Hindustan Zinc, India’s biggest producer of the refined metal, has approved a project worth 120 billion rupees ($1.39 billion) to ramp up capacity, the miner said on Tuesday.
The company will set up a metals complex with 250 kilo tonnes (kt) per annum capacity, at a location in the northern Indian state of Rajasthan where it already operates a zinc smelter.
“This (project) is the first part (of a bigger plan). Within a month or two, we will come out with further parts,” CEO Arun Misra told Reuters, adding the company is aiming to nearly double its production to 2 million tonnes (mt) per annum from 1.02 mt.
The company said it will use internal accruals and debt for the expansion.
“Our estimated capital expenditure for doubling the capacity over the next five years should be between 320 billion rupees to 350 billion rupees in a phased manner,” CFO Sandeep Modi told Reuters.
At peak capacity, Hindustan Zinc expects annual revenue of 620 billion rupees to 650 billion rupees.
The newly approved 250 ktpa project, expected to be completed in 36 months, will begin generating cash accrual from its fourth year, Modi said.
The current phase of the expansion also includes 30 kt of silver capacity addition.
Silver is Hindustan Zinc’s second-largest business. The company aims to increase silver refining capacity to 1,500 tons per annum (tpa) from 800 tpa, CEO Misra said.
Supply will remain tight, and our guess is by January 2027, silver prices should be around $41-$42 per ounce, Misra said.
Hindustan Zinc is also interested in mining rare earth elements in India, and will be eager to invest in a bigger way when private players are allowed, Misra added.
China, which controls more than 90% of global rare earth processing capacity, has restricted shipments, causing severe supply chain disruptions across the globe.
($1 = 86.1560 Indian rupees)
(By Manvi Pant and Sethuraman NR; Editing by Janane Venkatraman, Mrigank Dhaniwala and Shinjini Ganguli)
