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| Sesa Goa earmarks Rs 1,500 cr capex for next two years |
| Press Trust of India / New Delhi Jan 19, 2010, 15:17 IST |
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Vedanta Resource group firm Sesa Goa today said that it will spend about Rs 1,500 crore in its mining business during the next two years to reach the annual production capacity of about 50 million tonnes.
"For reaching 50 million tonnes, the ...Figure would be about Rs 1,500 crore," Sesa Goa Managing Director P K Mukherjee said during an analyst conference call when asked about the firm's capital expenditure for the next two years.
The company has an annual capacity of around 20 million tonnes and is targeting an additional five million tonnes by March 2010.
About the company's diversification and expansion plans, 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 and once the land is there ...Then we will start talking about collaboration ...as far as value-addition project is 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, Mukherjee remarked, "Steel lobby is continuously talking about curbing the profits of iron ore (companies). I will request in this forum... This is not the way to tinkle with tariff and the duty structure."
By the end of last quarter, Sesa Goa had cash and cash equivalents of Rs 5,505 crore.
Further, the company is bullish about the domestic and overseas demand for its mineral and expects an annual production of 5-7 million tonnes 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 per cent from the current levels, Mukherjee said.
The prices at which Australian mining giants Rio Tinto, 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, which was followed by India's largest iron ore producer NMDC, stands at about $61 a tonne for iron fines and around $72 a tonne for that on lumps.
Sesa Goa, which chanelises its chunk of exports to China, is cautious about temporary slackening in demand from the neighboring country on account sluggish industrial activity during the Lunar New Year Celebrations, which starts next month.
However, on the long term basis, Mukherjee remained positive on demand for Indian iron ore from Chinese steel mills, which primarily helped it to clock a net profit Rs 827.50 crore for the quarter ended December 31, 2009.
The company had a net profit of Rs 470.7 crore for the corresponding period a year ago.
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