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This presentation contains 'forward looking statements' that is statements related to future not past events In thisThis 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 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, uncertainties arise from the behaviour of 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 p ; g q ; , gglobal scale, including those of a environmental, climatic, natural, political, economic, business, competitive or regulatorynature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of anThis 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.
2
Vedanta: A Diversified Natural Resources Group
FY 2009 - 10 FY 2010 -11E Pro Forma
Aluminium
FY 2011-12E Pro Forma
Aluminium
CopperIron Ore
Power
CopperOil & GasAluminiumPower
Iron Ore Copper
Power
Zinc-India
Zinc-India (HZL)
Zinc-India (HZL)
Zinc-Intl.
EBITDA: US$2.3bn Analyst EBITDA consensus: $8.4bn1&2
(including Oil and Gas)
Iron Ore
Zinc India (HZL)
Analyst EBITDA Consensus: US$3.5bn1
(HZL) (Anglo Zinc) Zinc-Intl. (Anglo Zinc)
Vedanta is one of the world’s leading diversified Natural Resources group
First Indian group to be listed on LSE; ranked 51 in FTSE 100
Over 34,000 employees globally, including 9,600 professionals, p y g y, g , p
Industry-leading organic growth programme – $19 billion capex, c. 2/3 already spent
31. Company estimate for Zinc-International 2. Vedanta: US$5.8bn; Cairn India:US$2.6bn
Strategy Focused On Value And Growth
Organic growth focused strategy
Leverage unique position in India
Asset optimisation
Structural low cost advantage
Exploration focus
Selective value accretive M&A optimisationSelective, value accretive M&A
Large brownfield assets
Embedded growth options
High quality long life assets
Unlocking value
Leverage core asset development & operational skills
g
World class assets
Opportunity to list vertical business lines (including the IPO of Sterlite
Energy and KCM)
Inherent value in Silver business
4
Cairn India: Compelling Growth Opportunity
260
RajasthanCambay BasinRavva
Entry into attractive Indian oil & gas sector
Cairn India Production Profile (kboepd, Gross)
200
Ravva
Gross 6.5 bn barrels of oil in place
125175
240+
159Significant exploration acreage, 35+ prospects identified
4
125
44Doubling production in short term to 240,000 bopd at Rajasthan
2009 2010 2011 Target
Source:Wood Mackenzie, Company data
5
Strong Metals and Energy Growth in India
1,000 5Zinc (kt) LHS Copper (kt) LHS
Aluminium (mt) RHS Oil (mbpd) RHS 1,500Demand Supply
Resource Consumption Growth in India Peak Power Capacity Deficit in India (bn units)
600
800
3
4
1,100
1,300FY06–10 CAGR:Demand : 7.1%Supply : 6.6%
200
400
1
2
700
900FY10–15 CAGR:Demand : 10%Supply : 11%
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
0 500
FY06
FY07
FY08
FY09
FY10
FY11
E
FY12
E
FY13
E
FY14
E
FY15
E
S D t h B k W ld D l t I di t IIFL R h BMI I di Oil & G R t 2010
Infrastructure Spending
Increasing Urbanisation
Favourable Demographics
Metals and Energy
Demand
Source: Deutsche Bank, World Development Indicators, IIFL Research, BMI: India Oil & Gas Report 2010
Notes: Metal and oil consumption are calendar year based
6
Industry Leading Organic Growth Programme
Vedanta Copper Equivalent Exit Capacity (kt)
2,500
1 500
2,000
1,000
1,500
500
0
FY2003-04 FY 2006-07 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13
Oil and Gas Zinc-Intl Zinc-India Silver Aluminium Power Iron Ore Copper
Notes: 1. All metal and power capacities rebased using Copper LME and Commodity prices as on 3 February 2011
2. Copper custom smelting capacities rebased at TC/RC for H1 FY 2010-11
7
World’s Largest Zinc-Lead Producer
1,064
1,263
464Sterlite
Xstrata
Zinc-International Zinc-India (HZL)
Global Zinc and Lead Mine Production (kt) - 2010E1 Zinc - Lead R&R (Mt): 25+ Years Mine Life
5052
2 3 1,528
843
533
Teck
Glencore 206
655Rampura-Agucha
364Boliden
Top Zinc Mines MIC (kt) – 2010E(13.4%)
542505
375330
300224
Red Dog
Century
Antamina
Mount Isa Pb/Zn
San Cristobal
Brunswick144
299
(16.3%)
(11.3%)
(0.5%)
(7.0%)
(1.5%)
(8.2%)
194
177173170164
400
Lanping
Mc Arthur River
Lisheen
Tara
Skorpion
Gamsberg
FY 2002-03 FY 2009-10
(8.2%)
(9.3%)
(11.6%)
(7.2%)
(11.3%)
(6 7%)400Gamsberg
Data in bracket represents Zinc grade based on proved and probable reserves
Note: 1. Based on production of metal contained in concentrate.
