10th Apr 2015 10:44
LONDON (Alliance News) - Vedanta Resources PLC on Friday said production across most of its commodities fell during the full year as some operations were hit by disruptions, though production generally improved in fourth quarter, and most of the FTSE-250 miner's commodities also experienced price falls.
Vedanta said its oil and gas production for the full financial year to the end of March was 220,876 barrels of oil equivalent per day, down 3% from the 226,808 barrels produced a year earlier. This was largely on account of planned maintenance activity at the Mangala processing terminal and a higher than expected water cut at Bhagyam, both in Rajasthan, India, alongside the suspension of gas sales from the Ravva oil field in India for around three months, it said.
Some of the losses to production were partially offset by higher production from the Cambay oil field in India and better performance of the Mangala field in Rajasthan.
In the fourth quarter, production fell to 224,294 boepd from 232,884 boepd, though Vedanta said oil and gas production has now stabilised following maintenance work carried out in the second quarter, which dragged on its production.
The average oil price for the year was USD85 per barrel, down 21% from the USD108 per barrel average a year earlier, and prices fell further in the second half to USD77 a barrel in the third quarter and USD54 a barrel in the fourth. Brent crude is currently trading around USD56 a barrel.
Vedanta said its management committee has approved the development plan for the Raageshwari deep gas field in Rajasthan, which remains a priority for the company. The development plan aims to lead to production of 100 million standard cubic feet per day, and Vedanta is currently discussing contracts and plans for the field. The Raageshwari field produced around 16 million standard cubic feet of gas per day in the 2015 financial year and is expected to rise to 25 million standard cubic feet per day during 2016.
The FTSE 250-listed company said its production at Zinc India hit a record in the fourth quarter and for the full year, though both fourth quarter and full year production at its Zinc International business was hit by unplanned disruptions at the Skorpion site.
Mined metal production from Zinc India for the year totalled 887,000 tonnes, up from 880,000 tonnes, and zinc production rose in the fourth quarter from the third, which should lead to further production increases in 2015. The increase was due to higher ore production during the quarter.
However, integrated refined zinc, lead and silver production fell by 3%, 5% and 11%, respectively, during the year due to lower mined metal production in the first half and lower silver grades at the Sindesar Khurd mine. Once again, production of all three commodities rose quarter on quarter in the fourth, it said.
Silver prices in the year fell 15% to USD18.1 per ounce from USD21.4 per ounce, with prices falling in the third quarter to USD16.5 per ounce but rising in the fourth to USD20.5 per ounce. Lead prices fell 3% during the year to USD2,021 a tonne from USD2,092.
Vedanta's Zinc International business also saw production fall in the period. The business consists of the Black Mountain mine and the Gamsberg project in South Africa, Skorpion zinc mine in southern Namibia and the Lisheen mine in the heart of the Irish midlands.
Mined metal production was down 14% year on year to 312,000 tonnes from 364,000 tonnes, as production from all three mines fell in the period between 13% to 18%. The Lisheen mine has been producing less because it is nearing the end of its mine life and is due to cease production in the second-half of 2016, whilst the Skorpion mine was hit by a fire in January.
The company experienced a 14% rise in zinc prices during the year to USD2,177 per tonne from USD1,909 a tonne, and although average prices rose in the third quarter to USD2,235 per tonne, the price fell in the fourth to USD2,029 per tonne.
In its iron ore operations, Vedanta said it made good progress towards restarting mining at the Karnataka and Goa mines in India. Production restarted at Karnataka at the end of February with a target of 2.3 million tonnes of ore per year, with sales expected to resume from the site in the first quarter of the 2016 financial year.
In the fourth quarter, the Ministry of Environment and Forest of India gave environmental approval for the Goa mine, something it had previously blocked. Vedanta said it has been allocated 5.5 million tonnes of saleable ore at Goa, with mining expected to commence after the monsoon season, it said.
Pig iron production ramped up in the year to a record level of 611,000 tonnes from 510,000 tonnes a year earlier and in March, the company increased the pig iron plant's capacity to 700,000 tonnes a year from 625,000 tonnes.
Elsewhere, copper cathode production from its copper business in India hit a record high of 362,000 tonnes for the year from 294,000 tonnes, though full-year production at its Copper Zambia unit was 10% lower to 116,000 tonnes due to shaft interruptions. Aluminium production for the year was strong on the back of the ramp up of its Konkola deep mine, and Vedanta said it used 98% of its 1.0 million tonne per year capacity.
Copper prices fell 8% in the year to an average of USD6,558 per tonne from USD7,103 per tonne.
The company also experienced a 15% fall in silver prices during the year, whilst lead prices fell 3% an
The Australian copper business remains under care and maintenance, and Vedanta is currently evaluating the possibility of restarting operations.
"We continue to focus on the execution of our defined strategy and, despite volatile commodity markets, we remain confident in our diversified business model," said Vedanta Chief Executive Tom Albanese.
Vedanta shares were down 3.6% to 519.50 pence per share late Friday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance. Updated by Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Vedanta Resources