By Alex MacDonald
LONDON--U.K.-listed, India-focused natural resources company
Vedanta Resources PLC (VED.LN) said Wednesday it expects to reap
more free cashflow from its operations as its pares down a capital
expenditure program that fueled its significant production growth
over the past three years.
"We have crossed the inflection point where now free cashflow
exceeds the capex requirements," Vedanta's Chief Executive MS Mehta
told Dow Jones Newswires in an interview. "Our overall capex is
tapering off" in coming years, he added.
The company has invested $18.7 billion in its operations over
the last three years with $8.6 billion dedicated to growth projects
and $10 billion spent on the purchase of a majority stake in oil
and gas explorer Cairn India Ltd. (532792.BY), Zinc International
from Anglo American PLC (AAL.LN) and its Liberia iron ore
project.
In the last financial year, free cashflow exceeded capital
expenditure for the first time since it began executing its major
capital expenditure program. Free cashflow was $3.4 billion
compared to $2.7 billion in capital expenditure.
The FTSE-100 miner now expects to spend $3.3 billion on growth
projects in the fiscal year ending March 31, 2014 after spending an
estimated $3.2 billion in this financial year. Capital expenditure
will then drop to $1.3 billion in financial 2015.
Vedanta said it plans to invest a total of $2.1 billion on
metals and mining projects up to 2015 and $1.2 billion on oil and
gas exploration in the Indian state of Rajasthan until 2014.
It has alotted a further $2.6 billion in flexible capital
expenditure, which is contingent on securing regulatory approvals.
It has allotted $1.8 billion for aluminum, copper and iron ore
projects until 2015 and a further $0.8 billion for oil and gas
investment outside of Rajasthan until 2014.
MS Mehta declined to provide a figure on how much the free cash
flow would grow in coming years during a call with journalists.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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