Vedanta earnings hit by lower metal production, prices

Reuters - UK Focus

* Full-year core earnings fall 8.5 pct

* Copper, zinc production declines

* Aims to restart iron ore mining in Goa this year

* Zambian copper productivity a priority for new CEO (Adds CEO comment, details, updates share price)

By Karen Rebelo

May 15 (Reuters) - Vedanta Resources Plc (Other OTC: VDNRF - news) reported an8.5 percent drop in full-year core earnings, hit by lower copperand zinc production, weak metal prices and a ban on mining ironore in two Indian states.

The miner's stock fell as much as 4.5 percent in earlytrading on Thursday, making it one of the biggest percentagelosers on the FTSE-250 Midcap Index.

CEO Tom Albanese, the former Rio Tinto (Xetra: 855018 - news) bossappointed in April with a brief to get the best out of Vedanta'sunderperforming mines, said the company would invest in Zambiaand push for the restart of mining in Goa this year.

Vedanta, controlled by one-time scrap metal dealer AnilAgarwal, was one of three miners to drop out of the FTSE-100index last year. Its shares have lost more than a fifth of theirvalue in the last 12 months.

In India, Vedanta is hoping to unravel some of the red tapethat has thwarted its production and investment. The companyresumed iron ore mining in the state of Karnataka in Decemberafter a ban was lifted. Albanese expects Goa to be next.

"We hope to restart mining (in Goa) at the conclusion of themonsoon season in the latter part of this year," he said.

India's Supreme Court lifted a 19-month ban on mining ironore in Goa last month, although it capped annual output in thestate at 20 million tonnes.

In an interview with Reuters, Albanese cited energy policyand access to land and resources among the difficulties thathave held back some of Vedanta's operations in India.

"Some of the easiest wins are around energy policy, aroundpower transmission, around getting the 25,000 megawatts ofunutilized built generating capacity into the market," he said.


Vedanta, which has a market capitalisation of $4.4 billion,also said improving the productivity of its copper mines inZambia was a priority for the current year. In the last coupleof months alone, Albanese has visited the country six times.

Vedanta bought a controlling stake in Konkola Copper Mines(KCM) a decade ago, but the business, intended to be part of thecompany's push beyond India, has repeatedly disappointed.

In the financial year ended March 31, production of minedmetal in Zambia fell 19 percent to 128,000 tonnes last year dueto the temporary suspension of some mines.

"Over the next several months we're not going to see much ofa change in our overall production, but we will be beginning tosee an upward trajectory in production over the course of thenext year or two," Albanese said.

Vedanta's core earnings for the financial year fell to $4.49billion. Revenue fell 11.6 percent to $12.95 billion.

The company's shares were down 0.9 percent at 976 percent at1038 GMT. (Editing by Robin Paxton)

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