2. Targeted production capacity on 100% basis
3. Actual Production of CY 2010 on 100% basis
Source: Brook Hunt, Company Data
Zinc International R&R as on 31 December 2009, Zinc India as on 31 March 2010(Potential)
(6.7%)
8
Zinc Mining Cost: Zinc-India competitively positioned on Global Cost Curve
($90
9)
tile
($1,
267)
2000
2300
s ($
668)
atio
ns(H
ZL)(
$300
)
Qua
rtile
($59
2)
Seco
ndQ
uart
ile(
Thir
dQ
uart
1100
1400
1700
1) natio
nal O
pera
tions
Indi
aO
pera
Firs
tQ
200
500
800
Min
ing
Cash
Cos
t (C
($/t
)
Inte
r
-700
-400
-100
M
0 10 20 30 40 50 60 70 80 90 100-1000
Cumulative Production
Source: Brook hunt, 9 months FY 2010-11 for cash cost of Sterlite: HZL costs excludes Silver credit
Note : Cost of International operations is weighted average mining cost of Lisheen and Black Mountain for CY2009
9
Zinc-International: Skorpion Mine, Namibia
Overview
SkorpionAcquisition completed on 3 December 2010Integrated zinc refining: Unique technology to
Zinc Production (kt)
Integrated zinc refining: Unique technology to extract zinc metal from zinc oxide oreReserves & Resources: 8.3 Mt11.3% Zinc
Gergarub145
150152
gZinc-lead sulphide depositDiscovered in 2008
CY 2008 CY 2009 CY 2010
10
Zinc-International: Black Mountain Mine, South Africa
Overview Production (kt)
Black MountainAcquisition completed on 4 February 2011
U d d i d i i d l d
Zinc Lead
Underground mine producing zinc and lead
New mining infrastructure related to deep shaft coming online mid-2010
Reserves & Resources: 51.7Mt28 28 36
47 49
51
Gamsberg Project
1.5% Zinc and 2.9% Lead
By Products: Copper and Silver
28 28
CY 2008 CY 2009 CY 2010
One of the world’s largest undeveloped zinc deposits, located near the Black Mountain mine
T l f 186 l d iTotal resources of 186mt, located in two ore bodies
Grade: 6.9% Zinc and 0.4% Lead
Potential to produce 400 ktpa of zincPotential to produce 400 ktpa of zinc
11
Zinc-International: Lisheen Mine, Ireland
Overview Production (kt)
Lisheen
Acquisition completed on 15 February 201121
Zinc Lead
Underground Mine
Reserves & Resources: 8.7 Mt
11.9% Zinc and 1.9% Lead 167172 175
16
1921
CY 2008 CY 2009 CY 2010
12
Value Creation Opportunity: Silver
16.0Silver Production Silver exit capacityOn track to become one of the world’s top silver producers at 16moz
Silver Production and Capacity (moz)
− Sindesar Khurd mine
− Commissioning one year ahead of schedule, FY 2011-12
8.0
100% EBITDA margin – production costs included in Zinc-Lead CoP
− EBITDA potential of US$450mn+ at t Sil i
4.2
5.7
current Silver prices
Long mine life of 25+ years
FY 2008-09 FY 2009-10 FY 2010-11e FY 2011-12e
13
/ 2
Silver : Unlocking Accumulated Value
F ill 17,806Fresnillo
EV of pure-play silver
producers ($mn)Zinc-India vs pure-play
silver producers (koz)1
EV/EBITDA2
13.5Fresnillox
41,388
28,745
Fresnillo
Silver Wheaton
17,806
13,730Silver Wheaton 22.8
