Stating that zinc prices are expected to remain “strong” and are unlikely to come down very soon, Arun Misra, CEO of Hindustan Zinc, one of largest zinc –lead producers, said that there could, however, be some “fluctuations here and there”.

On the other hand, lead prices may see “little softening” on account of the automotive sector that is going through its own churn. A shift towards electric vehicles is happening, which has led to auto OEMs modifying their platforms. This is leading to some softening of lead demand.

“Zinc prices may fluctuate here and there. But the prices will remain strong. The direction of movement is very clear, unless geo-political disturbances get resolved miraculously. In case of silver we do see certain demand issues. As industrial consumption goes up, demand will rise,” he told BusinessLine.

In FY22, the zinc and lead LME prices were up 36.5 per cent and 15.7 per cent respectively.

For FY22, the company reported a net profit stood at ₹9,629 crore, up 20.7 per cent y-o-y while revenues stood at ₹29,440 crore, up 30.1 per cent y-o-y. While the topline and bottomline increase was led by higher zinc volumes and zinc LME prices, and favourable exchange rates, the numbers were partially offset by lower lead and silver volumes.

“In case of lead prices there is some softening with the push towards electric vehicles(EVs). But my take is, more lead demand will come in as apart from lithium, vehicles would require lead acidic batteries for all auxiliary power consumption requirements. So they need to restrict the lithium ion batteries for the main motor(in a car) . Otherwise overall power consumption in the vehicle will also go up,” Misra added.

Higher metal production

Hindustan Zinc’s mined metal production for the January-March was 2,95,000 tonne, up 2.6 per cent y-o-y on account of higher ore production at Rajpura Dariba, Sindesar Khurd and Rampura Agucha mines, supported by better mining grades.

Integrated metal production in Q4FY22 was 2,60,000 tonne, up 1.6 per cent y-o-y. The integrated zinc production was 2,11,000 tonne, up 8.1 per cent y-o-y. However, the integrated lead production was at 49,000 tonne, down 19.3 per cent y-o-y since the “pyro plant at Chandreya Lead Zinc Smelter was run in the zinc-lead mode in place of lead-only mode”.

Input cost rise

According to Misra, coal prices continue to be high. And the company is switching over to renewable power. It would be shutting down some of its thermal power plants in “one or one-and-a-half year’s” time. Benefits are likely to accrue from January–February 2024 onwards.

“We are in the final stages of signing power purchase agreement at a fixed price for 25 years. So we will have controlled power costs and it will be more remunerative than coal costs. We expect pressure on input costs and higher energy costs to continue for some more time and manage our margins in between,” he said.

In case of capex, the company has given a guidance of $125 – 150 million across three projects which include a renewable power project, Rajpura Dariba mill revamping and setting up of an alloy plant.

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