Hindustan Zinc Ltd (NSE: HINDZINC) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Raksha Jain — Director, Investor Relations
Arun Misra — Chief Executive Officer and Whole Time Director
Sandeep Modi — Chief Financial Officer
Analysts:
Amit Dixit — Analyst
Ashish Kejriwal — Analyst
Manav Gogia — Analyst
Raashi Chopra — Analyst
Shreans Daga — Analyst
Shivani Tanna — Analyst
Anirudh Nagpal — Analyst
Jainam Shah — Analyst
Shweta Dikshit — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 and Nine Months FY ’25 Earnings Call of Hindustan Zinc. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone.
I now hand the conference over to Ms Raksha Jain, Director of Investor Relations of Hindustan Zinc Limited. Thank you, and over to you, Ms Jain.
Raksha Jain — Director, Investor Relations
Thank you, Sagar, and good evening, ladies and gentlemen. Thank you for joining us today to discuss the 3rd-quarter and nine months results of FY ’25.
In this call, we will refer to our investor presentation available on our company’s website. Please note that today’s entire discussion will be covered by the Safe-Harbor clause mentioned on Slide 2 of the presentation. Today, we have our CEO, Mr Arun Mishra; and CFO, Mr Sandeep Modi. The management will be discussing the operational and financial updates for the quarter, followed by a Q&A session.
Now I would like to invite Mr Arun Mishra to present the results. Over to you, sir.
Arun Misra — Chief Executive Officer and Whole Time Director
Thank you, Raksha. A very good afternoon to all of you. Thank you for joining us today for the 3rd-quarter and nine months FY ’25 results briefing.
This quarter has been a historic 3rd-quarter in terms of financial performance and we delivered highest-ever mined metal and refined metal production on a Nine-Month basis. Globally, zinc production was flat in last five years. However, the growth of Indian demand was a CAGR 5% and so was the production growth of. We feel we are in the right place at the right time with a competitive cost advantage to unleash benefit from stable LME and silver prices. This exceptional performance was driven by our operational excellence with a strong focus on safety and continuous improvement across all areas.
I’m proud to announce that once again, we have been recognized as the global leader in sustainability among 248 metals and mining companies in the S&P Global’s Corporate Sustainability Assessment 2024. Furthermore, with the release of our 43cent Climate Action Report, Hindusan Zinc has been the first company in the metals and mining sector to achieve this distinction. We firmly believe that a strong septic culture is key to driving operational excellence. This quarter, we recorded zero fatalities.
On sustainability front, against the target of 0.5 million tonnes CO2 emission reduction, we have achieved 0.4 million tonnes of CO2 emission. With the increased use of renewable energy and eco-friendly battery vehicles in our mines, we are on-track to achieve the decarbonizing target by 2050. Both zinc and silver are important for the global transition to low-carbon future, be it energy storage solutions, renewable energy technologies, electric vehicles and infrastructure offering a sustainable alternative to large-scale storage and clean-energy production. The global shift towards clean-energy making zinc and silver indispensable and the demand for both zinc and silver is expected to rise significantly.
Moving to the market update. While Indian economy is expected to register 6.4% GDP growth in FY 2025, we see healthy demand for zinc in domestic market and our market-share remained healthy at 77%. In 2025, global steel demand is expected to grow by 0.5% to 1.5%, where in — whereas India is expected to lead the steel demand growth underpinned by its expanding infrastructure and construction projects, eventually increasing the demand for zinc and making India the third-largest zinc consumer globally.
During the quarter, the zinc and silver prices rose significantly by 16% and 27% year-on-year respectively, with the silver price touching its highest of $34.51 per try ounce during the quarter. The global refined zinc market is forecasted to remain in deficit in 2025 with a significant increase in-demand, partly offset by increased production in Europe. This deficit is also expected in the refined silver market with growing industrial use cases benefiting especially from renewable energy initiatives and automotive, et-cetera, thereby reflecting a bright outlook for silver in foreseeable future.
