Vedanta-owned Hindustan Zinc Ltd (HZL), the country’s largest zinc and silver manufacturer, will be investing ₹12,000 crore over a three-year period (36 months) as part of its capacity doubling programme targeting 2 million tonnes of mined metal. To be invested in three tranches of ₹3,000 crore (in FY26), ₹5,000 crore in FY27 and the remaining ₹4,000 crore in FY28, the entity will use a mix of internal cash generation and debt to fund these expansion plans, Arun Misra, company’s MD and CEO, told businessline.

The expansion will happen in at least two of its mines; a Phase-II expansion plan is being worked-on (covering the other mines) and will be presented before the board, soon.

Two global consulting firms had previously been employed, he said.

Funding expansion

Despite looking at a 50-50 break-up between internal accruals and external debt, there is unlikely to be any impact on the net debt and net debt–EBITDA ratio of the company. Cash flows before capex considerations continue to be steady in ₹10,000-odd crore range over these three years.

Free cash generated in FY25 was to the tune of ₹8,000–9000 crore, and borrowing cost is expected to be around 7 per cent, considering it has ‘AAA’ ratings.

“There will no impact on net debt; Hindustan Zinc will remain a debt-free company,” Misra explained.

Zinc demand is also expected to remain strong. India’s demand for zinc is projected to double over the next 5 -10 years, driven by significant investments in infrastructure, including steel production.

“And Hindustan Zinc’s expansion aligns with the strong growth expected in domestic and global steel demand,” he said adding that zinc prices are expected to play out in the $2600–2800 per tonne range over the next 12-months.

The company has 70-75 per cent market share in India.

Smelter and mine expansion

Earlier in the day, the company’s Board of Directors approved the initial plans for expanding its integrated refined metal capacity along with matching mines & mills capacity addition across multiple locations. Mine expansion will happen at Rajpura Dariba and Rampura Agucha, both located in Rajasthan. The company’s other mines are located at Sindesar Kurd, Zawar and Kayad – all three in the north Indian State.

As part of its expansion plans, a 250 ktpa (kilotonne per annum) integrated smelter at Debari in Udaipur district (Rajasthan) will be set up. The company’s current metal production capacity stands at 1.1 million tonnes (mt). Other smelters are located in Chanderiya where it has a lead-zinc one, and in Dariba and Pantnagar.

The Vedanta Group company, in which India’s Mines Ministry has a minority stake, plans to double its metal and silver capacities over the next five years, taking the total metal production capacity to over 2,000 ktpa and silver production capacity to 1,500 tonnes.

Demand for zinc in India is about 0.85 mt out of which Hindustan Zinc serves around 0.7-0.75 mt. Demand in India itself to likely to go about 1.2 mt in three years, and “there is delta of about 0.4 mt, which (the company) is increasing by 0.25 mt”.

“We will look at 20 -odd per cent exports,” he said.

Published on June 17, 2025