Metals and mining firm Hindalco won't be bidding for coal mines anymore amid the company's plans to shift towards renewable energy resources while focusing on cost reduction, Managing Director Satish Pai said in a post-earnings call on May 24.
The company resorts to coal and bauxite mining for its energy needs. The availability and efficiency of these coal mines directly impact Hindalco's production capacity, cost structure, and competitiveness in the market.
Pai said that company will no longer will be bidding for coal blocks and instead focus on the critical minerals exploration within India.
He further added that Hindalco has enough coal reserves for the monsoon, shielding against any rise in inputs costs. The company expects costs to fall 1-2 percent sequentially in Q1FY25.
Hindalco has four captive mines. It is operating Gare Palma IV/4, Gare Palma IV/5 and Kathautia coal mines while Dumri and Chakla are in development stage, according to the company's website.
It won the Chakla Coal Block in Jharkhand in an e-auction in 2021. Commenting on the block, Pai said, "the commissioning of the block is expected in the third quarter this fiscal."
Meanwhile, the company plans to finish the exploration of the Odisha-based Meenakshi mine this year, Pai said in the analyst call adding that the company will get the mining lease for the block finalized.
Hindalco, which participated in the mines ministry's critical minerals auction last year, said it has won one copper block near Nagpur for exploration purpose. Further, the company is bidding for two nickel and cobalt mines, Pai added.
Capex for FY25
The company has set FY25 capex at Rs 6,ooo crore, which will be mainly used for the company's ongoing expansion plans and will be fully funded by internal accruals, Pai said. Last year, it had earmarked capex worth Rs 5,000 crore.
"The capex will be spent on alumina, copper refineries, Flat Rolled Project (FRP) and battery foil project, "Pai said adding that there is no plans of debt repayment in the year. The company's gross debt reduced to Rs 54,501 crore as of March 31, 2023 down from Rs 58,337 crore last year.
During the quarter and year ended March 31, 2024, the Group has prepaid term loans amounting Rs 125 crore (State Bank of India) and Rs 4,495 crore (State Bank of India, Axis Bank, Punjab National Bank), respectively.
Also read: Hindalco Q4 results: Net profit rises 31% to Rs 3,174 crore helped by higher volumes, lower costs
The group does not have any term loan repayment obligation till May 2026, according to a regulatory filing from May 22.
Last year, the Aditya Birla Group company, had flagged that it has earmarked capex of Rs 5,000 crore each for FY24 and FY25.
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