Fresnillo
Silver Wheaton x
8,206Silver Standard 2,154Silver Standard 13.9Silver Standard x
4,433Silvercorp 2,475Silvercorp 20.9Silvercorp x
16,000
0 10,000 20,000 30,000 40,000
HZL (2012E)
0 5 000 10 000 15 000 20 0000 5,000 10,000 15,000 20,000
Source: Broker reports, Factset, Bloomberg as of February 21, 2011
1Peers production is as per 2011E
2 EBITDA based on CY 2011 estimates for peers
0 10 20 30
14
Aluminium: Optimising Returns
Power for sale (MW)
Unit Pre Deferral1 Post Deferral1
Aluminium capacity (kt)
2,500
1,200MWCPP at BALCO
600 1,200
2,400MWIPP t Jh d
600 2,400
260
500
IPP at Jharsuguda ,
BALCO-1 CPP 270 270
T t lBALCO
Jharsuguda
Present TargetTotal 1,470 3,870
FY10 Production FY12 Capacity Post Captive BauxiteFY10 Production FY12 Capacity Post Captive Bauxite
2,500kt Aluminium
760kt Aluminium and 3,570MW Surplus Power
533kt Aluminium
1: The first metal tapping from the 325 ktpa smelter at BALCO and 1.25 mtpa Smelter at Jharsuguda has been deferred
15
Aluminium : Positioning on Global Cost Curve
$1,9
74)
)($1,
840)
rtile
($2,
064)
2500
3000
96)Target costs of
$1 800 1 900/tTarget cost of $1 100 1 200/t
uart
ile($
1,56
5)
Jhar
sugu
da(
Korb
a($
1,78
5)
Seco
ndQ
uart
ile(
Thir
dQ
ua
2000
ost (
C1)
/t)
Veda
nta
($1,
8$1,800-1,900/t with bought-out bauxite and alumina
$1,100-1,200/t with captive bauxite
Firs
tQ1500
Cash
Co
($/
1000
0 10 20 30 40 50 60 70 80 90 100
500
Cumulative Production
16
Source: Brook hunt, 9 months FY 2010-11 for cash cost of Sterlite/ Vedanta
Commercial Energy - IPPs
Jharsuguda 2,400 MW
Talwandi Sabo 2,640 MW
SEL capacity (MW)Jharsuguda 2,400 MW (4 x 600 MW)
Synchronisation−Unit 1: Q2 FY 2010-11−Unit 2: Q3 FY 2010-11−Unit 3: Q2 FY 2011-12
5,040
Unit 3: Q2 FY 2011 12−Unit 4: Q3 FY2011-12
Fuel arrangements−65% Coal linkage−25-30% E-Auction/ Forward E-Auction−5-10% Imported Coal
2,640
3,060
Off Take arrangements−First unit to Grid−Balance in Merchant Market - 60% under Short term sales
agreement, 40% spot
T l di S b 2 640 MW (4 660 MW) 6602,400
Talwandi Sabo 2,640 MW (4 x 660 MW)
Synchronisation−Unit 1: Q4 FY 2012-13−Unit 2: Q1 FY 2013-14−Unit 3: Q2 FY 2013-14
1,200
2,400 2,400 2,4001,200−Unit 4: Q3 FY 2013-14
Fuel arrangements− Coal linkage in place for 1,980 MW
Off Take arrangements− 1 980 MW to Grid
FY 2010-11e FY 2011-12e FY 2012-13e FY 2013-14e
17
− 1,980 MW to Grid− 85% of balance 660 MW in Merchant Market and 15% to Grid
Commercial Energy - Others
100
Malco WPP Balco 270 MW Balco 1,200 MW
Other power capacity(MW)BALCO 1,200 MW (4 x 300 MW)
Synchronisation−Unit 1: Q1 FY 2011-12−Unit 2: Q2 FY 2011-12
1,843
270
273
100
100−Unit 3: Q4 FY 2011-12−Unit 4: Q1 FY2012-13
Fuel arrangements−65% Coal linkage for two units
1,543
270
270273−Coal Block under development- September 2011
Off-Take arrangements−600 MW to be sold under long term PPA−Balance 600 MW on spot, will serve the 325kt smelter
