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Fertiliser plant in pipeline, will increase production capacity to 1.35 million ton: Arun Misra of Hindustan Zinc

India’s largest zinc producer is expecting worldwide production to grow at about 3-3.5%, whereas in India, a growth between 7-10% is expected.

July 24, 2021 / 12:36 PM IST

Arun Misra, the chief Chief Executive Officer of Hindustan Zinc, spoke with Moneycontrol on production expansion, new fertiliser plant, and price outlook of Zinc. Misra feels there is less scope for zinc prices to go downwards and will remain rangebound.

In an interview with Moneycontrol’s Tarun Sharma, Misra says right now, we are on the drawing board for the 300 thousand tonnes of the coastal smelter in Gujarat. We are also looking at how to get the production up from 1.2 million to 1.35 million tonnes in about 2-3 years. Edited excerpts:

How do you see the zinc prices going forward?

If you look at prices, of course, they are dependent on both the factors – demand and supply. Supply-side, though some of the mines in Peru and parts of South Africa have opened up and started producing. On the other hand, some of the smelters in China face roadblocks due to power outages.

Overall prediction worldwide is to grow at about 3 – 3.5%, whereas in India, a growth between 7% to 10% is expected. After the 2nd wave of the COVID, the government now is prepared for any kind of future wave that can come in, we are ourselves investing in around 400-bed facilities around our areas of operation.

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The government is also building the capability of oxygen plants and also doing a huge vaccination drive. We have done 100% vaccination of our employees and contractor workers, now we are targeting their family members. We aim for a 100% vaccination for their family members.

I think the same is the tendency of all business houses in India. I see going forward, Zinc demand has already started increasing.

The Chinese are also planning to release the reserve of zinc and other base metal. Don’t you think that will impact the prices of Zinc?

The price was around $3,000 per ton, but the news of the Chinese letting the metal out has already impacted. Looking at the stock senate, which is at an all-time low. Their stocks are there in exchanges, so that shows that the consumption patterns are going up, and let’s see how China can handle the issue.

What is the guidance for the EBITDA margins?

We are not giving guidance on EBITDA margins, we are maintaining the items given on volume and cost, and we are sticking to that. We are not changing anything as of now. Our EBITDA margins are of course slightly bought by compared to last year’s LME, but also affected by rising input prices and the rising cost that is $1070 compared to last year’s $956 in Q4. So, the cost pressure is there. Otherwise, we should be able to protect our margin.

How is the capacity utilization? 

We are of course using 100%. We never slowed down last quarter, only at some parts of the mine, we witnessed a lack of operators because they were sick. So there was slow down on the operation, but right now we are in 100%, but 100% level of operation meaning all the equipment, all the manpower is engaged, but number-wise, if you look at to be at 1.2 million, we should be producing 300 thousand tonnes of metal every quarter.

We are far away from that and only produced 236 thousand tonnes of metal this quarter and this number has to go up and as and when the mines are getting fully developed, you should be getting the rate of 300,000 tons of record every quarter.

Any expansion plans for the company.

Right now, we are on the drawing board for the 300 thousand tonnes of the coastal smelter in Gujarat. We are also looking at how to get the production up from 1.2 million to 1.35 million tonnes in about 2-3 years. This also involves the expansion of the mines and smelting as well as our mining facility. So that should be the next phase of growth apart from the fertilizer plant that we may announce anytime soon.

Any updates on buying the Government stakes in Hindustan Zinc Limited.

Most Indians today are having an active interest in the industry and the economy. We are also waiting for the government to come up with more and more disinvestment of PSUs, not only Hindustan Zinc but all PSU, as they will open up the economy and create more jobs.
Tarun Sharma
first published: Jul 24, 2021 12:34 pm

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