Our fully integrated zinc business is owned and operated by HZL, India’s leading zinc producer with a 79.7% market share by volume of the Indian zinc market in fiscal 2008, according to the Indian Lead Zinc Development Association. HZL was the world’s fifth largest zinc mining company in 2007 based on mine production and is also one of the top ten lead mining companies by production volume worldwide, according to Brook Hunt. Sterlite owns 64.9% of the share capital of HZL.
HZL’s operations include three lead-zinc mines, three hydrometallurgical zinc smelters, one lead smelter and one lead-zinc smelter in Northwest India and one hydrometallurgical zinc smelter in Southeast India. HZL’s zinc production increased from 284,000 tonnes in fiscal 2006 to 552,000 tonnes in fiscal 2009, representing a CAGR of 24.8%. The production increases, together with higher zinc market prices, drove revenue of our zinc business from $875.5 million in fiscal 2006 to $1,209.1 million in fiscal 2009, representing a CAGR of 11%.
HZL has recently announced expansion projects that will take its total integrated zinc-lead capacity to 1,065,000 tonnes per annum with fully integrated mining and captive power generation capacities, thereby making it the world’s largest integrated zinc-lead producer by 2010. HZL will continue to maintain its superior cost leadership position among the zinc producers in the world. Two brownfield smelter projects, which will increase the production capacities of zinc and lead by 210,000 kt and 100,000 kt respectively, will be undertaken at Rajpura Dariba in Rajasthan, India.
HZL expects to increase its silver production from the current levels of approximately 100-120 tonnes per year to a level of approximately 500 tonnes per year in the form of silver and silver bearing residue. A large part of this increase would be from the Sindesar Khurd mine where silver occurrences are approximately at levels of 200 ppm and from the use of appropriate technology in the new smelters.
The expansion is supported by HZL’s strong reserves and resources of 272 million tonnes containing 31.5 million tonnes of zinc-lead metal at 31 March 2009. The reserves and resources position have been earlier independently reviewed and certified as per the JORC standard.
To support the increased smelting capacities, HZL will expand its ore production capacity at the Rampura Agucha mine from 5 mtpa to 6 mtpa. Further, ore production at the Sindesar Khurd mine, the new star in HZL’s mining portfolio, will be increased from 0.3 mtpa to 1.5 mtpa. HZL will also start mining activity at the Kayar mine which will have a production capacity of 0.3 mtpa.
In line with the group’s philosophy of being a fully self reliant producer of power, a captive thermal power plant with a capacity of 160MW will also be set up at Rajpura Dariba.
The zinc and lead smelters as well as the 160MW captive power plant and the Rampura Agucha mine expansion will be complete by mid-2010. The expansions at the Sindesar Khurd and Kayar mines will be completed in phases by early 2012.
The total investment in these projects is estimated at $720 million. This investment includes the cost of the smelters, captive power facilities, mine development and shaft sinking and other infrastructure. The expansion will utilise the same technology and project management skills that successfully delivered the Chanderiya II expansion project ahead of schedule.