Zinc demand in India continues to be good, despite weaker outlook across key overseas consumption markets like Europe and China, say Arun Misra, CEO and Whole-time Director, Hindustan Zinc. The Vedanta-owned entity saw an improvement in market share in India to 79 per cent, from 75 per cent, making it the largest player here.

The company continues to await clearances from the Mines Ministry – a minority shareholder – on its business restructuring plans.

In an interview to businessline, Misra talks about the zinc price movement in the context of global outlook, bringing down cost of production, business restructuring plans, among others. Edited excerpts:


1. What is the zinc price outlook?

Right now prices are somewhere between the $2500 / tonne and $2600 / tonne range; and is expected to be range-bound for Jan - Mar. We are not anticipating a significant change from this at the moment. Maybe a $50 per tonne upwards or downwards movement but nothing significantly high. However, considering the current demand scenario in India and overseas, we are comfortable if prices continue to be within this range.  


2. But the price guidance for most part of the year was around $3000 per tonne?

Yes. At that point we were banking on recovery in demand in key markets like Europe or China. That has not happened. Europe continues to remain slow or flat, if not depressed.

China, one of the largest consumer markets have not at all recovered. In fact, stimulus measures there have failed to lift the economy. So there is a clear indication that something is wrong there.

The USA is grappling with high inflation. But some improvement is being seen there now and is witnessing growth.

Amongst all this, India is a bright spot with demand witnessing an increase. To give you an indication, we were selling somewhere around 40,000 - 45,000 tonnes per month here, which is now around 50,000 tonnes. And our market share here has improved to 79 per cent.


3. Your cost of production is down significantly.

It has been at least four consecutive quarters since our cost of production started going down. In Q3 (Oct - Dec), it came down to around $1095 / tonne.

We made certain structural changes in the company which has helped. One of this being focus on better grades (of zinc). Another factor has been use of domestic coal, which is now up to 45-50 per cent (in the power plants), which earlier was 30 per cent. And then, we reworked some of the high cost contracts.

Our FY24 guidance on the cost of production was $1125 - 1175 / tonne, and we should end the year on the lower range of these numbers. May be in Q4 (Jan – Mar) we can look at the $1060 – 1070 /tonne range, considering factors like domestic coal availability and so on.


4. Your business restructuring plan is still awaiting clearance from the Mines Ministry. Do you see another run-in with the Centre?

There is no run-in. It is obvious that restructuring will need permission from the Ministry as they are shareholders having Board representation. We are in touch with the Ministry and the government nominees. We are hopeful of getting clearances before the next Board meeting scheduling in April.

I see this restructuring – into two separate businesses, zinc & lead (including recycling) and silver – as a risk free decision. The shareholding patterns or ownership format does not change; rather they remain the same across two companies now.


5. Would this restructuring de-rail the Centre’s stake divestment plans?

On the contrary it will unlock value across two entities and there will be more investor focus. In fact, if the market cap goes up, the government gains during the divestment process. The belief is, it could be easier to divest two companies, as you may get interest from two set of investors – one for the zinc & lead company and separately another for the silver business. And so it (restructuring) is a positive move.