India, is it the next China - Vedanta Resources · Tom Albanese CEO -Vedanta Resources PLC Asia...

Tom Albanese

CEO - Vedanta Resources PLC

Asia Mining Congress, 27th May 2015

India, is it the next China ?

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The views expressed here may contain information derived from publicly available sources that have not been independently

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Any forward looking information in this presentation including, without limitation, any tables, charts and/or graphs, 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 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. In this

context, forward-looking statements often address our expected future business and financial performance, and often

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financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal

prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global

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These uncertainties may cause our actual future results to be materially different that those expressed in our forward-

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This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of an offer

to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Vedanta or any of its subsidiary

undertakings or any other invitation or inducement to engage in investment activities, nor shall this presentation (or any

part of it) nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment

decision.

1Asia Mining Congress - May 2015

India: A Snapshot

Building growth momentum

� Pick up in investments and lower oil prices

� Continuing reforms: Insurance, Coal and MMDR bills

passed

� Lower inflation providing headroom for interest rate cuts

Government priorities and targets

� Make in India: Import substitution and employment

generation

� Housing for all by 2022: 60 million houses in urban and

rural areas

� Smart cities: USD1.2 trillion investment on building

urban infrastructure over next 20 years to improve

quality of life

� Power for all by 2019: focus on energy efficiency, smart

grids, coal and gas availability and renewable energy

� Digital India: transform India into a digitally empowered

society and knowledge economy

� Construction of 30 km highway per day, development of

high speed rail and waterways

2

6.6%

10.4% 10.1%

Zinc Aluminium Copper

India: Fastest Growing Major Economy in 20151

India’s Metal Consumption Growth Rate FY20152

Notes:

1. IMF World Economic Outlook Database, April 2015

2. Includes secondary and value added consumption from all sources

7.2 7.5 7.57.46.8

6.3

0.6

(3.8)

(1.1)

0.1

(1.0)

1.0

2014 2015 2016

India China Russia Brazil

Asia Mining Congress - May 2015

China & India : Fastest growing economies in the world…….

3

11.9 12.9

7.2

11.7

Average annual % growth

1990 - 2000

Average annual % growth

2000 - 2013

Advanced Economies China India Brazil South Africa

China India

China

India

Gross Capital Formation3

1IMF, WEO April 2015, 2 IMF WEO October 2014 , 3 World Development Indicators 2014 , 4 http://wdi.worldbank.org, Estimates of natural resources rents are calculated as difference between price of commodity & avg

Cost of producing it

0

2000

4000

6000

8000

10000

12000

1980 1985 1990 1995 2000 2005 2010 2015

Absolute GDP of India & China ($bn)2

……….. China’s growth stabilizing , India warming up

-2

0

2

4

6

8

10

12

14

16

1997-2006 2009 2011 2013 2015

Growth in Real GDP (%)1

1.2 1.4

0.3 0.1

1.41.9

1.6

2.1

1.2

0.3

0

1

2

3

4

5

6

7

India China

% o

f G

DP

20

12

Forest rents

Mineral rents

Coal rents

Natural gas rents

Oil rents

Contribution of natural resources to GDP (%)4


5.65.8

Major Sector Contribution to Economy

10%

7%

30%

36%

17%

China

Trade, personal &

households goods;

hotels & restaurants,

Transport & Storage

Other Activities,

Construction

Manufacturing

Mining, Utilities

Agriculture, hunting,

forestry; fishing18%

4%

13%

41%

24%

India

0.7%

4.4%

9.7%

25%

UK

1%

4%

12%

19%

US

6%

7%

13%

Brazil

Source: UN 2015, National Accounts Statistics: Analysis of Main Aggregates, 2013

Manufacturing & Mining contribution to India’s GDP remains low. “Make in India” a very important initiative to realise country’s growth ambitions

4

61% 63% 45%

30%


India will require a well-developed resources industry to meet its increasing demand

5

Sources: Wood Mackenzie, BP Statistical Report, Global Insight

Urbanization increasing Increasing Labour Force

(% of Total Population)

