Hindustan Zinc, a Vedanta subsidiary and the country’s largest zinc miner, is open to acquisition of overseas mines as it eyes greater global footprint, says its CEO Arun Misra.
Indian consumption of zinc is around 650,000–680,000 tonnes per annum, which means the company has to tap export markets for its additional production.
In an interview to businessline, he talks about the zinc consumption and demand patterns, growth prospects for the company in India, overseas plans, among others. Excerpts:
What is the zinc consumption and demand outlook like?
Zinc stocks are at their lowest at present. The London Metal Exchange stocks are around 25,000-odd tonnes, less than one day’s worth of global consumption. On-warrant stocks stand at 18,250 tonnes.
If you see, European smelters are firing up again as winters are receding; and China, post withdrawal of Covid restrictions, is powering up its smelters again. So, on one hand Covid is behind and on the other, the world is now factoring in the ongoing Russia – Ukraine tensions. Thus a supply surge is expected.
In India, there is a constant demand with the Centre’s infrastructure push being on track. So, we anticipate a 3-4 per cent growth in demand here. However, global demand is expected to be slightly lower at 2–2.5 per cent (against the previous expectation of 3 per cent).
And price expectations?
Zinc prices will be range bound in the $2900-3100 per tonne bracket, something that we have predicted throughout the fiscal. The LME three-month metal rose 16 per cent to a five-month peak of $3,512 in late January but has since tumbled all the way back to $3,040.
And any particular reason for these muted expectations?
See there are no new mines that are coming up or will start production in immediate years. Hence, global production is expected to be at similar levels. India and China are going to be the major consuming nations. And a lot of demand will be linked to their growth numbers. If all goes well, and the two major nations grow, we see a 5–6 per cent growth in the next four-to-five years.
In terms of production ramp up, what are Hindustan Zinc’s plans?
We are on course to have a 1.2-million-tonne-per-annum mined metal production capacity. Nearly, 8 lakh tonnes of this will be zinc, the remaining being lead and silver.
So, till December around 761,000 tonnes of mined metal production happened. The zinc production during October–December quarter was 210,000 tonnes and for 9-month period was 606,000 tonne. Lead production in Q3 was 46,000 tonnes and 157,000 tonnes for nine months.
And are there plans to grow beyond this in India?
There aren’t any new mines which have been opened up right now, although there are reserves in Rajasthan and Gujarat. Once something comes up, we will bid for them. So, for growth, we are looking at overseas mines which will give us a strong foothold - reserve wise and market wise - both.
Does the proposed Vedanta deal, sour divestment of the Centre’s stake?
I can’t comment on that. But yes, we did participate with the Centre in roadshows held some time back. Perhaps the offer-for- sale will come up by end-of-this-fiscal. Once there is an offer-for- sale, we will explore options available.
Are you open to acquisitions elsewhere or looking at options beyond zinc?
Yes. We are tapping Europe and South America for new mines. And I have reached out to bankers on that. Even if mining opportunities come in copper or lead, or if there is divestment of Hindustan Copper, we will gladly bid and diversify.