Despite the global volatility, India’s infra growth has held steady with steel demand rising, and other segments like automobile contributing towards it, said Arun Misra, MD and CEO, Hindustan Zinc Ltd.
For the quarter ending March 31, 2025, revenue was ₹9,000 crore (up 20 per cent y-o-y), while earnings were at ₹3,000 crore (up 47 per cent).
In an interview to businessline, Misra spoke about the price outlook and demand for zinc, impact of geopolitical tension on capex, the cost of production guidance and planned foray into critical minerals. Edited excerpts:
What sort of zinc price movement is expected?
Considering the current geopolitical scenario and volatility in prices, it is unlikely that zinc will reach the $3,000-3,200/tonne range highs. This fiscal, prices should be in the $2,600–2,750 / tonne bracket. If the world order stabilises then may be $2,800/tonne would be a better position. However, these continue to be lower than FY25 exit prices of $2,875/ tonne (average).
Any direct impact of Trump tariffs?
I don’t think so. The US is reliant mostly on Canada for zinc supplies. Not India. And it is unlikely that zinc supplies from Canada make way to India, primarily due to the existing logistical challenges – primarily the distance.
Indian demand for zinc remains quite strong driven by segments like automobiles, infra and steel, while energy transition requirements will drive lead and silver demand.
According to the International Lead and Zinc Study Group, global demand for refined zinc is expected to rise by 1.6 per cent to reach 14.04 million tonnes (mt) in 2025. This increase in demand will largely be led by increasing consumption in India and Korea followed by some support from China’s automotive and electrical sectors. The demand for refined lead is anticipated to grow by 1.9 per cent to 13.39 mt in 2025 led by the growth of lead acid battery segments in China, India and Vietnam.
What’s the FY26 production guidance?
For FY26, production target is 1,125kt, plus or minus 10kt (kilo tonnes), for mined metal, 1,100 kt plus or minus 10 kt for refined metal, and 700–710 tonnes for silver.
Silver production declined 8 per cent YoY in FY25 to 687 tonnes, compared to 746 tonnes in FY24, largely due to a higher contribution from pyro lead operations in the prior year. Silver volumes in FY26 are expected to remain below FY24 levels, with guidance in the range of 700–710 tonnes, with there being transition towards zinc-lead operating model. The silver output has the potential to exceed 1,000 tonnes once mined metal capacity scales up to 1.5 mt.
For FY26, total capex is guided at ₹4,900–5,400 crore, comprising ₹1,900–2,200 crore for growth capex and ₹3,000 – 3,200 crore for maintenance capex. As against this, FY25 capex stood at ₹4,400 crore, with ₹1,500 crore directed towards growth initiatives and the balance allocated towards sustenance capex.
Considering the changed price guidance, what would be its impact on net revenue and growth capex?
In FY25, our free cash flows were in the $1–1.1 billion range. Bottom-line management happened following lower cost of production and improved volume sales. This fiscal, we expect similar free cash generation (FY25 level). And, we do not see problem there.
In terms of project financing, the first phase of $1–1.1 billion growth capex plans (to increase production to 2 mt of mined metal), will soon be presented to the Board for approval. Maybe in another month it will happen.
The capex would be mix of debt and equity. See, in any given year, the max utilisation of free cash flow towards capex would be in the $0.5 billion plus (around ₹5,000 crore) range. So, the rest will have to be managed through debt. Raising debt would not be a problem considering our free cash flow, lower net debt position and our market capitalisation – the highest amongst zinc producers globally.
What is the debt position?
In FY25, the net debt came down to ₹1,169 crore; as against September 2024, when it was ₹5,720 crore.
Is it possible to quantify the cost benefits?
Hindustan Zinc concluded FY25 with zinc cost of production at $1,052/tonne, supported by improved ore grades, higher by-product sales, softer coal and input costs, and increased reliance on domestic coal and renewable energy (RE).
For FY26, the cost of production is likely to hover in the $1,025–1,050 / tonne range, underpinned by enhanced RE integration and favorable coal cost dynamics.
The RE share is expected to rise significantly from 13 per cent in FY25 to 30-35 per cent in FY26, driving a projected reduction of $10–15/tonne in power costs. By FY28, the RE integration is expected to be around 70 per cent.
You did plan to foray into critical mineral mining. Any update?
We have created a vertical that will aid our foray into precious metals and critical mineral projects in India. We won a gold mine in Rajasthan and a tungsten block in Andhra Pradesh. Exploration activities will start as we get some paperwork done. It could take 2–3 years to start mining activities in these blocks. We are also bidding for other mineral blocks like potash and lithium.
