Higher Lead and Zinc Prices Bolster Hindustan Zinc's Bottom Line

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Continued from Part One.

That Hindustan Zinc (HZL)’s production and sales have swung back up is good news.

Zinc demand was slated to grow in India in 2013-14. For 2012-13, demand was pegged at 600,000 tons.

But, according to the International Lead & Zinc Study Group (ILZSG), the global supply of zinc was expected to outstrip demand by 293,000 tons in 2013, compared to a 153,000-ton surplus in 2012. So some analysts here have opined that expecting HZL to carry on with the same “good” results in the next quarters of this fiscal year may be a bit unrealistic.

To post the figures it did, HZL benefited from an increase in metal prices in the March quarter, with average lead prices up 4.4 percent and zinc prices up 4.6 percent. But that may not necessarily be the case every time. As of late, zinc prices in the international markets have been down.

According to a report in The Economic Times, HZL was poised to increase output from its mines by 20 percent to 1.2 million tons over the next three years, at a time when some of the world’s largest zinc mines in Canada and Australia were being shut down due to the global supply-demand deficit in the global zinc market.

This will be Round 4 of expansion for HZL, and is attributed to the expansion at Rampura Agucha, the world’s largest zinc-producing mine, and Sindesar Khurd, a silver-rich mine, along with two other mines in India and the proposed development of two greenfield mines.

The report said that after nearly 1.2 million tons of mine production, roughly 10 percent of current global mine production will be over by 2016; the expansion move by HZL was expected to help increase its share in global mine production to 8 percent from current level of 5.5 percent.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner.

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