Vedanta Resources — BMO Global Metals & Mining Conference / J.P. Morgan Global Emerging Markets Corporate Conf (February 2015)
24 slides from Vedanta Resources's conference presentation, February 2015
Slide 1: BMO Global Metals & Mining Conference
BMO Global Metals & Mining Conference J.P. Morgan Global Emerging Markets Corporate Conference February 2015
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forwa
Slide 3: A Global Diversified Natural Resources Company
A Global Diversified Natural Resources Company Diversified Business Model – 9M FY2015 EBITDA • LSE listed with portfolio of large, long–life, Mix Margins Iron Ore Copper well-invested assets 7% 1% Oil & Gas 69% Power Zinc India 55% 5% • Operations across India, Africa, Australia and Aluminium Zinc I
Slide 4: Tier-1 Asset Portfolio
Tier-1 Asset Portfolio FY2014 Positioning R&R Life1 Production Capacity2 Oil & Gas (Cairn India) 3 Top 20 global independent E&P; Platts 2013: Fastest 15 218kboepd 225+ kboepd growing energy company globally Zinc India (HZL) nd 25+ 880kt 1.2mtpa 2 largest integrated zinc producer globally Silver (HZ
Slide 5: Focus on Safety – Key to Operational Excellence
Focus on Safety – Key to Operational Excellence Fatal incidents LTIFR Safety (per million man-hours worked) Fatal accidents and injury rates have declined 1.2 Implementing programs to eliminate fatalities 30 26 1.0 0.86 and control injuries: 25 22 0.83 20 0.8 19 Leadership focused on a zero-ha
Slide 6: Strategic Framework
Strategic Framework Strategic Advantages Strategic Priorities • Production Growth & Operational • Diversified, low-cost portfolio delivering Excellence cash flows through the cycle • Reduce gearing • Well-invested asset base • Add Reserves & Resources • Well-positioned to capitalise on India’s • Sim
Slide 7: India: Attractive Fundamentals
India: Attractive Fundamentals Steel Consumption Intensity: High growth phase Indian economy: Key differentiators Steel consumption per capita (in tonnes) vs. GDP per capita (in USD thousands) 1.2 Domestic-demand driven: lesser effect of South Korea global economic slowdowns on output 1.0 Steel (t
Slide 8: India: Regulatory Update
India: Regulatory Update Oil & Gas Government prioritizing energy security Gas pricing policy announced "We want to increase ease of doing business in India. Bottlenecks New incentive regime - evaluating revenue sharing have to be removed, red-tapism cut and investors given models confidence s
Slide 9: Oil & Gas
Oil & Gas Rajasthan Onshore Block (36 discoveries) ● Currently producing 180 kboepd (>95% oil) at Rajasthan at an opex of $5.7/bbl ~40 km ● Lowest quartile cost ● Significant gas potential of 1-3 Tcf Bhagyam (B) Mangala (M) Core ● Successfully initiated Polymer EOR programme at fields Mangala in Oct
Slide 10: Zinc India
Zinc India Strong volumes; on track to meet full year volume Rampura Agucha Ore body guidance Lowest quartile costs 16 moz silver capacity Present OC Proposed OC extension Brownfield expansion to 1.2mtpa mined metal Sindesar Khurd mine expansion to 3.75mtpa progressing well RAM U/G shaft
Slide 11: Copper Zambia
Copper Zambia High quality asset, significantly invested Top 20 copper mines by contained copper (mt) Collahuasi, Chile2 70.0 ~$ 3bn of capital invested since acquisition 110.0 (Glencore, Anglo American) Escondida, Chile2 (BHP Billiton) Olympic Dam, Australia2 (BHP Billiton) Increased life of
Slide 12: Aluminium & Power
Aluminium & Power Receipt of approvals and ramping up capacity at Aluminium Costs and Margins (in $/t, for Q3FY2015) Aluminium and power businesses 415 67 2,448 Start up of c.1 million tonne additional smelting capacity by FY2016; fully integrated with 1,966 Captive bauxite can significantly red