15%

30%

45%

60%

1990 2000 2010 2020 2030

India World China

15%

30%

45%

60%

2000 2010 2020 2030 2040

India World China

A view of the skyline of Mumbai

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2006 2007 2008 2009 2015 2020 2025 2030 2035

Liquids Production Liquids Consumption

Mil

lio

n b

arr

els

pe

r d

ay

FY35e Import Bill US$ 400 Billion

Source: International Energy Outlook 2011

FY13 Import Bill >US$150 Bn

India’s Growing Oil Demand with High Import Dependence


Per Capita Consumption: Significant growth to catch up with China(Metals - CY 2014 per capita consumption in kg; Oil - CY2013 per capita consumption in

barrels)

1.40.3 0.5 1.1

7.4

3.01.9

4.7

19.3

7.2

4.73.0

Aluminum Copper Zinc Oil

India World China

CAPITAL MARKETS DAY, MARCH 2015

India: Non-Linear Commodity Demand Growth

6

Copper Consumption IntensityCopper consumption per capita (in kg) vs. GDP per capita (in ‘000 USD)

USA

China

India

JapanGermany

South Korea

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0 10 20 30 40 50 60

GDP per capita (in USD thousands)

Oil Consumption IntensityOil consumption per capita (in tonnes) vs. GDP per capita (in ‘000 USD)

Steel Consumption IntensitySteel consumption per capita (in tonnes) vs. GDP per capita (in ‘000 USD)

Source: World Development Indicators, World Steel Yearbook, International Copper Study Group , Wood Mackenzie, Vedanta

Steel (tonnes per capita)

Energy (tonnesof oil)

per capita

USAChina

India

Japan

GermanySouth Korea

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0 10 20 30 40 50 60

Copper (kg) per capita


USA

China

India

Japan

Germany

South Korea

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

0 10 20 30 40 50 60



Aluminium Consumption IntensityAluminium consumption per capita (in kg) vs. GDP per capita (in ‘000 USD)

South KoreaGermany

JapanChina

USA

India0.0

5.0

10.0

15.0

20.0

25.0

30.0

0 10 20 30 40 50 60

Aluminium (kg) per capita


India’s Unexplored Mining Potential

7

16%

12%

8%6%

5%5%

4%3%

3% 3%0.2%

34.8% 100%

Canada Australia US Mexico Peru Chile China Russia Argentina Brazil India Others Total

1.13

0.66

0.52

0.190.09 0.08 0.04 0.04

Co

nst

ruct

ion

Fin

an

ce,

Re

al

Est

ate

an

d s

o o

n

Min

ing

& Q

ua

rry

ing

Tra

de

, T

ran

spo

rt

an

d s

o o

n

Ma

nu

fact

uri

ng

Oth

er

Se

rvic

es

Ag

ricu

ltu

re

Uti

liti

es

India: Shared geology and

mineral potential with Africa &

Australia

India reserves ranking

Global Ranking1 based on reserves

India’s share of global non-ferrous exploration spending very low

Source: SNL Metals Economics Group, Wood Mackenzie, GOI Ministry of Mines, BP Statistical Review June 2013, U.S. Geological Survey, Planning Commission, 12th Five Year Plan, 1Ranking based on reserves , 2 Unlocking the Potential of the Indian Minerals Sector,

Ministry of Mines , GOI (Nov 2011)

7th Iron OreR&R: 29 bn tonnes

5th CoalR&R: 295 bn tonnes

6th ZincR&R: 50 mn tonnes

8th BauxiteR&R: 3.5 bn tonnes

India’s mining employment elasticity higher than most other sectors

9.0%

2.1% 2.9%

9.1%

13.1%

1.1%

9.5%

22.1%

3.1% 3.8%

14.1%

20.0%

2.7%

14.2%

Odisha Rajasthan Andhra Pradesh Jharkhand Chhattishgarh Karnataka Goa

Opportunities in Mineral Rich States: Forecast on Mining Sector Contribution (%) to State GDP2

