Hindustan Zinc expects incremental cash flows of at least USD 15 million (about INR 125 crore) in 2025-26, as it increases its proportion of renewable energy for the production of mined metal, senior executives told ET.
“We are looking at savings of USD 15 per tonne from power. So, if we produce 15 million tonnes, that’s the saving,” said the company’s chief financial officer Sandeep Modi.
Savings could be higher if the company’s production is higher, or if the company manages to save more on producing each tonne of zinc, he said.
The country’s largest producer of zinc and silver produced 1.08 million tonnes of mined metal in 2023-24, its best ever, and has guided for production of 1.10-1.12 million tonnes in the current fiscal.
Power costs account for about two-fifths of Hindustan Zinc‘s total production costs. Earlier this year, the company signed a pact with Serentica for renewable energy, and currently about 8.5% of its energy is renewable.
While the share of renewable energy will continue to increase in the company’s total consumption, Hindustan Zinc is also working on modifying its power plants so that they can work with domestically produced coal, said chief executive Arun Misra.
The company’s cost of production in the June quarter was at a multi-quarter low, having reduced 7% sequentially to USD 1,107 per tonne. The company has guided for the cost of production in the range of USD 1,050-1,100 per tonne in this fiscal.
“We should be able to live up to our guidance,” Misra said. “We will continue to reduce costs, and not stop at a number just because we have reached the guidance. Ultimately, we want to get to a USD 1,000 per tonne kind of cost target in a year’s time.”
Hindustan Zinc’s agreement with Serentica, for power at a flat rate for its tenure of 25 years, will play a significant role in bringing down the costs of production and increasing cash flows for the company.
On Friday, the Vedanta-owned company also announced its earnings for the June quarter, which saw a 19% year-on-year increase in consolidated net profit to a five-quarter high of INR 2,345 crore. Operating profit was also at a five-quarter high, increasing 17% year-on-year to INR 3,964 crore.
Revenue from operations stood at INR 8,130 crore, up 12% year-on-year, due to better metal volume and metal and silver prices, further supported by a strong dollar and partly offset by lower silver volume, the company said in a statement. Revenue increased 8% month-on-month, it said.
