Hindustan Zinc Ltd (HZL) here has suspended production at the Visakhapatnam zinc smelter.

Sources said production was stopped as the management found bringing raw material from Rajasthan and using it at the local smelter unviable due to increasing input and freight costs. The local unit has a production capacity of 56,000 tonne a year.

HZL was incorporated from erstwhile Metal Corporation of India in 1966 as a public sector. During NDA rule, as part of disinvestment, its equity was sold to Sterlite Industries Ltd. The disinvestment was made in favour of Sterlite up to 65 per cent in three instalments, leaving the balance to the Government of India, financial institutions and the public.

It is an integrated zinc company with mines to finished metal. The zinc concentrate for the local smelter cotes from Rajasthan.

HZL produces zinc and related products – primary zinc, cadmium metals and sulphuric acid in bulk. Besides Vizag, HZL has smelters at Chanderiya, Debari and Dariba in Rajasthan.

Mr Ch. Prabhakara Rao, Vizag Zinc Smelter General Manager, said on Monday that the company would inform the date once they get the required raw material to resume production. Due to the stoppage of production, nearly 300 contract workers have been affected.

Sources said that due to increase in supply of raw material by China, Australia, Canada, Bolivia and Kazaksthan, the management might have thought that importing was less expensive than incurring heavy freight cost on sourcing raw material from captive mines in Rajasthan.

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