Vedanta on major cost cutting drive at Goa iron ore business

New Delhi: Mining conglomerate Vedanta has started a major cost cutting drive at its iron ore business in Goa amid subdued market sentiments and depressed prices of the commodity in global markets.

The firm led by NRI billionaire Anil Agarwal is expected to resume iron ore mining, after a gap of three years, at its Codli and Bicholim mines in the state next month. It has been allowed to produce 5.5 million tonnes (MT) of the commodity.

"Vedanta has gone on a major cost cutting drive at its Goa iron ore business. This includes cutting 400-450 jobs through Voluntary Retirement Scheme (VRS) and is also looking for buyers for non-productive land and other properties," a person in know of the development said.

While, around 400-450 jobs have been cut, which includes close to 100-120 permanent positions, the source said there could be more job cuts in the pipeline.

According to an industry source, Vedanta is looking at prospective buyers to dispose-off its non-productive land assets to cut losses.

"They (Vedanta) are also looking to rent two-three floors at their Goa head office in Panaji -- Sesa Ghor. Besides, it has lot of land assets that are not of use and it is looking at liquidating them to adjust costs," the source added.

When contacted, a Vedanta spokesperson said: "Since Sesa Goa Business of Vedanta in Goa is allowed to mine only 5.5 MT as against 12 MT environment clearance that it was operating before suspension, as per Supreme Court directive, restructuring and VRS initiatives to reduce cost per tonne have been forced on the company to suit the new operating level."

The spokesperson added, "Global cost curve has to be kept in mind as we work in unified competitive environment. Cost reduction has become need of the hour so as to remain competitive in a global melt down condition which all of us have to face."

Market insiders also attributed the major cost cutting drive to the three year-long mining ban in Goa as well as the weak market for commodities. Almost all the miners in the state are under huge losses.

"Vedanta took a huge hit due to the mining ban. The firm maintained most of its workforce and had paid them wages which again impacted its top and bottom line," they said.

That apart, the global metals market is facing one of its toughest times due to subdued economic sentiment and weak prices and almost all the miners and firms dealing with metals are going through a rough phase, they added.

Market uncertainty and falling prices have already led the company, part of the London-based Vedanta Resources, to cut production and shut down plants in its aluminium division.

Yesterday Balco, part of Vedanta Ltd, said it has started the procedure to shut down its aluminium rolling business in Korba (Chhattisgarh), which will see 1,000 people losing jobs.

Last month, Vedanta Aluminium said it is shutting down one of its streams at Lanjigarh (Odisha) that will reduce its output by half and impact up to 2,000 jobs.