Silver a bright spot; working to ramp up volumes : Hindustan Zinc

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The company reported a 47 percent decline in its net profit to Rs 1,037 crore for the quarter ended June mainly on the back of of higher taxes, cost of production and depreciation.

He is of the opinion that silver is a bright spot for the company’s performance going ahead and that Hindustan Zinc will focus on increasing recoveries from silver mines as well.

Below is the transcript of Sunil Duggal’s interview to Nigel D’souza and Ekta Batra on CNBC-TV18.

Nigel: I was just looking at your numbers and now in FY16, nearly nine lakh tonnes were produced from your zinc business. Now, in this year, we know that Rampura Agucha is going to be going through that transformation. Last year, it contributed close to around 60 percent of your total production. What kind of contribution can we see coming in from that mine?

A: We are very confident as per our robust business plan. We are confident much better than last year. So, if we look at the quarter one, it is right that it was a weaker quarter in terms of the mine plan and we have done exactly as per our mine plan. So, Q2 will be much stronger than Q1 and H2 will be much stronger than H1. So, it is with a robust business plan. So, the Rampura Agucha opencast mine, it goes to the famine and the feast. So, we have excavated more waste than ore in the current quarter and much of the volume has not come from the open pit mine. But definitely now, the quarter volume from the open pit mine as the waste has been excavated will be much better and the H2 volume will be much higher. So, from this standpoint, the volume from Rampura Agucha definitely will ramp up.

But, if you look at the underground mine, we are mining simultaneously from the opencast and the underground from our Rampura Agucha mine. So, as you look at the underground mine, the volumes are much better. We have done around 0.3 million tonnes of the production from the underground. So, with this runrate, we are quite confident because last year, we did much weaker compared to, for the complete year, much weaker compared to what we have done in quarter one. So, we are confident because now the infrastructure has been set up there and we are into the main block of the mining and the main stoping has started. So, in the current year, what I am saying is that we will get a much better volume from the underground and simultaneously a better volume from the opencast will come in Q2 and in the subsequent quarters.

So, overall this is a very robust plan. Along with that, the ramping up of the other mines is also progressing well. So, your overall volume will go up. The contribution from the underground mines will of course go up from around 40 percent last year to 60 percent. This is in line with the plan because of the opencast mine will close up in the next 3-4 years. So, with this we have to transition to 100 percent underground mining and along with that, we have to also ramp up from a million tonnes of the current production capacity to around 1.2 million tonnes in the next 3-4 years.

Ekta: If you can give us more details about the mine metal mix which is moving from rich content mines like Rampura to lower grade mines as well? How difficult will it be to increase production over a longer term?

A: I do not think it will be a challenge. It is as per the plan. The Rampura Agucha volume overall, when the concurrent production is coming from the open pit and the underground, the total volume in the next 3-4 years from Rampura location as such will vary much. But, what we are also doing is that we are ramping up our other mines. So, like Sindesar Khurd (SK) mines, in the current quarter, it has already produced a run rate of 3.75 million tonnes for which we have the licence capacity or the environment licence.

But, going forward, we are going ahead with increasing the licence capacity and the mine will further ramp up. Simultaneously, we have ramped up our Kayan mine, we have ramped up our Zawar mine. So, when all these mines are ramping up, the total ore production which was 10 million tonnes, it is going up to 15-16 million tonnes. So, it has to compensate with the lower grades. So, overall lower average grades will be compensated via the more ore production. And the total metal in concentrate (MIC), the transition will take place in which we will compensate what volume we will lose from the opencast mine. But we will also ramp up from a million tonnes to 1.2 million tonnes.