Thursday, October 8, 2015

Rs.2,500-cr debt kept Sesa Iron Ore up during ban years

Vedanta Ltd’s Sesa Iron Ore Division borrowed close to Rs.2,500 crore for maintenance during the three-year mining ban in Goa and Karnataka.

The company is expected to resume its mining operations in Goa next month. In Karnataka, Vedanta has sought the court’s direction to enhance its mining quota.

“The money was borrowed to meet all our expenses to keep all our assets and infrastructure in good shape. We also had to take care of our human resource as well,” Kishore Kumar, CEO Sesa Iron Ore Division, told reporters.

“In the past three years, the company has not retrenched any single employee, but about 400 of them quit voluntarily to get employment elsewhere,” he added.

At the peak of mining activity in Goa and Karnataka, the company had employed 5,600 people on its rolls and equal number on contract.

“The mining in Goa will resume in a month’s time. We have set a target of 5.5 million tonnes this fiscal (2015-16). At our peak performance, we were doing 15 million tonnes in Goa,” said Kumar.

Cost competitiveness
In Goa, the company has cost competitiveness to its credit. Mining is being conducted in Codli which has a capacity of 7 million tonnes, Bicholim 4 million tonnes and Sonshi at 3 million tonnes.

With improvisation in furnaces in Goa, the company is planning to bring down the cost of production to less than $20 per tonne from the current $22-25.

In Karnataka, mining has commenced at the company’s Chitradurga mine called ‘A Narrain Mine’ from February-end.

“In the next six months, we expect to achieve the court allotted target of 2.29 million tonnes. Our original allotted quantity is 6 million tonnes,” said Kumar. “Since Karnataka has not achieved its fixed quota of 30 million tonnes, we have moved the court for higher production. At present, the Supreme Court has fixed the company’s production at 2.29 million tonnes for us. We have asked for full capacity of 6 million tonnes,” he added.

Karnataka scores on cost competitiveness for domestic supply of iron ore. But duplication in taxes and prohibitive logistics costs is hurting the industry.

“The state of Goa has only two District Mineral Foundation (DMF) and Goa Permanent Fund. Whereas in Karnataka there are three — Special Purpose Vehicle (SPV), District Mineral Foundation (DMF) and Forest Development Tax (FDT) — all overlapping. We are waiting for clear court guidelines,” said Kumar.

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