Hindustan Zinc ventures into exploration for critical and offshore minerals, establishes subsidiary

Vedanta-owned Hindustan Zinc, the third largest silver maker globally and among the major zinc makers in India, is planning to explore, discover and develop mineral blocks, especially critical, deep-seated, and offshore ones. It will also participate in an auction of critical mineral blocks here.

The company has already set up a wholly-owned subsidiary, Hindmetal Exploration Services Pvt Ltd, to tap mineral resources ”through systematic exploration” of deposits. As per a stock market notification, it will also “participate in auctioning of mining blocks containing critical minerals.”

According to Arun Misra, MD and CEO of Hindustan Zinc, the subsidiary will be operational in the next six – seven months. Exploration activities will be primarily being carried out in India. An area of work will be identified over the next few months.

“The Mines Ministry is looking at various policies whereby it will look at promoting mine exploration, development and mapping activities for critical minerals; and also off-shore minerals. The exploration company helps give us an advantage. We would also be bidding for mineral blocks through this company,” he told businessline.

• Read: Hindustan Zinc re-engaging with govt to get modified demerger proposals cleared: Arun Misra

India’s Mines Ministry is already developing the process, procedure, norms, and SOPs for off-shore mineral block auctions over the next two to three months. Critical mineral block auctions are currently underway.

While Vedanta, the parent company, has bid for critical mineral blocks in the ongoing auctions, Hindustan Zinc has yet to place a bid.

Demand in India

Demand across key offerings like zinc, lead and silver are expected to stay strong in India, Misra said.

Zinc demand will be driven by infra – push and improved steel requirements; lead demand will come for a push for EVs (electric vehicles), inverters, lead batteries, among others.

In silver, Hindustan Zinc is eyeing a 10 per cent-or-more share of the country’s 6,500-7,000 tonne annual requirement, which is met mostly through imports.

“We would be getting into lead alloys at a future date. There is increased demand for zinc coming from the auto-sector including galvanised cars – which are popular in Europe,” he explained.

Against a global average of 1.5–2 per cent growth, zinc demand in India is expected to grow around 4-5 per cent.

Price Outlook

According to Misra, zinc prices are already witnessing a price rally amid supply issues and LME’s disallowance of stocking from sanctioned countries. Prices are expected to hit the $3,000 mark around August – September, ahead of the December period that analysts have stated.

• Read: Hindustan Zinc Q4 net profit declines 21% to ₹2,038 crore

Current prices are hovering around $2,850 per tonne, and indications are that they will reach the $2900 per tonne range in the coming days.

“Zinc prices should be back to the $3,200 mark around December. Prices are witnessing a rally; and silver prices are at an all time high,” he said.