What's Good for Glencore Isn't for Us, Vedanta Says of Zinc Cutsby
Indian miner says rational for it to maintain low-cost output
Company proceeds with $630m zinc project in South Africa
Vedanta Resources Plc won’t be following Glencore Plc in cutting zinc output after prices fell more than 20 percent in the past five months as it’s “rational” to maintain its low-cost production, Chief Executive Officer Tom Albanese said.
While the Indian company won’t match Glencore’s lead, it’s set to benefit from prices that jumped more than 10 percent on Friday after the Swiss rival, the world’s biggest miner of zinc, said it would cut production by about a third. BHP Billiton Ltd. has also shrugged off calls for metals output to be reduced, saying it won’t shut “cash rich operations.”
"You saw Glencore’s announcements reacting to that lower price, which I believe was rational," Albanese said. "By keeping our zinc production at a lower cost than the prevailing market price, it’s equally rational to continue to produce our zinc at capacity."
Vedanta, with about a third of its pretax earnings coming from zinc, can mine the metal at about $1,000 a metric ton across its global operations including the value of minerals such as copper and silver that are mined with it, he said in an interview on Wednesday.
Zinc dropped 0.2 percent to $1,817 a ton by 5:12 p.m. in London trading.
Mumbai-based Vedanta will also continue with its $630 million Gamsberg development near South Africa’s northern border with Namibia, Albanese said in Johannesburg.
"The rate of spend on that development will be driven by the amount of money it’s producing from cash from operations," he said.