Agarwal hopes Budget to provide impetus to resource sector
Feb 18 2013, 23:20 | By Moneycontrol.com
The Vedanta Resources group chairman, Anil Agarwal, expects the Finance Minister to provide extra impetus to key resources such as coal, iron ore, oil and gas in the upcoming Budget. He is hoping that government will announce positive initiatives which will push exploration and utilization of resources like coal, iron ore, oil and gas in the country.
"I expect very positive Budget... I have never seen the way the government is working in last few months and going forward, if this is the mood I think a lot of things will happen," Agarwal told CNBC TV18.
The natural resources sector has been facing tremendous pressure in recent time. Despite India having huge capacities of resources like coal and iron ore, power and steel companies are reeling from raw material shortage. Illegal mining, delay in allocation of mines, government and legal procedures are some of the key reasons which have been hampering exploration of these resources in the country.
"We can produce 600 million tonne of iron ore, we only produce 100 million tonne, that (is) also being closed down. Countries like Australia, Brazil produce that kind of metal. Mexico, Brazil has gone 15 times bigger than us in terms of their income. We remained there," Agarwal said. He said that although overdue, government has realised significance of these resource for the growth of manufacturing and employment in the country.
Also in case of natural resources on average 50-60 percent revenue goes to the government. Agarwal said that in particular the government is very focused on resources like oil and gas. "They are telling us to go in a full hog for exploration. They are giving us tremendous support, because 85 percent of the revenue goes to the government."
Vedanta Aluminum had to shut its 1 million tonne alumina refinery in Kalahandi since December 5, 2012 due to scarcity of bauxite, after Centre withdrew the company's license to mine bauxite from Niyamgiri hills. Although Agarwal is disappointed with Niyamgiri controversy, he is hoping that government will provide bauxite from alternate sources to the company to run the plant.
"Government is realizing that for 30 years no bauxite mining has taken place. I think the mood is very positive. They want to take it forward, so more investment can come," Agarwal said. India can produce aluminum at lowest cost of $1200-1300 as against the market price of $2200, he said. India produces 1.5 million tonne of aluminum, while it has a potential to produce 20 million tonne.
HZL and BALCO Stake
On buying residual stake of Hindustan Zinc Ltd and BALCO, Agarwal said that Vedanta Resources has offered government Rs 17,000 crore and is awaiting its decision on the same. The government currently holds 29.5 percent stake in Hindustan Zinc and 49% in BALCO. There have been speculations in the market that government may sell the residual stake in these both companies via offer for sale instead of selling it directly to Vedanta Resources to ensure better prices.
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