900
1,200
100
when commissioned
Wi d P P j t (WPP)
543
900
270
173Wind Power Project (WPP)
Expanding wind power plant capacity by 150 MW−Phase I of 50 MW to be completed by March 2011−Phase II of 100 MW to be completed by September 2011
FY 2010-11e FY 2011-12e FY 2012-13e
18
Copper - Creating Value at KCM
275
350
400+Pre Vedanta ownership
– Long operating history with quality asset base, but limited mine life
– Significantly underinvested
Increasing copper production
173
– Significantly underinvested
$1.8bn capital investment
– Significant reserves and resources added
– New smelter utilising latest technology
FY 2009-10A FY 2009-10e FY 2010-11e FY 2011-12e
1. Exit capacity
1 1 1
g gy
– Konkola Deeps Mining Project
– Asset optimisation
Delivering future value$/
1.80
1.39
– Substantial high grade R&R
– Integrated, well invested assets
– Production growth
– Improved cost performance
Integrated cash costs (US$/lb)
1.00– Valued local partner
FY 2009-10A Sep 10 Target
19
Copper – India/Australia
Production (kt) Exit capacity (kt)
Overview
One of the world’s largest single location copper custom
smelter
Production and Capacity (kt)
800
LME registered Cathodes and value added rods capacity of
240,000 tpa
Efficient by-product management
Captive power plant under construction
313 334 400
FY 2008-09 FY 2009-10 FY 2010-11e FY 2012-13e
Captive power plant under construction
Doubling capacity to 800 ktpa to further improve the market
share
Stable operations at CMT copper mines Australia – 30,000 tpa
20
Copper Smelting : Lowest Decile
40
USc
11.3
)
arti
le (U
Sc16
.4)
25
30
35
h Co
stb)
rin
(Usc
5.0)
Qua
rtile
(USc
5.6)
Seco
nd Q
uart
ile (
Thir
d Q
u a
10
15
20
Net
Cas
h(c
/lb
Tutic
o
Firs
t Q
0
5
10
0 10 20 30 40 50 60 70 80 90 100-5
Cumulative Production
Source: Brook hunt, 9 months FY 2010-11 for cash cost of Sterlite
21
Iron Ore Expansion
40 0
Production (mt) Exit capacity (mt)
Doubled iron ore production since acquisition in 2007 by Vedanta
Lowest quartile producer*
Iron ore Production and proposed capacities
KA 10
40.0Lowest quartile producer
– Goa continues to be in lowest decile
Logistics and infrastructure key to unlocking 40mtpa
15 9
21.4
40mtpa
– Goa & Karnataka expansions on track subject to environmental clearances
Expanding Pig iron capacity from 250 ktpa toGoa3011.3
15.9Expanding Pig iron capacity from 250 ktpa to 625 ktpa and Met coke capacity from 280 ktpa to 560 ktpa
FY 2007-08 FY 2008-09 FY 2009-10 FY 2012-13e
Notes: Capacities in FY 2012-13e refer to exit rates* - Excluding export duty and royalty p f
All capacities in WMT
22
Corporate Social Responsibility
Case Study: Health Update
General Health Outreach
55,419 people benefited through 28 company run
Impact
552 villages, 2.7 million people positively impacted
145 villages under the Integrated Village Development hospitals
47,828 people reached by mobile health units
