Hindustan Zinc witnessed some remarkable milestone achievements during FY 2023-24. Can you highlight some of the feats?

FY 2023-24 was a year of solid growth for Hindustan Zinc. We delivered our guidance and sustained our margins despite the volatility in zinc prices as we navigated the market challenges with agility. We also continued to maintain a strong liquidity position, supported by healthy free cash flow from operations. I am happy to inform you that we’ve had the highest historic production levels across our business segments. Mined metal, refined metal and silver posted record numbers of production. I am proud to share that Hindustan Zinc is now the 3^rd largest silver producer globally, as per the World Silver Survey 2024 conducted by The Silver Institute, USA. Our Sindesar Khurd Mine now stands as the world’s 2^nd largest silver-producing mine, moving up from last year’s 4^th position. We increased our silver production by 5% over the previous fiscal to achieve the highest annual silver production of 746 MT. We hold the second largest zinc reserves and resources globally. Our total ore reserves, as of March 31, 2024, stand at 175.1 Mt (net of production of 16.5 Mt during the year). Our industry-leading production growth rate, with the best-ever annual metal production, is another highlight of our performance for the year. Refined metal production for the full year stood at its highest ever, reaching 1,033 kt, while mined metal production went up by 2% y-o-y to reach the best-ever production of 1,079 kt. Refined lead production for FY 2023-24 was at 216 kt, up 3% from the previous fiscal year. With the successful commissioning of the fumer plant and the Rajpura Dariba mill, we took another major step towards improving our metal recovery. The commencement of commercial production at our 30 ktpa alloy facility further marked the beginning of a new phase in our growth and expansion trajectory. I am also happy to share that Hindustan Zinc is in the 1^st decile of the global zinc mines cost curve, with the lowest annual zinc cost of production (COP) in the last three years, at US$ 1,117 per MT. The Company has been ranked first globally in S&P Corporate Sustainability Assessment in metals and mining sector, underscoring our strong commitment to sustainable growth. The recognition of our Pantnagar silver refinery by the London Bullion Market Association (LBMA) and inclusion in the ‘London Good Delivery’ list underscores the adherence of our silver refinery at Pantnagar Metal Plant to international quality standards, marked by LBMA certification of 99.99% pure silver. Operating on 100% renewable power, our silver refinery aligns seamlessly with the Company’s pledge towards achieving net-zero emissions by 2050 or sooner.

What were the key market challenges in which the Company operated during the year, and do you foresee these easing in the coming months?

It was a difficult year for the industry on account of a number of global challenges, which impacted our financial performance in terms of absolute numbers. Despite suspension or closure of mining activity in many parts of the world, zinc prices continued to slide. On a year-on-year basis, zinc prices came down by 25% during FY 2023-24. This led to subdued demand and a huge pile-up in zinc stocks. However, beginning April 2024, zinc prices have started to rise, with the rebound in global manufacturing activity causing the prices of all commodities, including zinc, to rise on account of the increased global demand and supply disruptions. In the domestic market, stronger Purchasing Managers’ Index (PMI) has led to 20% year-on-year increase in zinc consumption, and we expect the demand to remain robust as the steel market continues to expand and grow on the back of India’s economic growth, rapid urbanisation, and a growing focus on quality infrastructure. Lead prices softened during FY 2023-24 owing to lower demand and on account of the fact that automobile sales saw a dip at the start of the year before picking up later. The Indian lead market has not been seriously impacted by the demand decline as a result of the enhanced focus on infrastructure and the additional spend on EV charging, as per the budget for FY 2024-25. We see significant improvement happening in both the zinc and lead markets, going forward, and these augur well for the Company, which has the capacities and capabilities to efficiently harness the demand opportunity. Silver demand is also expected to increase significantly, given the headroom that exists for the development of industrial use-cases like EVs and 5G, etc. Hindustan Zinc’s silver maximisation strategy has placed it in an ideal position to capitalise on this growth potential in the coming years.

Sustainability is extremely close to our hearts, with our commitment to propelling sustainable growth as an important pillar of our business strategy. Apart from its #1 ranking in the metals and mining industry in S&P Global Corporate Sustainability Assessment 2023, Hindustan Zinc has become the first Indian metal &mining company to have its near-term and long-term net zero targets validated by SBTi. We have also been recognised with leadership band scores (A-) in Climate Change & Water Security by CDP (Carbon Disclosure Project).

The safety and well-being of our people is a key priority of our ESG journey and we continue to enhance our investments in the same, year-on-year. It gives us immense satisfaction to note that Hindustan Zinc has had six consecutive quarters of fatality-free operations, as of March 31, 2024. Our people safety commitment, which also extends to our business partners and their employees, is uncompromising and we shall continue to work towards further strengthening the safety environment at the mines. In line with this focus, we organised ‘Wednesday for Transition’, a training series for equipping suppliers with critical knowledge on ESG topics, facilitating ESG risk management throughout the value chain. In addition to our ongoing safety programmes such as ‘Aarohan’, we have introduced a series of other initiatives to promote safety across our operations. These include critical risk management, safety pause, emergency response training and deploying cutting-edge technologies such as tele-remote operations and underground drones. We have also established India’s 1^st all women underground mine rescue team, thus seamlessly integrating our safety proposition with our diversity and inclusion focus. Promoting diversity, equity and inclusion is paramount to us, and the launch of #Zinclusion programme strengthened this proposition by enabling us to bring 16 LGBTQIA+ members into the Hindustan Zinc team. The various awards we have won for our people and safety practices clearly endorse our exemplary focus on these areas, and we shall continue to strengthen our efforts to raise the bar of our people safety further. I want to mention here that our empowerment focus is not limited to our own people but also to the employees of our business partners. In line with the government’s focus on promoting the MSME sector, Hindustan Zinc has taken a lead and prioritised payments to its MSME business partners, with an average payment cycle better than the statutory requirement by 22% for FY 2023-24. This marked another strong endorsement of our commitment to ESG and our dedicated efforts to enhance the sustainability focus in our supply chain partnership through social responsibility.

We are quite positive about Hindustan Zinc’s prospects in the coming year in light of the recovery we are seeing in the zinc and lead markets and the significant potential for growth in the silver market. Though inflation persists in the US services sector, and Europe’s construction and manufacturing sectors continue to be weak, commodity prices started surging since April 2024, with silver touching its highest value in rupee terms. The silver growth was on account of expectations of interest rate cuts by the US Fed, coupled with geopolitical tensions between Iran and Israel. The global manufacturing PMI also has been indicating a sustained expansion in output since February 2024, and India is leading the expansion among the major economies with its manufacturing PMI recording its 16-year high at 59.1 in March 2024. Global steel demand is forecasted to grow in FY 2024-25, with India contributing the most with a projected growth of 8.2%.