During the 3rd-quarter, we produced 265,000 tons of mined metal, up 3% sequentially in-line with higher road production and higher mined metal grades. We have enhanced the mine development by 14% sequentially to around 25 kilometers, preparing the mine to be future-ready. We reported refined metal production of 259,000 tons, slightly down sequentially due to maintenance activities. Despite all these, on nine-month basis, we have recorded our highest-ever mined metal and refined metal production this year. The nine-month mined metal production stood at 784,000 tonnes and refined metal production stood at 783,000 tonnes in-line with better plant availability and operational parameters. With a given record nine months performance and a proven run-rate, we are confident on achieving the full-year volume guidance for the mined metal and refined metal production.
As silver remains a significant contributor to our profitability with about 20 times growth in the past two decades, we continue to maintain a leading position being third-largest silver producer globally. As you all know that we have indigenously commissioned few more facility to generate wealth from the waste, leveraging a first-of-its-kind technology in India. Since COVID, we have been facing challenges in getting visa for our Chinese partners and we were facing some operational challenges as well. Therefore, we took strategic maintenance shutdowns, which has been concluded in January and the plant operations have been resumed.
On the other hand, we are also hopeful on issuance of Chinese visas based on discussions with the government, given the strategic importance of silver in India. Post this, we are hopeful to achieve the silver production of around 32 tons from on annual basis. Considering the shutdown of the plant in-quarter three and some changes in the mine sequencing in the SK mine as per geotechnical situations, we will achieve a silver production between 700 tons to 710 tons during the current year.
Our jinx COP for the quarter stood at $1,041 US dollar per ton, lower by 5% year-on-year, driven by improved metal grades, better domestic coal availability, increased renewable energy usage, higher asset realization, softened coal and input commodity prices and operational efficiencies. This demonstrates our efforts are on the right path of achieving our target of $1,000 per tonne for the cost of production.
Through a focused approach to significantly reducing costs alongside operational excellence, we have achieved a strong financial performance, recording the highest-ever 3rd-quarter revenue and EBITDA. Our profit-after-tax stood at INR2,678 crores, reflecting an impressive growth of 32% compared to an 18% increase in total revenue-driven by cost-reduction.
In conclusion, we are dedicated to expanding our capabilities with a focus on growing our R&R base to strengthen our global positioning. Our efforts will remain focused on broadening our portfolio in emerging areas such as minor metal recovery and value-added products, all through sustainable methods to drive greater value for our shareholders.
With this, I now hand over to Sandeep for an update on the financial performance.
Sandeep Modi — Chief Financial Officer
Thank you, Mr. Mishra, and a very good evening, everyone. Despite facing high inflation and global uncertainties, the Indian economy demonstrated remarkable resilience in the year 2024, making it the world’s fastest-growing major economy, characterizedized by strong GDP growth, substantial foreign actions reserve and a record level of FDI inflows. With it being on a fast-track to become the third-largest economy in terms of real GDP by 2030, the World Bank recently projected that India’s growth will remain robust in FY ’26 and ’27.
The base metal sector experienced a volatile 2024, starting the year as a weak performing asset class. However, in the latter half of the year, it rebounded driven by global demand for the metal used in the artificial intelligence and green energy transition. Gold and silver stood out by reaching record-high levels. Overall, both base metal and precious metal ended the year in positive territory, reflecting optimism about their long-term demand outlook.
Considering the demand growth we have witnessed in 2024, reflecting in the commodity prices and economic growth, the year till-date has been our best-ever performance in terms of mined metal and refined metal production. With the continued focus on the stringent cost-control and surge in the commodity prices in double-digits, we achieved highest-ever 3rd-quarter revenue and EBITDA with 10 quarter best EBITDA margin of around 53%, up 400 bps over last year. Our market-share in India has also increased to 77%.
During the 3rd-quarter, our total revenue from operations stood at 10th quarter best figure of INR8,614 crores, which is also ever highest 3rd-quarter revenue, up 18% Y-o-Y in-line with better zinc and silver prices, further supported by strong dollar and marginally offset by lower lead and silver volume and lead prices. For the year, till-date, the total revenue from operations stood at INR24,996 crores, up 17% Y-o-Y, driven by record metal production, higher zinc and silver prices, a stronger dollar was partly offset by lower silver and lead prices. We achieved highest-ever 3rd-quarter EBITDA of INR4,539 crore, up 28% Y-o-Y, in-line with strong volume, higher realization and lower-cost of production.
