Vedanta’s Anil Agarwal presses on with plan to raise oil, zinc output

Undeterred by concerns about the company’s debt levels, mining tycoon Anil Agarwal is pressing ahead with a bold plan to boost oil and gas production, expand production of metals such as zinc and aluminum, and get into the semiconductor industry.

Growing up in Patna, Agarwal, who left school at the age of 15, started his business in Mumbai in 1976 as a scrap dealer. He now runs a mining and metals empire that stretches across Britain, India, Africa and Australia.

In an interview with PTI, he said that mining can help India flourish as exploitation of the natural resources that lie beneath the earth will not only reduce dependence on imports but also create jobs and increase prosperity.

Vedanta, the company he founded and is chairman of, has ambitious plans to ramp up production across the business – from oil and gas to zinc and aluminium.

“We will produce within two years 300 thousand barrels of oil (and gas equivalent), and within 4-5 years we will produce 500 thousand barrels,” he said.

In the fiscal year ending March 31, 2023, Vedanta produced 142,615 barrels of oil and gas equivalent, primarily from its Rajasthan origins.

Zinc production, for which demand along with steel is growing exponentially with the expansion of the Indian economy, is set to triple to about 3 million tonnes with assets in India and South Africa.

He added, “The demand for zinc is increasing. We are looking to South Africa and here (in India) together to meet the supply and demand gap and produce around 3 million tons at a cost of US$1,000 per ton,” he added, adding that aluminium. It is also growing by 20 percent year on year.

Vedanta produced 2.3 million tons of aluminum in the 2022-23 fiscal year.

Agarwal says that while there is a lot of talk about new metals such as lithium and cobalt, essential ingredients for making batteries and panels for electric vehicles and renewable energy, without the minerals the country cannot thrive.

He said electric vehicles and renewables would require five times as much copper, aluminum and zinc.

“We need urgent attention on mining. In India we haven’t done (enough) exploration,” he said. “We look more and more underground, and we’ll be richer and better off.”

Vedanta aims to become a US$100 billion company by 2030 from the current US$20 billion with new investments planned in sectors such as zinc and oil and gas.

The company is also getting into the manufacturing of semiconductors and display panels. Semiconductors, which India relies heavily on imports for its needs, are used in almost every electronic item — from cars to cell phones and televisions.

Agarwal said the first semiconductor from the planned plant in Gujarat will be rolled out in two and a half years.

The oil-to-metals conglomerate has formed a joint venture with Apple chip supplier Foxconn. Vedanta has a total planned investment of US$20 billion for two separate chip (semiconductor) and display manufacturing units.

He said private equity wanted to be part of semiconductor expansion in India and there was no shortage of funds.

India estimates that the semiconductor market will reach US$63 billion by 2026, compared to US$15 billion in 2020.

The US Secretary of Commerce recently said that it is looking forward to the China plus one model to avoid supply chain disruption. For this, he said, there could be no “better manufacturing center than India”.

India spends Rs 3.6 crore annually on imports of oil, gas, electronics and other items. He said this could be reversed through increased exploration within the country and local manufacturing.

Agarwal said that per capita income in India should rise to US$5,000 from the current US$2,000. This can happen if natural resources are explored, imports are reduced and more jobs are created. He wonders why India should remain a third world country.

Asked about financing and technology interdependence for semiconductor plants, he said that US$1.5 billion has been allocated by the group, which should be enough to meet initial deployment requirements.

“People stand with bags of money, and money will never be a string,” he said. “We have a great partner in Taiwan’s Foxconn … other licenses (needed to make chips) that we have to take. It’s an ongoing process and it will start,” he said.

He dismissed concerns about future debt repayments, saying the group generates enough cash flows each year to meet all its obligations.

Agarwal built up the large Natural Resources Group by using borrowed money to buy distressed assets from government and mining companies around the world.

It has two major assets: a 50.1 percent stake in Mumbai-listed Vedanta Limited and a 79.4 percent stake in KCM, a copper mine and smelter in Zambia, which has been taken over by the government. Vedanta Ltd, in turn, controls Hindustan Zinc and Cairn Oil & Gas as well as aluminum, zinc and copper assets.

Besides his business, Agarwal wants to start a university and tackle child malnutrition by providing healthy meals to 8 crore children.