Vedanta operates in a dynamic, regulated, and commoditised environment, and is influenced by megatrends that shape the industry. Key trends* that resonate with us and we respond to in the current environment are provided below.
BUILDING RESILIENCE AMID VOLATILITY
The COVID-19 pandemic has altered business dimensions with uncertainty becoming the order of the day. In this light, businesses have started adapting together and separately, serving the interests of their stakeholders and ensuring business continuity. Scenario planning straddles four hypothetical ones which strategic leaders such as Vedanta can plan for. These include the following:
a. A ‘passing storm’ response
where the overall healthcare
ecosystem is bolstered post the
pandemic
b. ‘Good company’ scenario where
public-private partnerships will
emerge with new ecosystems
that would encourage innovation
c. ‘Sunrise in the east’ indicating
the shift of power to the eastern
side of the world such as China
d. ‘Lone wolves’ where the
pandemic situation drags on to
engage stricter protocols and
government surveillance
Based on ‘Deloitte Insights: Tracking the trends 2021’
Vedanta’s response: The COVID-19
pandemic is an unprecedented
humanitarian and economic crisis.
Our metal and mining industry
has sought to respond quickly to
protect the health of its employees
and its communities. These steps
are in response to (and often
ahead of) emergency measures
and lockdowns implemented by
governments across the world to
control the spread of the pandemic.
During these testing times, our
priority is to ensure the health
and safety of our employees,
contractors, and stakeholders,while ensuring business continuity
to the extent possible. At the
Group level, we have formulated
various controls to prevent the
spread of infection and thereby
maintain business continuity.
We formed a business COVID
taskforce formalised from diverse
departments whose task is
to implement strong controls
and SOPs/protocols, audit the
respective units so as to ensure
complete compliance to COVID-19
protocols to prevent the spread
of the infection and to monitor
and report the proceedings to the
business CEO and Group task force.
WINNING BACK INVESTOR CONFIDENCE
The mining industry lost out on
investor confidence owing to
the far-reaching downcycle that
eroded value post M&A action in
the past year. The companies in
the sector would now need to find
new ways to deliver consistent
shareholder returns, enhance
their environmental, social, and
governance (ESG) performance and
improve their capital and operational
discipline. The scenario is also
becoming increasingly conducive
with historical lows now history.
Vedanta’s response: Our focus
during these times has been to
ensure that we operate optimally
with lowest possible cost of
production.
In FY2021, we were able to
sustain our low-cost advantage in
aluminium by engaging structural
measures. While we have optimised
our coal and bauxite source mix,
we also continued our journey
towards improving our operational
efficiencies and debottlenecking
our assets for improved capacity
utilisation. For Zinc India operations,
we completed 1.2 MnT mined metal
project activities and sustained
production post-transition to a fully
underground mining company.
As we look forward to the year ahead,
we are operationally well positioned
to deliver. In Oil & Gas, we are the
largest private sector producer of
crude oil in India and rank among the
world’s lowest cost producer with
a pipeline of assets in production,
development, and exploration.
In Zinc, we are the world’s largest
fully integrated zinc-lead producer.
In terms of Aluminium, we are India’s
largest primary aluminium producer
supported by our own captive power
generation. We performed
exceedingly well on key
environmental, social and
governance (ESG) aspects during the
year. This is validated by our ranking
in the Dow Jones Sustainability
Index, which improved nine places to
12th globally in our industry.
ESG–GETTING SERIOUS ABOUT DECARBONISATION
Climate change has become
an accepted reality in business
circles and the risks arising from
the phenomenon are increasingly
becoming part of their strategic
dialogue. The cost of taking action
with respect to decarbonisation
and renewables is also reaching
parity. In this light, the focus from
investment houses is now on
how companies are moving from
strategy to on ground execution
that can show tangible results.
Vedanta’s response: Vedanta
has an unwavering focus on
sustainability, with ESG becoming
a core focus. We have a vision to
sustainably decarbonise by 2050.
To realise specific outcomes, we
have institutionalised a separate
vertical for ESG. We continuously
participate in ESG forums and have
a Group-wide carbon forum with
CEO level engagement.
ESG–OVERCOMING THE SOCIAL TRUST DEFICIT
There is a clear opportunity for
miners to create social value that
goes beyond compliance. Globally,
high-profile disasters have muddled
the reputation for mining and there
is a tangible trust deficit that many
miners experience. In this context,
miners should explore creating
long-term socioeconomic benefits
for the communities in and around
their impact zones. Measurement
of impact of CSR programmes, for
example, also gains prominence in
this backdrop.