This quarter, our Hindustan Zinc Alloy Private Limited, a 100% subsidiary of Hindustan Zinc has also achieved an annualized run-rate of generating EBITDA of INR150 crore against the overall investment of around INR200 crore, delivering on-track payback of less than two years. For the nine months, the EBITDA stood at INR1,200 649 crore, up 26% Y-o-Y through record metal production volume, higher realization and lower-cost of production, though partly offset lower silver volume as already highlighted by Mr Mishra.
The Zinc Corp excluding royalty stood at 15th quarter lowest figure of $1,041 per ton during the quarter with four year best-cost of production of $1,073 per tonne for the nine months. This indicates our progress towards recording a four-year lowest-cost for the full-year and confident enough on achieving the full-year cost guidance towards its lower band. Our growth projects, Debai roasted 160 KTPA and fertilizer is going well. We spent INR1,024 crores in growth as well as in sustaining capex during the quarter. We have delivered healthy free-cash flow, pre-CapEx of INR2,628 crore in 3rd-quarter and INR9,664 crore on a nine-month basis. We reported our nine-quarter best profit-after-tax of INR2,678 crore, up 32% Y-o-Y, in-line with the higher EBITDA. For the nine months, profit-after-tax stood at INR7,350 crore, up 28% Y-o-Y. The effective tax-rate for the quarter is 24%.
Supporting the government’s effort to empower the MSME sector, we have prioritized payments to MSME vendors, achieving an average cycle of 18 days, which is 60% faster than the institutory requirement. This underscores our commitment to ESG principle and strengthens trust in our supply-chain though enhanced social responsibility. This year, again, we have continued our legacy of ensuring highest-level of corporate governance and transparency in reporting practices.
I am proud to share that Hindustan Zinc’s integrated annual report for the financial year ’24 was recognized as one of the top integrated Annual report in India and won Gold Award with the top-50 rank worldwide at the LACP USA Spotlight Awards. Overall, we achieved strong performance for the quarter and the nine months our focus on operational excellence and cost-reduction is driving improved financial results. Our large-scale low-cost operation consistently delivering industry-leading EBITDA margins and generating strong cash-flow from operations. With the further increment in the share of renewable power in the overall power requirement, increased production volume and other recovery enhancement initiative, we are confident of achieving the design cost of $1,000 per ton.
With the solid foundation for continued success, we position ourselves for future growth and maximizing value for all our shareholders. Before I hand over to operator, I’m also happy to share that company delivered superior total shareholder return of around 62%, that is INR181 per share in comparison to 10x of Nifty 50 and 13 times of Metal Index. Our market capital also increased by INR64,000 crores during this financial year.
With this, I now hand over to operator for Q&As. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone phone. If you wish to remove yourself from the question queue, you may press R and two. The participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles again you may press star and 1 to join the question queue our first thank you.
Our first question comes from the line of Amit Dixit from ICICI Securities. Please go-ahead.
Amit Dixit
Yeah, hi. Good evening, everyone, and thanks for the opportunity. Congratulations for a good set of numbers this quarter. I have couple of questions, sir. Is it possible to quantify the hedging gain in this quarter, the residual hedging quantity we have and if there was any fresh exposures taken in this quarter? Thank you.
Sandeep Modi
Hi. Sandeep here. Good evening. So we have overall hedging gain in the nine months locked-in is INR58 crore rupees flowing through the P&L and the remaining around INR64 crore is lying in the other comprehensive income, which will flow into P&L in the Q4. The open quantity is around 14,000 tonnes of the zinc, rest all has been squared off.
Amit Dixit
Okay. Okay. No fresh exposures were taken on this quarter.
Sandeep Modi
No fresh exposure.
Amit Dixit
Okay. The second question is around the — in the prepared remarks, we mentioned that there was a lower production due to maintenance-related shutdown. So is it possible to quantify what kind of in quantity terms, what would have been the loss?
Sandeep Modi
So if we see 259 KT of metal, perhaps another 5, 6 kt would have been added to it.