293,197 people benefited through 1883 health
awareness camps
Program
Health care services outreach to over 308,000 people
20,000 children enrolled for computer education in 200
government schoolsp
1,236 patients screened and benefited by Vedanta
Cancer Hospital outreach
N i i
government schools
770 Self Help Groups, 27,100 members earnings
supplemented
6,652 farmers, 1470 acres covered under the agriculture
and watershed programNutrition
230,000 children at 2,232 government schools
benefited through 8 mid-day meal kitchens
136,707 children covered through 2,546 pre-school
and watershed program
81 NGO partners, 77 CSR personnel and 199 extension
workers
centres under the Vedanta Bal Chetna Anganwadi
programme
23
Summary
Vedanta Copper Equivalent Capacity (kt)
2 000
2,500
1,500
2,000
500
1,000
0
FY2003-04 FY 2006-07 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13
Oil and Gas Zinc-Intl Zinc-India Silver Aluminium Power Iron Ore Copper
Significant near term production growth across attractive commodity portfolio
Diversified Earnings
24
Strong cash flow growth
Zinc-International: Financial Highlights
Skorpion CY 2009 CY 2010
EBITDA ($mn) 100 165
CoP (c/lb) 41 46
Black Mountain
Depreciation ($mn) 57 62
Tax rate (%) 1-5% 1-5%
Black MountainCY 2009 CY 2010
EBITDA ($ mn) 55 73
CoP (c/lb) 56 69
Depreciation ($mn) 1 1
LisheenCY 2009 CY 2010
Tax rate (%) 28% 27%
EBITDA ($mn) 72 115
CoP (c/lb) 58 58
Depreciation ($mn) 1 4
Tax rate (%) 7% 13%
26
Zinc-International: Consideration Paid
Particulars Skorpion
($mn)Black Mountain
($mn) Lisheen ($mn)
Total ($mn)
Debt-Cash free acquisition price announced on 10 May 2010 698 332 308 1,338
Add: Opening Net Cash / (Net Debt) 46 (100) 209 155
Share Value 744 232 517 1,493
Add: Accrued Interest on Share Value from the period of announcement of acquisition up to completion
51 29 29 109
Less: Dividend and Others (88) (1) - (89)
Share Value as at acquisition completion 707 260 546 1,513
Add: Settlement of loans as at closing of acquisition - 88 - 88
Cash paid on closing 707 348 546 1,601
Note: Economic ownership, including profits and cash flows passing to Sterlite with effect from of 1 January 2010.
27
Vedanta Group Structure
Vedanta Resources(Listed on LSE)
Konkola Copper Mines (KCM)
54.6%
Madras Aluminium (MALCO)
94.5%70.5%
29.5%Sterlite Industries
(Listed on BSE and NSE and NYSE)
VedantaAluminium (VAL)
79.4%
Sesa Goa (Listed on BSE
and NSE)
55.7%
3.1%
51 0%100%
64 9%100%
VS Dempo and Company Private Limited
100%
51.0% 64.9%
Zinc-India(HZL)(Listed on BSE
and NSE)
AustralianCopper Mines
Bharat Aluminium (BALCO)
Sterlite Energy(DRHP filed)
100% 74%
CopperAluminium
KEY
Skorpion and
Lisheen
Black Mountain
100% 74%
Zinc-International
Zinc-India (HZL)
PowerIron ore
Structure as at 30 September 2010. Zinc-International acquisition completed – February 2011
Zinc-International
28