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Vedanta’s earnings forecast to rise 144% on higher production

Vedanta’s earnings forecast to rise 144% on higher production
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First Published: Tue, May 15 2007. 12 42 AM IST
Updated: Tue, May 15 2007. 12 42 AM IST
London: Vedanta Resources Plc. is expected to post a 144% rise in annual earnings after the India-focused miner reported a big rise in annual production of its major metals a month ago.
Vedanta is forecast to post earnings before interest, tax, depreciation and amortization (Ebitda) of $2.686 billion (Rs11,012.6 crore) for the 12 months to end-March on Wednesday, according to the median of 10 analysts polled by Reuters.
The mining and metals sector has profited handsomely from a prolonged boom in mineral commodity prices after years in the investment backwaters, and consolidation has been rife.
Vedanta’s main operations are in India, Asia’s third largest economy and one of the world’s fastest growing in recent years. It also operates in Armenia, Australia and Zambia. Some metals, notably copper and zinc, fell sharply at the end of last year and into 2007 but have since rebounded.
On 24 April, Vedanta announced a $1.4 billion offer for 71% of Sesa Goa, taking it into the iron ore industry.
HSBC said in a preview note: “Apart from the commodity cycle risks, the main elements of uncertainty are whether Vedanta’s Indian subsidiary Sterlite will be able to buy out the government’s 29.5% in Hindustan Zinc Ltd, and whether the bauxite mining licences in Orissa will soon be granted.”
Separately, Vedanta said it will boost annual production of aluminum to 900,000 tonnes in 2009 to capitalize on higher prices and improving local demand. A 500,000-tonne smelter at Jharsuguda and expansions to existing capacity will allow the company to increase output from a previously forecast 800,000 tonnes, Gunjan Gupta, vice-president of sales and marketing, said on Monday at an industry conference in Bahrain.
The Jharsuguda smelter will be commissioned next year and be in full production by early 2009, Gupta said.
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First Published: Tue, May 15 2007. 12 42 AM IST