Vedanta’s response:
Vedanta aims
to be the developer of choice for
communities, and an enabler for
better livelihoods. Our Nand Ghar
initiative, a novel programme aimed
at women and child empowerment,
has helped create significant impact
in communities around our impact
zones.
ESG–CORPORATE GOVERNANCE ADDING TO COMPETITIVE ADVANTAGE
The third pillar of ESG – Governance,
is often underrated, but can have
heavy repercussions if ignored as a
downside risk. However, if managed
prudently, good governance can
change its role to a competitive
advantage. Approach to issues such
as human rights, ethical conduct,
diversity, cybersecurity, and evolving
social norms will need to gain
significance in strategy-making and
Board discussions.
Vedanta’s response:
Vedanta
has an illustrious Board with 50%
independent members, that
guides us in our present and future
roadmap. Our corporate behaviour
is led by our core values and policies
that align to good governance.
ESG–CREATING AN AGILE SUPPLY CHAIN
The pandemic has exposed supply
chain risks of mining companies,
which were not actively recognised
before. This validates a relook at how
direct and extended supply chains
work, how inventory is managed
and how cost structures need to be
evaluated. On the mitigation front,
companies need to explore alternate
supply lines, and reduce risk by
creating predictable operations.
Vedanta’s response:
Vedanta has an
integrated value-chain which helps
inherently mitigate supply chain risks
to a large extent.
THE PATH TOWARDS INTEGRATED OPERATIONS
The proliferation of technology
in mining has unlocked several
opportunities in decision-making
and achieving cost advantages.
Digitalisation-led business
integration is a key enabler, and
a factor of achieving distinct
competitive advantage. It results in
predictable outcomes, consequently
achieving better stakeholder trust.
Vedanta’s response:
Vedanta
has been at the forefront of
digitalisation in its industry and
has invested in technologies
that not only results in better
efficiencies and integration, but also
enhanced safety in operations.
ADVANCING THE FUTURE OF WORK
While there has been an
undercurrent of shifting workplace
practices, the pandemic has
brought a sea change in the way
organisations manage their team,
through remote operations and
work-from-anywhere models. With
the use of Industry 4.0 technologies,
activity-heavy operations such as
mining can also move to remote
models, with minimal human
interactions and larger system
integration. Conventional ways of
working now need to be re-examined
and contemporary working practices
adapted as the new normal.
Vedanta’s response:
Vedanta
Vedanta has
been at the forefront of digitalisation
and technology. We have various
initiatives throughout the Group
where remote working is used to
analyse real time data.
For example, at Cairn Oil and Gas,
a pilot is being conducted to use
video analytics to reduce manual
monitoring efforts and leverage
technology to automate the alert
monitoring through business rules.
Similarly, long range ultrasonic
testing-based solution is used for the
real-time pipeline monitoring.
COVID Marshal is an AI and ML
based video analytics application
implemented in Vedanta Limited
which analyses the video captured
through CCTVs and provides the
compliance reports. The data
is ingested for the compliance
dashboard which can be accessed
real time by the Management.
In Oil & Gas, a pilot is also being
run where drones are used for
automating survey of pipeline
and rights-of-usage to ascertain
erosion, exposed pipe, vegetation
overgrowth, encroachments and
missing/damaged signs and markers.
At HZL, drones-based technology
is leveraged to provide solutions
for asset maintenance and
sustainability. These solutions
provide automated diagnostics from
safe and frequent aerial inspections
(for transmission lines, pipelines etc.)
and real-time, centralised view of
remote assets.
ON THE ROAD TO ZERO HARM
The safety focus of mining
companies has evolved towards
zero harm, and there is a significant
improvement in mining safety
records. However, there is still
room to improve, and companies
will likely need to integrate different
data pools and systems to effect
better results.
Vedanta’s response:
Safety
is a core priority area for
Vedanta, and we have instated
processes and practices to
enable highest standards of
safety for all our people.
MEETING DEMAND FOR GREEN AND CRITICAL MINERALS
With the world moving towards
a greener future, the demand for
materials that enable cleaner energy
is on the rise. This poses a clear
opportunity for mining companies,
as their portfolios will be shaped in
response in the near future.
Vedanta’s response:
Vedanta is a
core player in unearthing minerals
such as zinc and steel, which are
not only core inputs in realising
renewable infrastructure, but also in
contributing to circular economy.
