KOLKATA: Hindustan Zinc Limited, the country's only integrated zinc producer, is poised to increase output from its mines by 20% to 1.2 million tonne (mt) over the next three years, at a time when some of the world's largest zinc mines in Canada and Australia are being shut down nudging the global zinc market into a supply deficit scenario.
The current mine expansion will be the fourth major expansion plan of Hindustan ZincBSE 0.86 % and is attributed to the expansion at Rampura Agucha, the world's largest zinc producing mine, and Sindesar Khurd, a silver-rich mine. HZL's Zawar and Dariba mines are also being expanded in a phased manner. It is also slated to develop two greenfield mines as part of its expansion plan. While it will start commercial production at Kayar in Rajasthan with initial capacity of 0.35 mtpa in FY14, it will also develop a small mine at Bamnia Kalan in Rajasthan.
Nearly 1.2 mt of mine production, roughly about 10% of current global mine production, will be exhausted by 2016. In such a scenario, the expansion move by HZL is expected to help increase its share in global mine production to 8% from current level of 5.5%.
Among the global mines slated to close down by 2016 include Century in Australia and the Brunswick and Perseverance mines in Canada. The supply deficit in zinc is expected to hit in 2014. With world zinc market turning to deficit mode, prices are expected to rally in anticipation of tight supplies. The last time the market entered a supply deficit, its value went up four times. Zinc price went from less than $0.40 per pound to $2 per pound in 2005-06.