Hindustan Zinc Ltd. will invest Rs 3,200 crore to set up a fertiliser plant with a capacity of 1 million tonnes per annum, Arun Misra, chief executive officer and whole-time director at the company told BQ Prime.
Elaborating on the company's future road map, Misra said HZL aims to become carbon neutral by greening their underground vehicles and the company will sign power purchase agreements for renewable capacity of 450 MW by 2028. HZL also plans to replace thermal power by 2030.
The company expects zinc as a sector to grow at 3-3.5% in coming years as applications of zinc are seen growing from just the galvanization of steel earlier.
Read the edited excerpts from the interview:
Applications Of Zinc
Zinc is used to galvanise steel, which by itself gets corroded by exposure to moisture. By coating a layer of zinc helps to protect corrosion. Most of the products used by us in daily life are made of galvanized steel.
Of the total production of Indian steel makers, around 40% is flat and rolled products, of that, 20% is galvanized steel. In developed countries, it is mandatory to use galvanized steel in the auto industry.
Zinc is also used in making of alloys that are used to shine the bathroom fittings and other household items.
HZL's present share in the Indian zinc market is 80%. In lead, it holds 85-90% market share, as there are other secondary lead producers in the country. For silver, HZL holds 10% market share.
Although, HZL is the only producer of zinc in the country, steel producers keep an option open to import around 20% under free trade agreement with South Korea and Japan to prevent against uncertain events.
Growth Post 2002 Disinvestment
At the time of disinvestment in 2002, our production was around 1 lakh tonnes which has grown to 1 million tonnes per annum now. So, it is ten times growth in production.
Earlier we operated with just 3 mines, now we have 8 operating mines. The company had close to 3500-4000 workers that has now grown to 25,000. There are around 5-7 lakh direct and indirect people dependent for living on the company. That shows the growth in economy around zinc in Rajasthan that can happen through good disinvestment process and a strong management.
The company has also invested close to Rs 15,000–Rs 20,000 crore since 2002.
Covid Impact & Recovery
The Covid is behind us, and the recovery is more than pre-Covid period. Even during Covid, we were producing at our highest ever numbers. We were hardly closed for 15-20 days but we picked up quickly and were producing at full throttle.
The reasons were: One, we are integrated producers, we have our own mines. Secondly, we quickly rolled out hundreds of ways to manage the situation. We had personal insurance of Rs 10 lakh for each worker including contract workers.
We took care of vaccination of their entire families. We provided air ambulance service to sick people and even provided oxygen from our plants to nearby hospitals.
We had set up a 120-bed hospital by getting all the facilities. That motivated people to continue to work here and resulted in highest ever production figures during the Covid period.
Supply Side Constraints & Zinc Prices
The price of zinc had peaked to $4,000/tonne on the London Metals Exchange (LME) during Covid. Given the U.S. GDP is projected to grow at 2%, we expect the infrastructure development to continue.
Zinc prices are expected to remain at $3,000-$3,100/tonne in the Q3FY23.
Zinc As A Sector
In developing economies, the growth of steel is associated with the growth in GDP, as the per capita consumption of steel is lower compared to developed economies. In the Indian scenario, if the GDP grows at 6.5%-7% then the steel also grows at 5.5%-6.5%. In that case, zinc will grow at 1.5-2%.
At 10% GDP growth, the zinc growth can be assumed to be 2.5%. So, with political and economic stability and continuous push to infrastructure, we can safely assume zinc will grow at 3% for the next 3-4 years.
Demand Centers & Locations
Although many steel plants are located in east India, quite a lot of galvanisers are in the northern and western part of the country, since they want to be closer to their customers and white good sectors. So most of our customers are evenly spread across east, west, north and south.
Mine Expansion Programme
We planned for 1.2 million tonne capacity by this year, but that is unlikely to be achieved. The immediate focus is to take the metal and concentrate capacity to 1.2 million tonnes by FY24. Simultaneously, we will launch the plan for 1.35 million tonne capacity that we aim to achieve a year after that.
Of the eight operational mines in Rajasthan, the expansions will be taken up at Zawar and Rajpura Dariba mines where still large amounts of properties need to be explored. As far as other mines are concerned, Rampura Agucha and Sindesar Khurd mines have matured and there is not much to be expanded.
Decarbonisation Strategy
We are bound by science-based standards, so we are not talking about intensity but absolute numbers. We have tied-up for 200 MW renewable power purchase agreement, which will land in our plants from 2024.
After that, parallelly, we will tie-up for another 250 MW green power. So, by 2028-29, we will have 450 MW of green power capacity, which will be around 80% of our total power capacity.
We hope to completely replace thermal power with renewable by 2030.
Apart from power, we are also focusing on water treatment. At present, we are 2.4 times water positive and we plan to take that to 5 times water positive levels. We are planning our mines in such way that all of them become zero liquid discharge plants.
Entire wastewater will be treated and reused in plants, reducing fresh water dependence on river and dams. We are putting up 2 big treatment plants in Rampura Agucha and Zawar mines which will treat all the wastewater generated from the plant and reuse it.
HZL To Set Up 1.2 MT Fertiliser Plant
We produce huge amount of sulphuric acid from our plants which are in demand by large fertiliser plants in the nearby region. But that involves transportation over long distances and is very hazardous.
We are putting up a 0.5 mtpa diammonium phosphate (DAP) plant in Chanderia, Rajasthan, which will be expandable to 1 mtpa capacity in the next 3-4 years. The work on the 0.5 mtpa capacity project will start from January and will take around 18-20 months to complete. It will entail an investment of Rs 1,600 crore.
Greening Of Vehicles
Most of our vehicles used in underground mines are fossil fuel-based, mostly diesel. We are looking at replacing them with battery operated vehicles.
To start with, we will replace four vehicles. We have tied-up with vehicle manufacturers, and given the operability and usability within the mines, we will replace all our 900 vehicles in the next 5-6 years.
Mergers & Acquisitions
Have made a presentation to the board regarding acquisition of mines outside India. Some of the locations we can look at are in South Africa and Australia if they are available.
Capex Plans
We have a sustenance capex of $400 million (Rs 3,280 crore). Apart from that there will be additional capex of Rs 2,400 crore for the fertiliser plant and the roaster plant at our smelters (to increase the melting capacity).
We do not need any fundraising activity since we have enough cash.
Outlook
Zinc as a metal will always be needed, forget temporary fluctuations. The applications of zinc will increase over time. Earlier it was galvanization of steel for flat product, now it is used in long products as well.
Now it is used as a nutrient for soil, medicine packing purposes. Railways is looking to galvanise railway tracks. It will also become an alternative to battery manufacturing–zinc air batteries.
With growth in infrastructure, construction activity, zinc is seen to grow at 3-3.5% in India.
Future Of Women In Mining
We have always provided opportunity to women in mining. Earlier also we employed women in open cast mining. With government opening up under ground mines to women, we became the first mining company in the country to employ women in underground mining.
We are making a good campaign around women in mining. So that all junior engineers and other technical personnel may consider it as good career option.
As of now, mostly women are used as engineers and white collared position, and are not fully allowed in underground activities, we are in discussion with government to see if we can make a section of mine all-women operated.
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