India to be among the top 10 producers in the next two years.
Indian companies having exposure in silver are making hay, as the white metal continues its winning streak.
Hindustan Zinc is eyeing a 43 per cent increase in the production by 2012-13 which will make it one of the top five major silver producers in the world.
“Our silver segment is undergoing phenomenal growth. The new 1.5-million-tonne mill at our silver-rich mine Sindesar Khurd has commenced production towards the end of Q3FY11. With our accelerated capacity ramp up at Sindesar Khurd mine, we are poised to exit FY12 with silver production capacity of 500 tonnes (16 million ounces). We will become one of the world’s top silver producers at 16 million ounces,” Hindustan Zinc, chief operating officer, Akhilesh Joshi, said.
Not just Hindustan Zinc, silver, which is 70 per cent mined as a by-product of zinc, lead and copper, will have a rub-off effect on major copper players in the world too.
Hindustan Copper ramp-up in copper production from three million tonnes to 12 million tonnes by 2016-17 would mean more of the white metal.
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Hindustan Copper officials said that though it exported 3.6 tonnes of silver, but the public sector sells copper concentrate, which factors in the price of silver at the time of evaluation. Industry representatives added that Hindalco— which clocked in sales of Rs 1,413 crore from precious metals (gold and silver) for nine months ended FY11—was also likely to produce 60-70 tonnes of silver by 2012-13. The growth plans of different companies would put India among the top 10 silver producing nations (with India’s total silver production crossing 20 million ounces). India’s current rank is 15th, but it will be in the top 10 in the next two years.
But, is the staggering increase in prices—41 per cent this month alone— backed by fundamentals? Companies that have an exposure think so.
“It is a demand-supply scenario coupled with the global financial uncertainty that is making silver and gold safer hedging instruments,” Hindustan Copper Chairman and Managing Director, Shakeel Ahmed, said. Of course, it helps that lead and copper are in short supply. “All supply sources are in short supply,” a silver producer said on condition of anonymity.
Small wonder that silver and main product (copper) prices have been moving in tandem. Copper for delivery in June gained 0.28 per cent to Rs 425 a kg after a slip. Silver too rebound after a decline. And if company officials are to be believed then prices will appreciate to Rs 1,00,000 this year itself.
But, there is yet another silver lining. Analysts say, “International Copper Study Group has forecast a copper deficit this year, which means a price increase.” Less copper production means less production of its by products, precious metals.