Saturday, October 13, 2007

Vedanta's investment posts significant gain

Vedanta's investment posts significant gain
By Joe Kaunda
Saturday October 13, 2007 [04:00]

Vedant's investment in Zambia has continued to post significant gains to the mining group’s general performance with second quarter figures showing a record output for copper and aluminium. According to the Mining Weekly published on Wednesday the second quarter figures released by the Citigroup, showed that Vedanta Resources Plc - a 51 per cent shareholding in Konkola Copper Mines - posted record production of key metals. This was largely in line with market expectations, as new operations came on stream.

Citigroup in a research note quoting Vedanta stated that Vedanta had registered record production at its copper and aluminium operations in India with further positive outcomes from initiatives undertaken at KCM in Zambia having significantly contributed to the Group’s total output.

“The increase in (overall) production was primarily due to the full production from the new Korba smelter, the ramp up of the Tuticorin smelter, stabilisation of the Chanderiya smelter and the positive impact of the various initiatives taken at the Konkola operations,” Vedanta said.

Shares in London-listed Vedanta, which also has operations in Zambia and Australia, were down 0.7 per cent at 2 140 pence last Wednesday when the FT350 mining index was up one per cent and the FTSE 100 index was down 0,2 per cent although the Vedanta shares have shot up about 80 per cent this year alone.

The company achieved its highest-ever quarterly production volumes in aluminium, Indian copper and zinc mining operations, a statement said.

Vedanta said aluminium production for the three months to the end of September rose 25.3 per cent to 99,000 tonnes while copper cathode output in India and Zambia increased 13.8 per cent to 91,000 tonnes and 29 per cent to 40,000 tonnes respectively.

The Group’s zinc mining production grew 15.3 per cent to 143,000 tonnes while refined zinc output rose 20.5 per cent to 94,000 tonnes.

Iron ore output was 1.85 million tonnes, which Citigroup said was 16 per cent below what it had forecast.

“Production numbers were basically in line with expectations, reflecting a good performance in a tough global operating environment,” Citigroup said in a research note, reiterating its “buy” rating and 2 350-pence price target.

“The iron ore division was the only major area to miss production estimates, mainly due to monsoons affecting shipping.”

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