Vedanta’s Anil Agarwal decides to aggressively increase oil and gas production, enlarging metal outputs like zinc and aluminium and entering into semiconductor production. The mining tycoon is unfazed by concerns over the company’s debt levels.
In 1976, Agarwal started a business in Mumbai as a scrap-metal dealer and determined mining as an essential economic activity that cuts import dependence, creates jobs, and surges prosperity.
In an interview, he said they would produce 300,000 barrels of oil (and oil equivalent gas) in 2 years and 500,000 barrels in 4-5 years.
In FY23, Vedanta produced 142,615 barrels of oil and equivalent gas, chiefly from Rajasthan assets.
Due to increasing demand, zinc Production is targeted at around 3 million tons from assets in India and South Africa. This would cater to the demand-supply gap, producing about 3 million tons worth $1,000 per ton as aluminium sees a 20% YoY growth. Vedanta had 2.3 million tons of aluminium in FY22-23.
Emphasising the importance of metals, Agarwal said EVs and renewable energy sources would need five times copper, aluminium, and zinc. Metals like lithium and cobalt are key ingredients for making batteries and panels for EVs and renewable energy.
Vedanta is targeting a $100 billion company by 2030 from the present $20 billion with new planned investments in the zinc, oil, and gas sectors.
The company enters into manufacturing semiconductor and display fabs. The first semiconductor from the planned factory in Gujarat will be rolled out in two-and-a-half years.
Vedanta formed a joint venture with Apple supplier Foxconn to make chips with a total planned investment of $20 billion for semiconductors chip and display chip manufacturing.
India’s semiconductor market will touch $63 billion by 2026, compared with $15 billion in 2020.
India expends Rs 3.6 lakh crore yearly on imports of oil and gas and electronics. This can be reversed through exploration within the country and local manufacturing. India’s per capita income should rise to $5,000 from the current $2,000 only if natural resources are explored, imports are reduced, and more jobs are created.
Agarwal constructed the large natural resources group using borrowed money to buy distressed assets from the government and mining companies.
It has two main assets- a 50.1% stake in Mumbai-listed Vedanta Ltd and a 79.4% holding in KCM, a copper mine and smelter in Zambia seized by the government. Vedanta Ltd controls Hindustan Zinc and Cairn Oil & Gas with aluminium, zinc, and copper assets.