So, clearly, Vedanta Group has a bunch of worries on its hands.
The Group has redrawn its priorities, evident from a recent interview in the Business Standard. CEO Tom Albanese said the very first task now is to ensure that group companies are running at capacities they were capable of, since a lot of money has been spent on projects that were not yet completed or not running at full capacity. He laid the blame for some of this on regulatory issues.
At least where Indian operations are concerned, the company thinks the government’s treading down the right path, especially on the regulatory front. This raises hopes for an expansion in the immediate future. Sesa Sterlite was one of the companies affected in a big way by the ban on the mining of iron ore, as reported by MetalMiner.
Vedanta has welcomed the new mining ordinance passed by the Indian government, and the clause that allows the auction of mining blocks. Albanese was of the view that auctioning the mines would break the logjam and get India’s mining sector moving by bringing in fresh investments.
In one sense Vedanta is gravitating to India to balance business out for itself. Under previous governments it was not sure of getting a favorable response to some of its proposals, including some mergers, acquisitions, and mining operations. Now, under Prime Minister Narendra Modi, Vedanta seems to believe the environment is different.
Vedanta Group has already pumped as much as $30 billion in India in the last decade or so, and has now gone on record to say it’s not averse to putting in a similar amount over the next few years. As first part of this, it is planning to invest $6 BN in next 3 years in oil and gas, zinc, aluminum, and of course, coking coal.
Whether Vedanta’s renewed confidence in India bears fruit, of course, will play out in the coming years.
The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.