Sesa Goa earmarks Rs1,500 crore capex for next two years

Sesa Goa will spend about Rs1,500 crore in its mining business during the next two years to reach an annual production capacity of about 50 million tonnes

Vedanta Resource group company Sesa Goa Ltd on Tuesday said that it will spend about Rs1,500 crore in its mining business during the next two years to reach an annual production capacity of about 50 million tonnes (MT), reports PTI.

"For reaching 50MT, the figure would be about Rs1,500 crore," Sesa Goa managing director PK Mukherjee said during an analyst conference call when asked about the company's capital expenditure plans for the next two years.

The company has an annual capacity of around 20MT and is targeting an additional 5MT by March 2010.

About the company's diversification and expansion plans, Mr Mukherjee said, "We have a prospecting licence (PL) in Jharkhand. We have already applied to convert the PL into mining licence (ML) and at the same time we are quite close to getting an access to land area. Once the land is there, then we will start talking about collaboration, as far as value-addition projects are concerned."

Vedanta Resources had indicated that Sesa Goa, which is already into manufacturing of pig iron, could further diversify into steel making.

Asked if Sesa Goa expects further hike in export duty on iron ore, Mr Mukherjee remarked, "The steel lobby is continuously talking about curbing the profits of iron ore (companies). I will request in this forum (that) this is not the way to tinkle with tariff and the duty structure."

By the end of the last quarter, Sesa Goa had cash and cash equivalent of Rs5,505 crore.

Further, the company is bullish about the domestic and overseas demand for its mineral and expects an annual production of 5-7MT of iron ore in 2010-11.

Moreover, for the next fiscal, the company expects the benchmark long-term contract rates to rise by 20%-40% from the current levels, Mr Mukherjee said.

The prices at which Australian mining giants Rio Tinto and BHP Billiton supply iron ore to Japanese and South Korean steel mills form the global benchmark rate.

In the current financial year, global benchmark rates, followed by India's largest iron ore producer NMDC, stand at about $61 a tonne for iron fines and around $72 a tonne for lumps.

Sesa Goa, which channelizes its chunk of exports to China, is cautious about temporary slackening in demand from the neighbouring country on account of sluggish industrial activity during the Lunar New Year Celebrations, which start next month.

However, on a long-term basis, Mr Mukherjee remained positive on demand for Indian iron ore from Chinese steel mills, which primarily helped it to clock a net profit of Rs827.50 crore for the quarter ended 31st December. The company notched up a net profit of Rs470.70 crore for the corresponding period a year ago.
 

  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    28 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)