Amit Dixit
Okay. Okay, sir. Great. Great. And given the level of LME prices at the moment, is it fair to assume that we will be running the combo smelter in zinc mode only because zinc prices are — appear to be quite favorable over late.
Sandeep Modi
Absolutely. We will be continuing in the lead plus zinc mode only and also quarter-four typically the mines are at their peak in producing concentrate and our best mines — best grid mines in Agucha primarily being zinc mines. So we will have more of zinc MIC and will be continuing and the prices are favorable. So we should be continuing in that same mode only.
Amit Dixit
And the geotechnical issues that you alluded to in your prepared remarks are now averted in-mine.
Sandeep Modi
Few technical issues will come here and there in the mine, but we have got solid mechanism behind it to address along with international experts who work with us. So while they may have little bit of issues while development, but I don’t see a big challenge there.
Amit Dixit
Okay. Great, sir. Thank you so much and all the best.
Sandeep Modi
Thank you.
Operator
Thank you. Participants, you may press star and 1 to ask a question thank you. Our next question comes from Ashish Kejriwal from Nuvama Wealth Management. Please go-ahead.
Ashish Kejriwal
Yeah. Hi, good evening, everyone. Thanks for the opportunity. Sir, quick three questions. First, you mentioned that you are still maintaining the overall mine metal production guidance as well as refined zinc guidance? Yes, of course, we are still holding on to it. Because that means that 4th-quarter could be 350 around KT from 265 to 350 KT, do we think that we will be able to manage that?
Sandeep Modi
So Ashish, this is Sandeep here. So it’s a — I think if we do 316 KT of the mined metal, I’m not sure how we are getting 350. If we do 316 kt of the mined metal, we can achieve the guidance. And for the metals, we need 290 kt. So — and the roaster is getting commissioned in the mid of February. So we are quite confident to achieve both of those.
Ashish Kejriwal
Okay. That’s great. Second question is in terms of royalty, is it possible to quantify how much royalty we have paid to our parent in nine months and three months respectively?
Sandeep Modi
So it’s around INR650 crore for the full-year.
Ashish Kejriwal
Okay. So we have already paid INR650 crores for entire FY ’25.
Sandeep Modi
Yeah, yeah. It’s paid-in advance and adjusted before the next payment is done.
Ashish Kejriwal
Yeah. And sir, lastly, last quarter also we said that we are working on to increase our capacity from 1.2 to something like 2 million ton and can give some kind of details. So any progress on that front?
Sandeep Modi
And also we have almost finalized mining contractors because all said and done, the mines need to be depend, new levels to be opened up. So whichever way we design the mine, we have to do that task, which is no regret move. So we are finalizing the both two Australian contractors and one Peruvian contractor and that should happen in early-February and so that they can start mining in month of April. So that will start adding more volume to next year’s ore production.
Second is expansion of smelters, current expansion of new roaster, which is in getting commissioned in this quarter itself. And also we are finalizing the order for a 250 KTPA of metal production capability in the smelter side. So as you — as the strategy that we are adopting, you won’t hear one project of 2 million ton, you’ll hear expansion projects being announced every now and then of some 250, sometimes another 250 KTPA depending upon where I find — where we find it most suitable. And I’m sure first two steps are two mining contractors engaged in mines for deepening the mines and 250 KTP order placement for expansion of smelter, that will be followed by many such steps.
Ashish Kejriwal
So sir, is it possible if we can say on, for example, next five years plan, year-wise, like we are 1.2 million ton mine metal right now and defined metal of 1.1, how we are stepping ahead and reach 2 million ton maybe five years, seven years whenever, but year-wise, not obviously, as you rightly pointed out, it can’t be go one-go, but from 1.2, are we going to 1.35, 1.5. So year-wise, if it’s possible to share?
Sandeep Modi
It will be very correct. So as I said, 250 KTP if I commission, 1.2 will go to 1.45 directly, which is close to 1.5. And then maybe we will look at another 0.500 KTPA plant, a 0.5 million ton plant to take the capacity to 2 million ton. That will be in one-go. But the first figure is from 1.2 to 1.45 and commensurate mining. If once that establishes which I can see anywhere between one and up to 2.5 years’ time, which will be — take us to FY ’27 and then we will see to take it from 1.45 to 2 million tonnes.