Slide 13: Other Businesses
Other Businesses Tuticorin Copper Smelter COPPER - INDIA One of the most efficient custom smelters globally Smelter operating at benchmark parameters High copper recoveries Low energy consumption CY 16 annual TCRC settlements higher at +Usc 25/lb IRON ORE Mining leases renewed at Goa and
Slide 14: Building Momentum: Delivering on Strategic Priorities
Building Momentum: Delivering on Strategic Priorities Strategic Priority What we Achieved Focus Areas Approvals and start-up of Oil & Gas: RJ ramp up Aluminium and Power capacities Zinc India: Zinc and Silver ramp up Production growth across Iron Ore: Resuming operations portfolio with a foc
Slide 15: Appendix
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Slide 16: Strong Financial Profile
Strong Financial Profile Credit rating of BB/Ba31 Diversified Funding Sources (as of 30 September 2014) Cash and Liquid Investments of $8 bn, additional $0.9bn Short Term Loans undrawn committed lines of credit 9% Bonds-USD 24% Gross debt reduced by $400 mn and net debt reduced by $200 mn in Q
Slide 17: Entity Wise Cash and Debt
Entity Wise Cash and Debt Net Debt Summary ($mn) 30 Sep 2013 31 Mar 2014 30 Sep 2014 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta plc1 8,090 85 8,005 8,323 16 8,307 7,532 59 7,473 KCM 743 32 711 733 10 723 813 0 813 Sesa Sterlite Standalone 5,116 598 4,518
Slide 18: Well-Invested Assets Driving Cash Flow Growth
Well-Invested Assets Driving Cash Flow Growth Cash Flow and Growth Capex Profile - $bn Continued growth in Free Cash (as of 30 September 2014) Flow with production ramp-up Free Cash Flow-FY² M&M Capex Zinc Capex O&G Capex¹ $0.4bn free cash flow (post 3.7 growth capex) in H1FY2015 3.5 0.4 Prior
Slide 19: Credit Metrics
Credit Metrics LTM H1 FY2014 LTM H1 FY2015 Covenant Net Debt/EBITDA 1.9x 2.1x < 2.75x EBITDA/Net Interest Expense1 7.9x 9.2x > 4.0x Net Assets/Debt 2.31x 2.28x > 1.75x Gearing2 33.3% 34.9% Notes: 1. Interest includes Capitalized Interest. 2. Gearing is calculated as Net Debt divided by the sum of Ne
Slide 20: Inter-company debt
Inter-company debt During H1 FY2015 Debt Service Liability (in $mn) Cairn India lent $1.25bn to Annualized a wholly owned overseas Vedanta Resources plc 31 March 2014 30 September 2014 Interest Cost subsidiary of Sesa Sterlite Gross External Debt 8,511 7,697 465 Ltd Intercompany Receivable at Plc
Slide 21: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of a 10% depreciation in FX Rate H1 FY2015 H1 FY2015 Currency Average FX rate EBITDA ($mn) INR/USD 60.1911 204.8 Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY2015 H1 FY2015 Commodity Average price EBITDA ($mn) Oil
Slide 22: Capital Allocation and Returns
Capital Allocation and Returns World class assets and operational excellence to deliver strong, stable and sustainable cash flows Improve Capacity Utilization (Aluminium, Iron Ore and Copper Zambia) Strong Shareholder Strengthen Enhance Returns since IPO Balance Sheet Asset Portfolio • Maintained Pr
Slide 23: India Regulatory Update – MMDR and Coal Block
India Regulatory Update – MMDR and Coal Block Mines and Minerals Development Coal Scenario and Coal Block Auctions Regulation (MMDR) Ordinance, 2015 ● Ordinance issued in Jan 2015 Coal Scenario ● Government focussed on improving coal situation ● Coal India FY14 production: 462 MT vs.482 MT ● Resourc
Slide 24: Group Structure
Group Structure Vedanta Resources Divisions of Sesa Sterlite 79.4% 62.9% Iron Ore (Sesa Goa) Konkola Copper Smelting (Tuticorin) Copper Sesa Sterlite Mines (KCM) Power (2,400 MW Jharsuguda) Aluminium & Power assets (VAL) Subsidiaries of Sesa Sterlite 59.9% 64.9% 51% 100% 100% 100% 100% 100%