Hindustan Zinc to invest Rs 1k cr

Plans to set up two more zinc fumer plants over the next two-three years

Hindustan Zinc, one of the lowest-cost zinc producers in the world, will be investing another Rs 1,000 crore to set up two more zinc fumer plants over the next two-three years, a source close to the development said.

A zinc fumer plant is meant for extracting metal from waste. Industry sources estimate that Hindustan Zinc currently loses about 27,000 tonnes of metal per annum in this waste.

The Vedanta Resources Plc subsidiary on Thursday said it has invested Rs 570 crore in its first zinc fumer plant at Chanderiya Hydro-II plant in Rajasthan. This plant is expected to start by mid-2018. 

The plant will help improve recovery of zinc to 97.5 per cent from 96.8 per cent and push volumes of lead produced by 4,700 tonnes and silver by 33 tonnes per annum.

"We will be funding the other two fumer plants through our internal accruals at Hydro-I in Chanderiya smelting complex and in Rajsamand at Dariba smelting complex," Sunil Duggal, chief executive at Hindustan Zinc told Business Standard.

Hindustan Zinc has placed formal order to China non-ferrous metal industry's Foreign Engineering & Construction Co for its first fumer plant. "Once the other two fumer plants are set up, volumes of zinc, lead, and silver at these complexes will also increase in similar proportion, in turn improving our bottom line and top line," informed Duggal. 

Hindustan Zinc has an overall current capacity to produce about 825,000 tonnes of zinc, 180,000 tonnes of lead and about 500 tonnes of silver per year. 

A zero-debt company, Hindustan Zinc has a strong balance sheet with healthy operating profit margin, and strong earnings per share and dividend histories. As on December 31, 2016, the company's net cash and cash equivalents stand at Rs 25,319 crore, placing it in a comfortable position to fund any of its expansions or upgrades.