Vedanta hit by a slowdown in iron ore output

MINER Vedanta yesterday posted a drop in full-year iron ore output, hit by a ban on mining in a southern Indian state where it has major operations.

The FTSE 100 listed company said its iron ore production over the year to the end of March fell to 13.8m tonnes compared with 18.8m a year ago, after a fourth quarter broadly in line with market forecasts.

Sales fell less steeply, totalling 16m tonnes, from 18.1m.

The problems in Karnataka, where the authorities have imposed tough new rules in a crackdown on illegal miners, and production setbacks in Goa dented the figures, it said.

The ban is being opposed and has been referred to the Indian Supreme Court. The company’s shares dropped by more than six per cent following the announcement.

Iron ore, a steelmaking ingredient, is typically one of Vedanta’s most profitable products, accounting for almost a third of earnings, but output has been constrained in recent quarters by curbs to combat illegal mining.

Meanwhile Vedanta said its refined zinc production from its core Indian operations rose six per cent to 759,000 tonnes for the year, despite a dip in the fourth quarter.

In a statement the company said it had been dealt a blow by “continued mining ban in Karnataka, and transport and logistics bottlenecks in Goa. We are expanding existing roads and establishing road corridors at Goa to reduce these bottlenecks.”