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By Alex MacDonald

LONDON--Vedanta Resources PLC (VED.LN) plans to materially reduce its capital expenditure plan, the company's chief executive said Friday, amid concerns about the company's ability to pay down debt after the recent commodities price slump.

The India-focused natural resources company expects to cut hundreds of millions of dollars from its forecast $2 billion capital budget for the financial year ending March 31, 2016, CEO Tom Albanese told analysts on a call. "It will be material" he added.

The U.K.-listed miner, like many others, spent billions of dollars expanding its business during a decade-long commodities boom. That period has lost its luster after a sudden ramp up in new production capacity for many commodities and slower-than-expected demand growth. This has caused commodities prices to slump. For some of Vedanta's key products, particularly oil, copper and iron ore, prices are now hovering at more than-five year lows.

Credit ratings agency Moody's Investor Services responded to the lower prices by downgrading Vedanta's outlook to negative from stable. It raised concerns that a lower oil price could crimp the firm's ability to pay down debt.

Vedanta reported earnings before interest, taxes, depreciation and amortization of $1.02 billion in the financial third quarter, down 11% from the corresponding year-earlier period. Oil and gas earnings, typically the company's largest, fell 44% after oil prices more than halved from June to now.

The company also produced negligible earnings from its iron ore division and generated no earnings from its majority-owned Zambian copper unit in the third quarter. This more than offset higher earnings from its zinc, aluminum, and other copper assets in India and Australia. Revenue rose 1% to $3.36 billion.

Vedanta sought to allay concerns about its debt by pointing out that it only needs to repay about $1.3 billion of its $16.8 billion in gross debt by end-March and about $1.5 billion the following fiscal year. The company has about $8.85 billion in liquid assets and untapped credit facilities and is in talks to refinance this financial year's maturing debt at a lower rate. "We are comfortable on our [debt] covenants at current commodity prices," Chief Financial Officer DD Jalan told analysts.

Vedanta's planned capital expenditure cut should also help conserve cash. Vedanta didn't provide further details, but RBC Capital Markets analyst Tim Huff estimates the company may seek to cut it annual capital expenditure to or below the $1.4 billion spent in fiscal 2014.

Vedanta is also working on a turning around its Zambian copper division where half of its operations are operating in the red due to balooning production costs and a falling copper price. Analysts expect the division to hemorrhage even more cash this quarter after the Zambian government introduced higher royalties this month.

The firm also said it renewed its iron ore mining leases in Karnataka and Goa, India's two largest iron ore producing states. The company expects to start producing iron ore in Goa from April and in Karnataka by February, after securing necessary approvals following the repeal of mining bans in those two states.

The company had net debt of $8.8 billion as of the end of December, down from $9 billion at the end of September.

Write to Alex MacDonald at alex.macdonald@wsj.com

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