Hindustan Zinc to boost silver output by 30% as price surges

Hindustan Zinc would increase its silver output in the second half of this fiscal by nearly 30% compared with the first half.

Arun Misra, chief executive officer of the country's largest producer of the precious metal, expects prices of silver rising to up to $55 per troy ounce by January from around $51 currently.

While the Vedanta group company has cut its guidance for the production of silver through the year, it is aiming to produce as much as 380 tonnes of silver between October - March, compared to an output of 293 tonne between April to September.

"We are taking a stretched target. This is quite a stretch, and it is possible not to go beyond 62 - 63 tonnes a month," Misra told ET in an exclusive interaction. Given the lower production in the first half of the year, the company is aiming for the maximum it can produce in the second half, arriving at the revised guidance.

For Hindustan Zinc, the production of silver is linked to that of lead, and the production of lead falling by nearly a third reflected in the lower output of silver as well, which fell to 144 tonne in the September quarter, down 22% on year. In the June quarter, the company had produced 149 tonne of silver, down 4% as compared to the previous year.

Even with the lower volumes, the contribution of the silver business to Hindustan Zinc's consolidated earnings before interest, tax, depreciation and amortisation was at nearly 40% in the September quarter, an all-time high.

And Misra is optimistic that this will go up further in the coming quarters. This will be led by a combination of higher volumes and higher prices of silver. "I had earlier anticipated that silver prices will be around $42 - $44 per troy ounce. Now this looks like it can go up to $50 - $55 by January," he said.

The prices of silver have seen a sharp rally in the last few months to touch all-time highs of more than $54 per troy ounce. For Hindustan Zinc, the average prices of the precious metal rose 34% year-on-year in the September quarter, after a 17% on-year jump in the June quarter. Prices have, however, fallen more than 6% from the recent peak to around $52 per troy ounce.

The company will take a call on the production of silver for fiscal 2027 by January - February. "With lead prices at $1,600 - $1,800, and zinc around $2,900 - $3,000, it does not make much sense to produce more lead and less zinc. So we will be producing more zinc, but prioritise the production of lead from ore which has more silver," he said.