Ashish Kejriwal
Okay. Okay. So one thing is sure that from 1.2, we are going ahead to 1.45 by FY ’27 or max FY ’28.
Sandeep Modi
Absolutely.
Ashish Kejriwal
Okay. Thanks, sir. Thank you and all the best.
Sandeep Modi
Thank you.
Operator
Thank you. Participants, you may press star in one to ask a question. The next question comes from the line of Manav Gogia from YES Securities India Limited. Please go-ahead.
Manav Gogia
Oh, very good evening and thanks for the opportunity. So one question I wanted to ask was on the Hindustan Alloy plant. Could you quantify the amount of EBITDA that was generated during this quarter?
Sandeep Modi
The EBITDA generated by Hindustan Zinc Alloy Private Limited is INR43 crore during the quarter three and profit-after-tax of INR31 crores.
Manav Gogia
Okay. And what would be the annual run-rate that we can expect on a full-year basis from the same?
Sandeep Modi
So full-year basis — full-year basis, we can expect at a peak capacity of around INR200 crore EBITDA. And since it’s a new company, the ETR will be 17.44%.
Manav Gogia
Got it. Thank you so much. So one more question was, can you give me the blend of renewable energy in the total energy mix that we had, I think last quarter we were somewhere around 14% and we had guided to be between 25% to 30% during this particular quarter. So if you could just…
Sandeep Modi
During this quarter also, it was around 15% in the overall total power — total power, the renewable energy component was 15%.
Manav Gogia
Got it, got it. Sure, sir, I’ll join back the queue for more. Thank you so much.
Sandeep Modi
Thank you.
Operator
Thank you. The next question comes from the line of Raashi Chopra from Citigroup. Please go-ahead.
Raashi Chopra
Thank you. Just a couple of questions. On this renewable energy, will you still exit the 4th-quarter at 25%?
Sandeep Modi
Renewable exit — energy exit, exit we should be around between 18% to 20%.
Raashi Chopra
Okay. And the — I don’t know if I missed this on this call, but the cost of production guidance for the full-year, you still maintaining what you had given earlier?
Sandeep Modi
So we had a guidance of INR1,050 to 1,100 and we are maintaining the same guidance. As I said in my talk track, we should be delivering towards the lower-end of the guidance.
Raashi Chopra
Okay. And just on the restructuring, I mean, there were press articles which were suggesting that you couldn’t talk to the government. Have those concluded or they’re still ongoing?
Sandeep Modi
No, restructuring, no, we were — government was busy on the part, so we did not press for demerger because both were interconnected as I had spoken at the last quarter Board meeting. And also in the meantime, the critical mineral mission was declared, more-and-more blocks were being announced. So we focused our attention into bidding for new mineral blocks and the critical mineral mission and we were successful in four blocks, out of which one of course has been canceled later on by the Government of India, three are with us. And this is another area we — this also adds to the enterprise value and hence the shares. So we use that opportunity. In the meantime, government USA, so 1.5% has been done. If nothing else happens, then again we’ll come back to talking about demerger.
Raashi Chopra
All right. And just one last question from me. On the dividend side, I mean, there has been a bit of a slowdown vis-a-vis what has been announcing. So is there any sort of change in dividend policy or we can expect it to kind of resume?
Sandeep Modi
So I think there is no change in the dividend policy. The dividend policies remain a 5% of the opening net-worth or the 20% — 30% of the profit. And I think we have already delivered INR12,000 crores for this financial year, which is almost equivalent to the profit-after-tax of the full-year. So there is no change.
Raashi Chopra
Okay. Thank you.
Operator
Thank you. The next question comes from the line of Shreans Daga from Barclays. Please go-ahead.
Shreans Daga
Hi, thanks for the opportunity and congrats on a good set of numbers. I have one question on the Supreme Court ruling on mining sales last year. So has Hindustan received any of the new demands for any kind of says related to mining? And are you making any provisions for the rest of the year for any such demands?
