New Delhi: Mining giant Vedanta Resources has resorted to "aggressive cost reduction" and "workforce reduction" in its aluminium segment amid subdued and volatile market conditions globally.
The Anil Agarwal-led mining conglomerate said sharp rise in Chinese exports has led to a short-term market saturation and the cost of the metal in global market suggests that over 50 percent of the world capacity is at loss, based on current prices at the LME (London Metal Exchange) plus premium.
Vedanta is taking bold decisions in the current low price environment. A disciplined approach towards smelter ramp-up in light of current market volatility, it said in a statement.
The ramp up of the first line of the 312 kilo tonne capacity at Jharsuguda will commence in the second quarter (July-September) this fiscal, it added.
The London-based minerals major further said the start up of additional pots is on hold and it is shutting down its rolling business at Balco.
The firm has also resorted to partial capacity reduction at its Lanjigarh Alumina refinery, it said in a presentation.
To deal with the current market conditions, Vedanta said it has resorted to "aggressive cost reduction drive through operational efficiency, workforce reduction, product mix optimisation, procurement and synergies across locations."
It added that the industry body Aluminium Association of India is engaging with Indian government on increasing import duty in light of surging imports.
Vedanta said it will "...Continue to focus on optimising assets, maintaining positive free cash flow and delivery of strategic priorities" through a "series of initiatives to reduce costs, maintain financial strength and complete debt refinancing well in advance."
Last month, Vedanta Aluminium said it had started the closure process of one of its production stream, which would lead to the Lanjigarh facility's output declining to half and impacting up to 2,000 jobs.
The mining giant attributed the closure to the collapse in aluminium prices and lack of bauxite availability from Odisha.
Vedanta Resources' Indian arm Vedanta Ltd last month also announced that aluminium prices globally had collapsed in the past few months and the current indications were that the trend would continue.
As per Aluminium Association of India data, in last three years, LME prices have come down by 35 percent to USD 1,660 per tonne in June, 2015 from a peak of USD 2,555 a tonne in June 2011.
Shares of Vedanta Ltd today fell by 0.20 percent to settle at Rs 99.65 apiece on the BSE.
