Vedanta Ltd. has approved a $1.5-billion capex plan to boost output of its oil, zinc and steel businesses as the global commodity prices remain elevated on supply crunch and rising demand.
The board of Vedanta approved capital expenditure of $687 million in Cairn Oil and Gas to increase near-term volume, the company said in an exchange filing.
Of that, $360 million will be spent towards infill or additional wells created to tap oil pockets in prolific fields including Mangala, Bhagyam, Aishwariya, Aishwariya Barmer Hill, and Ravva, among others. It will spend $327 million on exploration across the Open Acreage Licensing Policy blocks and Production Sharing Contract blocks, including pilot wells for shale.
The metals-to-mining group’s investments seek to reap gains from a surge in crude when global demand jumped as the pandemic waned. Russia’s invasion of Ukraine has worsened the crunch, sending oil to 14-year high earlier this month. The war has also driven prices of wheat to steel.
Vedanta has earmarked a capex of $466 million towards Zinc International’s Gamsberg Phase 2 project. It will double annum ore capacity to 8 million tonnes and produce an additional 200 kilo tonnes a year of MiC or minimum inhibitory concentrations of zinc.
The company has set aside $348 million for an expansion project at its subsidiary Essel Steel Ltd. That includes an additional blast furnace supported by 0.5 metric tonnes per annum coke ovens; an 1.8 MTPA pellet plant; an 800 tonnes-per-day oxygen plant; and upgrading other auxiliaries and infrastructure, including a railway siding.
In second half of FY22, the company has guided for capex worth $1.1 billion towards the key divisions.