Mining sector contribution(%) to state GDP in 2009

Forecast on mining sector contribution(%) to state GDP in 2025


Vedanta : A Global Diversified Natural Resources Company

PositioningR&R Life1

FY2015Production Capacity2

Oil & Gas (Cairn India)Top 20 global independent E&P; Platts 2013: Fastest growing energy company globally

15212kboep

d225+

3

kboepd

Zinc India (HZL)2

ndlargest integrated zinc

producer globally

25+ 887kt 1.2mtpa

Silver (HZL)One of the largest silver producers globally

25+ 10.5moz 16mozpa

Zinc InternationalOne of the largest undevelopedzinc deposits

20+ 312kt 400ktpa

Iron Ore4

Operations in Goa and Karnataka; Large deposit in Liberia

20+ 0.6mt 5

16.8mtpa

Copper ZambiaWorld class resource

25+ 117kt 6

400ktpa7

AluminiumStrategically located large-scale assets with integrated power

877kt 2.3mtpa

Notes

1. Based on FY2015 production and R&R as at 31 March 2015; Iron ore is based on existing capacity; Zinc

International includes Gamsberg deposit in R&R

2. Includes announced expansions; Iron ore shown at last operating capacity of 14.5mt in Goa and 2.3mt

provisional capacity in Karnataka. Recent SC judgement has imposed an interim state-wide cap of 20

mtpa at Goa.

3. Expected capacity for currently producing assets

4. Numbers excluding Liberia

5. Iron Ore operations affected by mining restrictions in Karnataka and Goa

6. Integrated Production

7. Shaft capacity, subject to review

8

• LSE listed with portfolio of large, long–life, well-

invested assets

• Operations across India, Africa, Australia and Europe

• FY2015 EBITDA of $3.7 billion

• Strong cost position

• Oil & Gas and Zinc in lowest quartile

• Aluminium in lower half, without raw material

linkage

• Focus on disciplined capital allocation and balance

sheet management


CAPITAL MARKETS DAY, MARCH 2015 9

Vedanta – Making a Positive Contribution1

61%10%

9%

9% 5%

2%

4%

Revenues by GeographyFY2015

India

China

Far East Asia

Middle East

Europe

Africa

Others

Social Investment: $42 mn

Payment to Government Exchequers: $ 4.6 bn1

Direct & Indirect Employment: 82,000

Contribution to India’s Oil Production: 27%

Vedanta’s Geographical Overview

1. Debari smelter

2. Chanderiya smelters

3. Rampura Agucha mine

4. Rajpura Dariba mine & smeltersand Sindesar Khurd mine

5. Zawar mine

6. Talwandi Sabo power project

7. Silvassa refinery

8. Iron ore operations – Goa

9. Iron ore operations – Karnataka

10. Tuticorin smelter

11. MALCO power plant

12. Lanjigarh alumina refinery

13. Jharsuguda smelters & power plants

14. Korba smelters & power plants

15. Rajasthan block

16. Ravva (PKGM-1) block

17. KG-ONN-2003/1 block

18. KG-OSN-2009/3 block

19. PR-OSN-2004/1 block

20. Cambay (CB/052) block

21. MB-DWN-2009/1 block

22. SL 2007-01-001 block

Zinc-Lead-Sliver

Oil & Gas

Iron Ore

Copper

Aluminium

Power

Projects under development/commissoning

Captive thermal power plant

1010

11

19

1817

16

16

13

1313

12

14

14

6

15

15

5

1

43

2

20

20

8

9

7

24. Mt Lyell mine, Australia

23. Lisheen mine, Ireland

23

25. Iron Ore project, Liberia

26. Konkola and Nchanga copper mines & Nchangasmelter, Zambia

27.

28. Skorpion mine, Namibia

29. Black Mountain mine, South Africa

30. South Africa Block 1

25

2726

28

2930

24

22

Note: Maps not to scale

21

1FY2015


CAPITAL MARKETS DAY, MARCH 2015

Sustainability : Key to our business

10

Safety

� Fatal accidents and injury rates have declined

� Implementing programs to eliminate fatalities and

control injuries:

o Leadership focused on a Zero-Harm culture

across the organization

o Consistent application of ‘Life-Saving’

performance standards

Sustainable Development

� Implementing sustainability controls through Vedanta

Sustainability Framework aligned to IFC, ICMM & OECD

standards

� Working and partnering with think tanks & institutional

bodies – WBCSD, CII, IUCN etc.