Sandeep Modi
So, I think we have been very, very ultra-conservative and we provided INR83 crore as a provision in the last quarter and there has not been any demand on account of it. We will actually see whether to reverse in the subsequent quarters.
Shreans Daga
Okay, that’s it from me. Thanks.
Operator
Thank you. A reminder to all the participants. If you wish to register for a question, please press star N1 on your touchstone phone. The next question comes from the line of Shivani from Dolat Capital. Please go-ahead.
Shivani Tanna
Yeah. Thank you for the opportunity. Sir, my question was regarding the silver production FY ’25 guidance was 750 to 775 tonnes, but 9M volume shows that the guidance might not be achieved. So any impeding reason for the same and future prospect regarding the status of additional silver volumes from the pharma?
Arun Misra
Although every year we do give a guidance, silver guidance when we give the guidance for cop, capex and the metal volume, but all of us have to appreciate that silver is just a byproduct and it is — it is a reflection of the grade and what we are mining as on-date. So while you know it’s — since it’s a byproduct, we would rather say our focus would be on meeting the guidance on metal and meeting the guidance on cop — cost of production, meeting the guidance of meeting the guidance of capex. However, silver being a byproduct, we should try to reach to whatever level closer as-is physically possible under the current circumstances, which Sandeep has already anywhere between 710 tonnes or more we should be able to do. May not be meeting the guidance, but it’s not much of a concern because we should — our primary focus is meeting the guidance on metals.
Shivani Tanna
Okay, sir. Got it. Thank you.
Operator
Thank you. The next question comes from Anirudh from JM Financial. Please go-ahead.
Anirudh Nagpal
Hello, sir. I’m audible?
Arun Misra
Yes absolutely.
Anirudh Nagpal
So sir, first of all, congratulations on a good set of numbers. So I just wanted to have a question regarding the factors, which will be driving the cost from 1,041 to INR1,000. So can you please give a color on what will be the factors?
Sandeep Modi
Yeah. I think the $1,041 to $1,000, I think from going here, the — we had the highest cost of around say $12, $97 and last 15 quarters we have gone significantly down every quarter and now around 1,041. As I said, we should be around $1,050 on a year basis. From here, the journey, the main component will be the renewable energy. As I have been explaining in the earlier part that we are the far from the mine. So we have very significant logistic cost and renewable energy does not come with any cost of the logistics. So every 2% increase in the renewable energy will save $1.
And as we have signed the two power delivery agreement with the Serentica and the third power delivery agreement is going to be signed, so we will be almost 70% secured from the renewable power through the renewable energy. And from 15% to 70%, that is around 55% increase, we will have a $30 cost-reduction in the next two years. It will happen in the phases. So that is the key 80% component for my cost-reduction. And second key component would be the volume increase. So more-and-more volume increase will have a more fixed-cost absorption given that I have 30% to 35% fixed-cost. So over the FY ’26 and FY ’27, we should see the cost, I believe and hopeful to see FY ’26 exit cost around $1,000 and FY ’27 should be below $1,000.
Anirudh Nagpal
Okay, thank you. That answers my question.
Arun Misra
Thank you.
Operator
Thank you. Participants, you may press star N1 to ask a question. A reminder to all the participants, if you wish to register for a question, you may press R&1 on your touchtone phone. The next question comes from Ashish Kejriwal from Nuvama Wealth Management. Please go-ahead.
Ashish Kejriwal
Yeah, thanks for opportunity. Sir, I missed that time. What could be the probable capex for this expansion, this 250,000 tonnes smelter as well as mine expansion, which we are planning to do.
Sandeep Modi
So we are planning, as Mr. Mishra has said for 1.2 million to 2 million tons. So it will be in the phases, but overall capex as a very, very highly indicative basis our past capex performance and the global benchmark should be between $2 billion to $2.5 billion is spreading between the three to five years.
Ashish Kejriwal
But the $2 billion to $2.5 billion is for 1.2 to 2 million tonnes. So we have visibility only for 1.2 to 1.45 right now. So have we gone ahead with ordering or still it’s in the both stage?
Sandeep Modi
No, no, Ashish, I think we have — we — as of now, we have appointed a three global mining consultant and one for the smelter and three for the mining. So mining is more like doing the mine development. It smelter is very easy to set-up. Smelter — our global benchmark is around $3,000 of the cost of — for the project cost in case of Europe, which is around $4,500 per ton. Our case, it has been always $2,300 to $2,400 per ton. So we should be remaining in the same range. So $250 KT multiply by to $2,500 should be around a $500 million kind of numbers to put in a perspective, $500 million of the numbers for putting the smelter. And similar, if I take the mining expansion, if I have to mass that 250 kt, it should be around $700 million to $800 million. So over 250 KT for mining in a smelter should be around I think $1 billion to billion.
Ashish Kejriwal
Okay. That’s very clear, sir. So — and we are planning to start it from next year maybe.
Sandeep Modi
Yeah, yeah. We should be planning for next year also. Next year and we are also working on the 10 million tonne of the recycling project as well, tailing recycling.
Ashish Kejriwal
Okay. Can you please explain, sir, give some more details on that 10 million ton recycling?
Sandeep Modi
No, so we will be putting up a 10 million ton recycling plant, which will be annually processing 10 million ton of tailings. We have got huge quantity of tailings in Rampur Agucha mine and we’ll be taking the tailings out from the tailings them, reprocessing it and produce zinc and zinc out of it. So roughly it has a grade of anywhere between 2% to 2.5%. And since there is no-cost attached to the import side, so only thing we need to do is process it, which can be a function of the current technology we are exploring is a function a combination of flotation and then leaching with sulfuric acid and produce directly zinc sulfate out of it and then transport zinc sulfate to smelter and produce zinc. So this is something will make our process more sustainable. It’s a reuse and recycle principle and also produce additional zinc from the tailings that we have. We don’t have to mine it.
Ashish Kejriwal
Sir, is it possible to share now how much tailings we have and when we are going to plan or start this recycling plant or when we’ll start hitting our P&L?
Sandeep Modi
So maybe we’ll have to wait for one more such call, maybe after another Board meeting when we’ll come back with further details. But as of now, we are working aggressively with the designers. We are sending samples to Australia for testing so that the technology can be frozen. Once, I guess another one, one and a half month that will be done. And once that is done, then we can come back and share with you how much will be the yield of it, how much will be the capex of it. And I’m sure this will be very-high payback project, it will happen. And also it will be one of its kind in the world. No other zinc mining and smelting company has ever thought of making such a large-scale plant for tailing reprocessing.
Ashish Kejriwal
Yeah. And this will be under Hindustan Zinc only.
Sandeep Modi
Of course, this will be under Hindustan Zinc. If the demerger doesn’t happen before that.
Ashish Kejriwal
Yeah. Okay, sir. Thank you and all the best.
Sandeep Modi
Thank you.
Operator
Thank you. The next question comes from Jainam Shah from Indsec Securities and Finance Limited. Please go-ahead.
Jainam Shah
Good evening, sir. Thank you so much for this opportunity and congratulations on good set of results. My only question is that what is the revenue potential from the DAP plant that is going to be expected to be commissioned in FY ’26?
Sandeep Modi
Okay. So, Jainam, thanks for your question. The fertilizer plant will get commissioned by the Q4 ’26, so we are not expecting any revenue from the DAP plant in FY ’26, sir. The — on a full-scale basis for this 5.1 lakh ton of the fertilizer plant, we are having the EBITDA potential of INR400 crore to INR450 crore annually.
Jainam Shah
Yeah. So you have been mentioning EBITDA across the different calls that has been there, but revenue potential is not shared. So any specific reason for that or it’s still in the books. So what will be the revenue potential? I just wanted to know that.
Sandeep Modi
Revenue potential will be, I think we are talking about because we are having taking a 12%, 13% margin. So in this kind of the project will be — revenue will be around INR2,000 crores INR2,500 crores. That’s the revenue. So I think very simple math, nothing to hide about it.
Jainam Shah
Okay. Okay. Thank you so much, sir. Thank you. Thank you for the question.
Operator
Thank you. The next question comes from Shweta Dikshit from Systematix. Please go-ahead.
