GLOBAL CONTEXT
2017 saw the global economy grow by 3.8% according to the IMF's World Economic Outlook (WEO). This was a 0.5% increase over the previous year and the fastest growth rate since 2011. This global uptick was driven by resilient growth in advanced economies combined with a continued pick-up in growth in emerging markets. Key drivers included an increase in investment spend, supported by an improved outlook and a rise in private consumption.
Global metals markets are still looking at China to play a key role given that it accounts for more than 50% of world metal consumption. However, India is projected to grow by 7.4% in 2018 and 7.8% in 2019, maintaining its status as one of the fastest-growing major economies in the world, according to the IMF's WEO.
In the medium term, growth is expected to rise gradually as structural reforms continue to be implemented, raising productivity and incentivising private investment. An amended MMDRA (Mines and Mineral Development and Regulation Act) in 2015 has brought increased clarity on the licencing around mining. Key regulatory reforms around opening commercial coal mining to the private sector and the launch of Open Acreage Licensing Policy (OALP) in the oil & gas sector to improve exploration, are some of the steps in the past year towards creating a more favourable operating environment.
Positive demographic factors such as an increasing workforce and urbanisation are driving a greater need for infrastructure development. The Indian government continues to invest in the infrastructure sector, having increased its spending in the Union Budget 2018-19.
Vedanta, as the only diversified natural resources company in India, is uniquely positioned to leverage India's growth potential by catering to that demand. With such a vast domestic market, everything we produce in India, we aim to sell in India.
We expect to see a continued focus and further investments in the infrastructure, transportation and power sectors. We also anticipate changes in government policy to incentivise domestic metal and energy production, and to reduce dependence on imports. These initiatives will lead to an increasing demand for domestically produced metals.
With various growth opportunities in the pipeline, we anticipate that our performance in FY 2018-19 will be even stronger.
We expect to focus on organic growth in areas where we have deep expertise: principally, oil & gas, and zinc. Equally, we continue to monitor markets and make our decisions with a strong sense of realism.
Some of the other factors that will continue to affect the mining industry in general and Vedanta in particular include:
