Commodity Czar

Anil Agarwal Has Seen His Fortunes Change With an Upswing in Commodity Prices.

- Rajeev Dubey

Nearly 1000 metres deep in the womb of mother earth, some 80- odd kms from Udaipur in Rajasthan, a stream of monstrous 60 tonne trucks haul zinc ore over steep ramps. The deafening roar of their 760 HP engines inside Hindustan Zinc’s Sindesar-Khurd (SK) Mine is a cochlea-numbing experience. Mine chief Sanjay Kumar Sharma is hollering away on the wireless. He doesn’t have a choice as the wireless buzzes with a heady combination of Peruvian, Brazilian, Rajasthani, Punjabi, Hindi and heavily accented English from truck operators and their supervisors. Consequently, misunderstanding is not uncommon and nor is the scenario of this orderly movement of heavy duty trucks giving way to chaos. A wrong instruction could cause traffic jams lasting several hours on the one-way ramps. When they happen, Sharma needs to resolve the confusion fast—real fast. Delay in ore supply leads to production loss at a time when global zinc prices are on a tear. It also goes counter to group chairman Anil Agarwal’s mandate to ramp up zinc production to cash in on the uptrend in prices – it will earn more per tonne and costs will be spread over a higher base.

For nearly a decade, zinc remained an under-invested sector globally. But in a span of just two years – with some large mines in Australia and Ireland exhausting their resources and some in China shutting down due to environmental concerns – global zinc surplus turned to shortage, global inventory hit an 18 year low and world zinc prices nearly doubled from $1,600 a tonne to just over $3,000 per tonne. As an integrated player with a production cost of barely $800 per tonne, suddenly Vedanta is raking profits in zinc.