Shweta Dikshit
Hi, good evening, everyone. A couple of questions from my side. Is there an annual capex guidance for the next two years?
Sandeep Modi
So, I don’t think we will give the — we give the annual capex guidance during the start of the year. And as Mr. Mishra has said, about the 1 million to 2 million tonne and I explained one of the other analysts also. We will be having a — if we launch this 2 million ton project, it will be two — so between three to five years, $2 billion to $2.5 billion. It will depend upon the Board of. As of now, we are staying for the this year annual guidance around $200 million on the growth capex and maintenance capex around $375 million. For the next year guidance, we are still in the process of business planning and once the Board approves this capex, then we can announce it formally.
Shweta Dikshit
So I mean, for a model perspective, we can at least for now take this as a steady-state basis for the next two years, that will be the minimum capex for the two years?
Sandeep Modi
Yeah. Yes, as you can take that for your model purpose.
Shweta Dikshit
And another question on the — on the recycling plant, that’s a 10 million ton processing capacity per annum, right, as you mentioned, and recovery of around 2% to 2.5%.
Sandeep Modi
Yeah, it should be having the content of 2% of the metal.
Shweta Dikshit
And this is likely to be only zinc or are you looking at other any other metal or minerals here?
Sandeep Modi
So we are focusing more into the zinc and silver.
Shweta Dikshit
Zinc and silver okay. And this — since you said this is something which does not entail any input costs since that these are basically tailings that you’ll be utilizing. So could you give an indication of what — like what kind of visibility do you have of processing 10 million ton every year or like what’s your input cost?
Sandeep Modi
You have to wait for that — those numbers. As of now, we are undergoing sending samples for testing and finalizing the technology. Capacity roughly we assume that we should be having a 10 million tonne processing plant. We have got enough of tailings in-stock for that. And also every year, since we’ll be increasing the volume to 2 million ton metals, so to that account, production of tailings will also go up many folds from the current level. So supply-side is not an issue. Issue is only finalizing technology so that we can — attribute the right cost numbers and we can calculate the right return on investment. So that I think we’ll wait for another 1/4 to know that.
Shweta Dikshit
All right. Thank you so much.
Sandeep Modi
Thank you.
Operator
Thank you. A reminder to all the participants. If you wish to register for a question, please press and one on your touchstone phone. The next follow-up question comes from Manav Gogia from YES Securities India Limited. Please go-ahead.
Manav Gogia
Hi, thank you so much for the opportunity. Sir, one question I wanted to ask was basically on the fumor getting ramped-up. So last quarter, I believe you had mentioned that there were some design inefficiencies that have taken place. So I just wanted to know-how are we placed on the tumor ramping-up?
Sandeep Modi
So right now we have taken a shutdown and that shutdown is over, both the furnaces are up and running from today. And also we have designed inefficiencies regarding the coal mill so that we have brought in new equipments and we have put in-place during the shutdown. So we have done whatever in our knowledge, what we could do. Do. At the same time, we are also trying for Chinese experts to get visas so that we don’t have such problems that we encountered for last couple of years in the coming days. And I’m sure from this quarter onwards, the FEMA would be delivering what it was designed for.
Manav Gogia
Okay. And has this produced any of the volumes till now?
Sandeep Modi
Yeah, yeah. It has produced five tonnes of the equivalent of the silver in the last six, seven months. So it is not like that’s not producing, it is producing at the run-rate, of course, 30% of the design capacity. But we are hopeful that in the Q4 should be almost 60% to 70% of the design capacity.
Manav Gogia
Okay. Sure. That was it from my end. Thank you so much and all the very best.
Sandeep Modi
Thanks.
Operator
Thank you. Participants, you may press star in 1 to ask a question thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Jain for closing comments.
Raksha Jain
Thank you, Sagar. Thank you everyone for joining us today on this call. If there are any follow-up questions or if there are any clarifications required, you can reach-out to the Investor Relations team. Thank you so much.
Arun Misra
Thank you.
Sandeep Modi
Thank you.
Operator
Thank you. On behalf of Hindustan Zinc, that concludes this conference. Thank you for joining us. You may now disconnect your lines.