Expansion positives factored into Hindustan Zinc valuations

The board of Hindustan Zinc Ltd (HZL) has approved a capital expenditure (capex) plan of ₹12,000 crore to be funded through internal accruals and debt to expand zinc smelting capacity by 250 kilo tonnes per annum (KTPA) at Debari in Rajasthan along with a mine capacity expansion of 330 KTPA.

- DEVANGSHU DATTA

At an investor meet held by the company, the management announced that the expansion is expected to be completed in the next 36 months, with capex across FY26-FY28.

The guidance is ₹3,500 crore capex in FY26, ₹5,000 crore in FY27, and the remaining in FY28.

Of the capex, ₹6,250 crore will be allocated to expanding zinc smelting capacity at Debari at a cost of $2,500 per tonne of capacity, which is lower than the global average of $3,500 per tonne.

This includes ₹1,000-1,200 crore for associated facilities such as a leaching & purification plant, cell house, and roaster.

The remaining capex will be on mine expansion.

The smelter expansion project will have its own fumer facility, which will produce an additional 30 tonnes per annum of silver.

Following the completion of Phase-I, the refined metal capacity will reach 1.379 million tonnes per annum, or MTPA (1.169 MTPA of zinc and 0.21 MTPA of lead), with refined silver capacity rising by 30 TPA to 830 TPA.

The existing capacity of 1.129 MTPA operated at a utilisation level of 93 per cent in FY25.

The Phase-I expansion will add 22 per cent to capacity.