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28 January
LONDON,
Press Release
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Highlights
Summary Performance in the third quarter ended 31 December 2008 (“Q3”) was challenging due to a sharp deterioration in economic conditions. Record production volumes of zinc and aluminium and record sales of iron ore were primarily offset by steep falls in commodity prices as well as negative provisional pricing adjustments and write-down of inventories to their net realisable value. Revenues for Q3 were $1,306.9 million, 31% lower than the corresponding prior quarter primarily on account of lower LME prices. EBITDA for Q3 was $10.1 million, impacted by approximately $104 million of inventory write-downs, negative provisional pricing adjustments of approximately $47 million and currency translation losses of approximately $34 million. Excluding these items, underlying EBITDA was $195.1 million. Aluminium Aluminium production in Q3 was a record 122,000 tonnes, a 23% increase over the corresponding prior quarter, primarily due to the ramp up and stepped commissioning of the first phase of the 500,000 tpa Jharsuguda aluminium smelter. To date 228 pots have been commissioned at Jharsuguda, supported by three units of the captive power plant (“CPP”). The fourth unit of the CPP has also been recently commissioned. We expect to fully commission the first phase to its rated capacity of 250,000 tpa by the end of FY 2009, nine months ahead of schedule. We have temporarily suspended the high cost operations at the MALCO smelter in mid December 2008 and more recently a part of our Plant I operations in BALCO, where operating costs are high. We are selling surplus power to optimise returns. Despite higher volumes, revenues for Q3 were lower at $183.2 million compared with $261.9 million in the corresponding prior quarter primarily due to a 25% reduction in aluminium LME prices. EBITDA for Q3 was $13.1 million compared with $73.4 million in the corresponding prior quarter, primary due to the aforesaid reasons and higher input costs. Production Results For The Third Quarter and Nine Months Ended 31 December 2008 Rigourous cost control measures coupled with the fall in input costs have started yielding a positive impact on the CoP at BALCO. CoP was $1,642 per tonne in Q3, down from $1,969 per tonne in the immediately preceding quarter. CoP in December 2008 was $1,467 per tonne. Going forward, we expect the trend of reduction in costs to continue and expect to be able to achieve a further reduction in CoP in the last quarter of FY 2009. The first stream of the alumina refinery at Lanjigarh is fully operational and production of 165,000 tonnes in Q3 was close to its rated capacity. The second stream is mechanically complete with a dry run and testing of equipment under progress. We expect to start progressive feeding of the Lanjigarh refinery with our own Niyamgiri bauxite by mid CY 2009. Ordering of critical items has commenced for the new 3mtpa Lanjigarh alumina refinery expansion project and site mobilisation activities are progressing on schedule. Work on the new 1.25 million tpa Jharsuguda II aluminium project is progressing well with basic and detailed engineering underway and orders for critical equipment complete. The project is currently on track for phased commissioning from March 2010, as previously announced. Site engineering and plant layout activities are in progress at the new 325,000 tpa smelter project at Korba. Ordering has also commenced and site activities are expected to start by end FY 2009. In respect of the associated 1,200 MW captive power plant, all major ordering activities have been completed and site activities are progressing as planned. The project is on schedule for phased commissioning from October 2010, as previously announced. | |||