaOperations Largest zinc producer in Africa Among top 3 copper producers Large iron ore assets in LiberiaCapitalInvestment $2.6bn in Zambia Two large projects – Liberia iron ore andGamsberg zinc depositContributionto fiscus One of the largest in Zambia Contribute d 2.8% of GDP in Namibia in2011Contributionto Society Community programmes benefiting150,000 people across 3 countriesEmployees Largest private-sector employer inZambiaVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  8. 8. Konkola Copper Mines8Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013Substantial highgrade resourcesand reserves 688.9 Mt of copper reserves & resources, 13.6 Mt of contained Cu Konkola underground mine grade of 3.55% with 24+ years mine lifeWell investedproductionfacilities New 300+ktpa Nchanga smelter; New East and West Millconcentrators; Second Cobalt Recovery Furnace Konkola Deep Mining Project (KDMP) mid-shaft loading commissionedin April 2010 and waste hoisting from bottom-shaft commissioned inOctober 2012Substantialproduction growthand cost reduction Growth in copper production from 200 kt production in FY2012,targeting production of 400+ ktpa through brownfield expansion Further cost reduction and stabilisation: targeting sustainable costperformance of <$1.50/lb C1 integrated cash costsStrong workingrelationship withZambian government The largest private employer in Zambia in terms of the number ofemployees and third-party contractors Zambian Government remains an important shareholder of KCMValued localpartner Committed to training and developing the local workforce Local communities: Numerous health, education and welfareprogrammes
  9. 9. Konkola Copper Mines9Vedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013Konkola Deep Mining Project Konkola resource one of the highest grade,Tier 1 copper ore bodies At ~1.5 km, newly commissioned shaft is oneof deepest in the copper industry Mid-shaft loading commenced in April 2010 Waste hoisting from bottom-shaft commencedin October 2012 Ore hoisting from bottom-shaft expected tobegin within next 6-9 monthsNchanga Smelter Direct-to-blister flash smelter commissionedin 2008 to replace older, less efficient smelter 99.6% sulfur capture rate makes it secondmost environmentally friendly smeltersin the world Process recoveries at 98.6% and fossil fuelconsumption down ~69% Only smelter that can recover cobalt fromconventional Cu concentrate
  10. 10. Black Mountain Mining10BMM has been in production for over threedecades Underground operation, mining a polymetallicorebody Production rate of 1.7Mtpa ore hoisted Sequential flotation plant produces c.83kt ofzinc, lead, copper and c.1.6 million troy ouncesof silver in conc.Gamsberg, one of the largest undevelopedzinc deposits in the world Potential to produce 400ktpa zinc over a 20year life of mine at Gamsberg NorthAsset Reserves(mt)ReserveGradeZnReserveGradePbResources(mt)BlackMountain8.2 2.5% 2.8% 63.81Asset Resources (mt) Grade ZnGamsberg North 154 6.3%Gamsberg East 32 9.8%Priorities Drilling of Swartberg deposit in order to extendthe life of operation Gamsberg feasibility study for large open pitmine & concentratorVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013Note: 1. Swartberg deposit
  11. 11. Skorpion Zinc11Skorpion Zinc is the only zinc refinery inAfrica Largest integrated zinc operation in Africa Ore to finished metal beneficiation withinNamibia Refinery capacity of 150ktpa of Special HighGrade ZincGergarub Deposit Zinc-lead sulphide deposit Discovered in 2008, located close toSkorpion Zinc operations Co-exploration agreement with Rosh PinahZinc Corp.Asset Reserves(mt)ReserveGradeZnResources(mt)Skorpion 6.5 9.7% 2.6Priorities Investment in exploration in order to extendthe life of operation Gergarub feasibility study Skorpion Refinery Conversion feasibility study Convert the current plant to treat sulphideore/concentratesVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  12. 12. Western Cluster Limited12West Africa – the next Major Iron Ore hub Potential to develop into a 100mtpa Iron Oreexporting regionWestern Cluster Limited c.1bn ton resource across 3 deposits, 70-140km from port 48 000m of drilling and aeromagnetic surveycompleted in 2012 c.3x upside to earlier 1bn tonnes resourceestimate Capex flexibility, proximity to port, low opex($30-35/t) Potential for ramp-up to 27mtpaPriorities Scoping and feasibility studies of the facilitiesat the port of Monrovia First shipment expected in FY2014Asset Type ResourcesMano River Brownfield 80mtBea Mountain Greenfield 923mtBomi Hills Brownfield 50mtVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  13. 13. 1. Responsiblestewardship2. Buildingstrongrelationships3. Adding andsharing valueSustainability – integral to our business13 Embed sustainable development into every aspect of what we do To improve our health and safety performance for a safer, more secure and healthierenvironment 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 helpsupport a sustainable society and planetRobust Sustainability Governance StructureVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  14. 14. 14 Partnership with Govt of Namibia to upgradeclinic in Rosh Pinah 80% reduction in malaria prevalence in areassurrounding KCM operations KCM operates 2 hospitals and 5 clinics Free cataract surgery for surroundingcommunities in Northern Cape Support for FET College – O’Kiep, N Cape Training and skills development at Skorpion Bursaries at local and Indian University Sponsored apprenticeships Karas Regional Science Fair KCM operates 2 child care centres and 2trust schools with over 1,800 students inZambiaEducationHealthSocial and community partnerships are key to successVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  15. 15. 15 Brick making facility, Pella, Northern Cape Skorpion - Karas Goat Project Cattle and goat rearing programs forcommunities in which KCM operates Brick making facility, Pella, Northern CapeSustainable livelihoods Partnership with DBSA to build capacity inlocal (Khai-Ma) municipality in NorthernCape Support for NGOs (Hope for Life) Partnership with Department of SocialDevelopment, Poffadder, Northern CapeCapacity buildingSocial and community partnerships are key to successVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013
  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 tomake a lasting positive contribution16Growth and Long-Term Value Creation with a Focus on SustainabilityVedanta’s Strategic Priorities in Africa - Investing in African Mining Indaba 2013