Hindustan Zinc, India's largest zinc and lead producer, is on an expansion mode to meet the buoyant demand expected from steel producers. The company's Cief Operating Officer, Mr Akhilesh Joshi, spells out his company's expansion plans and how he sees demand for zinc and lead panning out.

Excerpts from the interview:

Zinc prices, as they trade on the London Metal Exchange, are down by over 10 per cent since mid-February 2011. Does underlying demand remain strong?

A slight fluctuation in LME prices is a common phenomenon but, overall, LME prices are strong. Developed economies have seen stupendous growth in the last few years and we expect the momentum to continue. European nations too have recovered and are showing tremendous potential for growth.

Seeing the past and the present trend, developing economies such as China and India have always been leading the growth and all these factors are expected to generate a strong demand for the metal. With increase in demand, zinc surplus is also expected to come down significantly.

Given that a large portion of lead demand is met by secondary recycling space, what is Hindustan Zinc's game-

plan for approaching this segment?

The growth in recycle market facilitates the balance in demand/supply of lead, as the demand for lead cannot be matched entirely by the limited primary deposits around the world.

Hindustan Zinc has the largest capacity to produce 85,000 tonnes and, shortly, we will be commissioning another 100,000 tonnes to take the capacity to 185,000 tonnes.

What is the current demand-supply equation in lead segment? Does the current market have the capacity to absorb Hindustan Zinc's product?

We should be able to meet the current large deficit in lead. But in the current scenario, the deficit has led to domination of secondary or recycling market. We are quite bullish on the lead demand in future, considering the growth of the consumption markets and segments.

What are your domestic expansion plans for zinc and lead product lines?

Hindustan Zinc has made a five-fold increase in production capacities since 2002, when Sterlite Industries took over the company. Since then, we have been expanding our capacities at regular intervals. As a result, from 204,000 tonnes metal production capacity in 2002, we are producing about a million tonne today.

Under our phase-III expansion projects, we have successfully expanded the ore production capacity at Rampura Agucha from 5 mtpa to 6.15 mtpa. We have also successfully commissioned a 210,000 tpa zinc smelter and 160 MW thermal power plant at Dariba.

To accelerate production at Sindesar Khurd Mine, which is also silver rich mine, we have recently commissioned a 1.50 mtpa concentrator, which reached a production run-rate of about 85 per cent as we exited the year.

Among the drivers of profit growth were revenue from silver during the last quarter. What are your plans for the segment?

Our silver segment is poised to almost treble from current levels driven by volume ramp up at Sindesar Khurd Mine and improvement in recovery at our mines & smelters.

We are aiming to exit FY 2012 with Silver production capacity of 500 tonnes, at which, we should be amongst one of the leading Silver producers globally.

How about your power requirements for your increased smelter capacity?

HZL perceives wind power generation as a financially and environmentally viable solution for meeting India's rapidly growing energy requirements.

Taking our green energy initiatives a step further, we announced, in January 2011, an addition of 150 MW in our existing 123 MW wind power project capacities. Of this, around 48 MW has been commissioned in Q4 FY-2011, and we aim to complete the balance commissioning by September 2011.

We have invested about Rs 10,000 crore in these expansion projects since 2002.

What do you believe will be the ramifications of the intended draft Mining Bill on the mining sector?

Updates on applicability, scope, computation, and so on, under the MMDR are still awaited. Since there has been significant representation from the industry, the Government may reconsider its stand on the matter.

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