The Hindu Business Line : Refined zinc demand seen rising 15 pc

DEMAND of refined zinc in the country is expected to increase to around 4,00,000 tonnes in 2004-05 fiscal from 3,50,000 tonnes in 2003-04, an increase of 15 per cent, industry sources said.

"Demand for refined zinc is growing at the rate of 12-15 per cent annually and is likely to be sustained for next few years," Mr K.K. Kaura, Managing Director of Hindustan Zinc Ltd (HZL) and also Chief Executive Officer of the Sterlite group, told Business Line.

HZL and Binani Zinc Ltd (BZL), the two major producers of zinc products in the country, cater to 80-85 per cent of the domestic demand.

HZL is estimated to produce about three lakh tonnes (including 2.3 lakh tonnes through domestic capacity and 70,000 tonnes through toll processing route) for 2004-05 against the actual output of 2.6 lakh tonnes in 2003-04 (including 2.25 lakh tonnes through domestic capacity and 35,000 tonnes through toll processing route).

As HZL has surplus mining capacity, the company sends zinc concentrate to overseas zinc smelters (in China and Korea) for toll processing and gets refined zinc back in India. HZL received about 35,000 mt of zinc in 2003-04 through this route.

"This not only helped HZL to fill the local supply gap but also increased HZL's market share. HZL will continue to adopt the toll processing route to fill supply gap till its expansion comes on stream," Mr Kaura said.

BZL, another zinc smelter, is estimated to produce around 35,000 tonnes for 2004-05 against about 32,000 tonnes in 2003-04.

Thus, the total supply by these two producers will be around 3,35,000 tonnes for 2004-05 against 2,90,000 tonnes in 2003-04.

However, the demand-supply gap would be around 65,000 tonnes for 2004-05 against 60,000 tonnes in 2003-04, which is largely met through imports.

"About 75 per cent of total zinc in India is used in steel galvanising (mainly sheet/coil).

Strong growth exhibited by steel sector (both in Indian market and export) is likely to lead to further increase in usage of zinc in galvanising," Mr Kaura said.

"Zinc consumption is gradually picking up in construction sector where zinc is being used in galvanization of re-enforcement bars. Other areas where zinc will find increased usages in future are die-casting, highway guard rails and zinc alloys (replacing imports)," he said.

"Increased spending on infrastructure and higher awareness among people about anti-corrosive property of zinc will lead to high consumption growth of zinc in India. We believe 10 per cent plus growth rate is sustainable for next few years," Mr Kaura said.

Global zinc consumption is expected to grow at 5 per cent for next couple of years.

HZL to expand capacity

HZL is expanding its refined zinc capacity from existing 2,30,000 tonnes per annum to 4,00,000 tpa.

The company expects the project to be commissioned by early-2005. The expansion will meet the burgeoning local demand-supply gap.

"Smelter expansion will come at Chanderiya. The Rampura Agucha mine capacity is also being increased from existing 2.2 million tpa to 3.75 million tpa to meet increased concentrate requirement," the HZL Managing Director Mr Kaura told Business Line.

A coal-based 154-MW captive power plant is also part of expansion programme.

The total capital investment for the expansion is Rs 1,550 crore. The company raised external commercial borrowings of $125 million (Rs 550 crore) for this project. The rest will come from internal accruals.

Leading vendors such as Lurgi, Outokumpu, ABB, Alsthom and BHEL are associated with the project.