� Focused drive on non hazardous waste utilisation

c.50% of non hazardous waste recycled for industrial use

HZL- Wind Farms (Renewable Energy)HZL operates 273 MW capacity wind farms

Community Development

� Benefitting over 4 million people through community

development programmes

� Industry leading CSR efforts

� Focus on Swachh Bharat (Clean India) Campaign and Rural

livelihoods

� Focus on local consent prior to accessing resources

KCM - Child Care and Early education programmetargets pre-school level education and child development


…Delivering Margins and Progressive Dividends

Resilient Portfolio in Volatile Commodity Environment

11

Diversified Portfolio with Low Cost Assets… EBITDA Mix for FY2015

39%

37%

11%

4%

7% 1%

Oil & Gas

Zinc

Aluminium

Power

Copper

Iron Ore

Competitive Position on Global Cost Curve

I II III IV

Zinc Intl.

Oil & Gas62%

ZincIndia51%

Aluminium20%

31%

Size of circle denotes EBITDA contribution and

% denotes EBITDA margin in FY2015

Copper Zambia(0.4)%

EBITDA Margins Dividends

0

300

600

900

1,200

1,500

1,800

0

10

20

30

40

50

60

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12PF

FY13

FY14

FY15

Adjusted EBITDA Margin % ¹ (LHS) LMEX ²

Brent ² Copper Equiv. Production- kt (RHS)

Note: 1. Excludes custom smelting at Copper and Zinc-India operations.2. LMEX and Brent rebased3. In FY2004, a single dividend of 5.5 USc per share was paid, for the four months since listing, equivalent to an annual payment of 16.5 USc per Share

0

10

20

30

40

50

60

70

FY04³ FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Usc/share


Well-Invested Assets Driving Production Growth

12

0

500

1,000

1,500

2,000

2,500

3,000

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12PF² FY13 FY14 FY15 NearTerm

Copper Equivalent Production (kt)

Zinc-Lead Silver Copper Aluminium Power Iron Ore Oil & Gas

Total Production (copper equivalent kt)

Notes:

1. All commodity and power capacities rebased to copper equivalent capacity (defined as production x commodity price / copper price) using average commodity prices for FY2015. Power rebased using FY2015

realisations, copper custom smelting capacities rebased at TC/RC for FY2015, iron ore volumes refers to sales with prices rebased at average 56/58% FOB prices for FY2015

2. PF refers to proforma for Cairn India acquisition

+66%

Near Term


Production Growth and Asset optimisationOperating at full capacity

Strengthening the Balance SheetReduce Gearing; maximise free cash flows

Identify next generation of ResourcesContinue to add R&R

Simplification of the Group structure

Protect and preserve our License to Operate

Well positioned for growing Indian economy

Strategic Priorities

13Asia Mining Congress - May 2015

Q&A

14

Group Structure

15

Konkola Copper

Mines (KCM)

62.9%

Vedanta Resources Plc

100%64.9%

Zinc India(HZL)

AustralianCopper Mines

Vedanta Ltd

Cairn India

59.9%

79.4%

Subsidiaries of Vedanta Ltd

� Sesa Iron Ore

� Sterlite Copper (Tuticorin)

� Power (2,400 MW Jharsuguda)

� Aluminium

(Odisha aluminium and power assets)

Divisions of Vedanta Limited

Option to increase stake

to 94.4%

Unlisted entitiesListed entities

Talwandi Sabo Power (1,980 MW)

100%

MALCO Power

(100 MW)

100%

Skorpion & Lisheen -100%

BMM -74%

100%

Zinc International

51%

Bharat Aluminium (BALCO)

Option to increase stake

to 100%

100%

Western Cluster (Liberia)

NotesShareholding based on basic shares outstanding as on 31 March 2015


India, is it the next China - Vedanta Resources · Tom Albanese CEO -Vedanta Resources PLC Asia...

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