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Vedanta Approves $1.5 Billion Capex in its Oil, Steel and Zinc Businesses

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Vedanta Limited, the Mumbai-headquartered mining company, approved capital expenditure of approximately $1.5 billion across its Oil, Steel and Zinc businesses.

Vedanta’s Cairn Oil & Gas division and subsidiary ESL Steel shall be making investments in Oil & Gas and Steel sectors respectively, while investment in Zinc will go towards expansion of Vedanta’s Gamsberg Project in South Africa.

Vedanta’s USD 1.5 Billion Capex Investment Plan

Vedanta Limited approved the following investments during its board meeting on 25th March 2022:

Vedanta’s Investment Plan for Cairn Oil & Gas Division

Vedanta Cairn logo

Cairn Oil & Gas, Vedanta Limited’s oil and gas unit, will be investing $687 million to increase oil volume and capacity through the drilling of infill wells and resource exploration.

Out of this total amount, a sum of $360 million has been earmarked for drilling infill wells at the existing fields of Cairn Oil & Gas. Infill wells are drilled in oilfields to reduce the spacing between oil wells. This practice ensures more efficient and consistent utilisation of oil resources in oilfields. Mangala, Bhagyam, Aishwariya, Aishwariya Barmer Hill and Ravva are a few Cairn Oil & Gas fields where infill well drilling will be carried out.

Cairn Oil & Gas shall be using the remaining $327 million for its exploration programme. This exploration will cover Open Acreage Licensing Policy (OALP) blocks and Production Sharing Contract (PSC) blocks. Pilot wells for exploration of Shale gas, which is essentially natural gas found in small cracks of shale rock, shall also be covered in this investment.

The company had disclosed a target of increasing its capacity to 300 thousand barrels of oil equivalent per day (Kboepd) from 192 Kboepd in FY-21.

Investment in Vedanta’s Steel Business by ESL Steel Limited

ESL Steel plant is a 2.5 MTPA capacity plant located in Bokaro, Jharkhand, which produces Pig Irons, billets, TMT bars, wire rods and ductile Iron pipes. Vedanta board has approved an investment of $348 million to take the Steel capacity of ESL Steel to 3 MTPA.

This investment will be used to add another 1,050 m3 blast furnace at the plant. Coke ovens of 0.5 MTPA capacity, 1.8 MTPA pellet plant, 800 Tonnes Per Day (TPD) Oxygen Plant & other auxiliaries will also be added. This investment also entails infrastructure up-gradation, including railway siding to the plant head. A new 0.18 MTPA ductile Iron pipe plant will also be set up along with de-bottlenecking measures.

Investment in Vedanta’s Zinc Business through Expansion of Gamsberg Project in South Africa

Vedanta board has also approved an investment of $466 million for phase II of its Gamsberg project in South Africa. This expansion is set to double the mining capacity of this project from the current 4 MTPA to 8 MTPA. Doing so will increase the Zinc output by 200,000 tonnes per annum.

According to the company’s statement in a stock filing, it shall make Vedanta Zinc International the biggest producer of Zinc in South Africa and bring about positive socio-economic benefits.

About Vedanta Limited: Vedanta Limited is a major Indian mining company with its headquarters in Mumbai. The company’s revenue in 2021 was Rs. 91,442 crores ($12 billion). According to Vedanta Limited, about 65,000 people are employed directly or indirectly by the company.