Hindustan Zinc eyeing acquisitions in US, Europe in new growth push

Parent Vedanta has zinc assets in Namibia, South Africa and Ireland

Hindustan Zinc, a subsidiary of Vedanta, is looking to expand its operations to markets such as the US and Europe, in its next phase of growth, CEO Arun Misra said in a conversation with Business Standard.

The company, the world's second-largest zinc producer, proposes to do this by acquiring zinc assets in the US and/or Europe, Misra said, as it looks to get to a targeted mining capacity of 1.5-2 million tonnes per annum over the next few years. Most of the zinc assets are currently held by parent Vedanta in countries such as Namibia, South Africa and Ireland.

The inorganic growth push by Hindustan Zinc would help it tap emerging opportunities in developed markets such as the US and Europe, Misra said. Zinc is used in galvanising operations in the construction sector, for making batteries, chemicals, taps, pipes and tyres among other activities.

The company has a current mining capacity of about 1.1 million tonnes per annum. This is expected to touch 1.2 million tonnes ver the next few quarters, as the company drives efficiency in its operations, Misra said.

"Of the $250-300 million capital expenditure that we incur every year, $50-75 million goes into various de-bottlenecking projects. We are doing this to improve efficiency in our operations. This will also help improve overall output," Misra said.

Acquisition of assets overseas will also help Hindustan Zinc derisk its business model, Misra explains, which remains limited at the moment to India. "Tapping opportunities in the US and/or Europe from an inorganic perspective will also help us service clients in these markets better and reduce freight costs," Misra said.

Demand, however, in the company’s home market of India also remains robust. This is because the government’s infrastructure push will continue to drive demand for zinc to build galvanized road, rail and power transmission lines, Misra said.

Demand for the metal reflected in the company's September quarter results, which grew 33 per cent versus a year-ago in terms of bottomline and 36 per cent on-year in terms of revenue.

Misra says that the company has signed a power delivery agreement for sourcing up to 200 mega-watts of renewable energy, which will reduce 1.2 million tonnes of carbon emission. This is expected to go a long way to help the company achieve its net-zero target by 2050, he said.