Hindustan Zinc Ltd (NSE: HINDZINC) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
Raksha Jain — Director of Investor Relations
Arun Misra — Chief Executive officer
Sandeep Modi — Chief Financial Officer
Analysts:
Amit Dixit — Analyst
Manav Gogia — Analyst
Pallav Agarwal — Analyst
Shivani Tanna — Analyst
Rashi Chopra — Analyst
Ashish Kejriwal — Analyst
Jainam Shah — Analyst
Sumangal Nevatia — Analyst
Prateek Singh — Analyst
Aditya Walekar — Analyst
Shreyans Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and Full-Year FY ’25 Earnings Call of, Inc. 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 Mr Raksha Jain, Director of Investor Relations of Hindustan Zinc Limited. Thank you, and over to you.
Raksha Jain — Director of Investor Relations
Thank you, operator, and good evening, ladies and gentlemen. Thank you for joining us today to discuss the 4th-quarter and full-year 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 Safe-Harbor mentioned on Slide 2 of the presentation. Today, we have our CEO, Mr; and CFO, Mr Sanjeep Modi. The management will be discussing the operational and financial update for the quarter and full-year followed by a Q&A session. Now I would like to invite Mr Haru Mr to present the results. Over to you, sir.
Arun Misra — Chief Executive officer
Thank you, Raksha. A very good evening to all of you. Thank you for joining us today for the 4th-quarter and full-year FY ’25 results briefing. Before we begin the presentation, I share with you which deep sorrow and a heavy heart that there has been an unfortunate incident at our Zinc Football Academy in Javar where we have lost a safety officer due to an unexpected collapse of a telecom tower during dismantling activities. I extend my heartfelt condolences to the Birit family and once and want to assure them of our unwavering support during their extreme difficult time. Such incidents are truly heartbreaking, particularly as we strive to afford a safety-first culture throughout every part of our organization. Following a thorough investigation, we are committed to implementing strong corrective measures and strengthening our safety protocols to prevent such strategies in future. These incidents serve as a stark reminder of the critical importance of constant vigilance and improvement. Continuing with the presentation, I’m pleased to share that Hindusan zinc has delivered a record-breaking year with the highest-ever production of both mined and refined metal. This milestone further solidifies our positioning as the world’s largest integrated zinc producer. Our leadership has also been measured in the sustainability performance with a notable improvements in ESG ratings across prominent platforms such as S&P Global Corporate Sustainability Assessment and FTSE for Goods, etc. We have delivered our second-ever highest revenue, EBITDA and profit after taxes where our EBITDA stands at INR17,465 crores, up 28% and profit after taxes of INR10,353 crores, marking an improvement of 33% over last year as compared to increment of 18% in revenue from operations. As a part of our sustainability journey, we have set ambitious goals for 2025 and our efforts over the past five years have meaningfully advanced us towards them. Notably, we have reduced our total recordable injury frequency rate by 55% from 2020 levels as against a target of 50%. We also achieved GHG emissions reduction of 0.67 million tons of CO2 equivalent against 0.5 million tonnes target. This year, we have launched first low-carbon zinc ecosyn with a carbon footprint 75% lower than the industry average. It supports our customers’ sustainability goals by reducing Scope 3 emissions. As we have stated before and with the recent announcement by the London Metal Exchange on introducing a green premium for sustainable metals, is well-positioned for stronger value realization. Our CSR initiatives across key areas, education, health, water and sanitation, sustainable livelihood, sports and culture, women empowerment and community development impacted approximately 2.3 million lives, up from 1.9 million last year. Turning to the market update, last year has been favorable with drink and silver prices surging 16% and 29% respectively, driven by persistent supply. While there are some uncertainties in the current global macroeconomic environment, the is expected to continue into 2025 as well. Given the lack of any significant new zinc for silver projects, consequently, zinc prices are likely to stay resilient and market sentiment for silver continues to be strongly optimistic. The global commodity landscape for zinc and silver continues to evolve amid geopolitical and economic shifts. Recent developments, including the retaliatory duties imposed by US administration have impacted trade dynamics and introduced short-term volatility. However, despite these headwinds, we believe India is uniquely positioned to benefit from the current environment. The government’s sustained focus on infrastructure development ranging from smart cities to railways and highways is driving robust steel demand, which is expected to reach 300 million ton by 2030, which in-turn will catalyze in increased zinc consumption for corrosion production. This optimism is further reinforced by India’s strong economic fundamentals with a projected GDP growth of 6.5% by IMS and a manufacturing PMI of 58.5%, reflecting healthy industrial activity and continued momentum as essential components in clean-energy storage and sustainable technologies, zinc and silver are powering the global energy transition. As these metals play a pivotal role in the green revolution, Hindustan Zinc is proud to play a leading role in enabling a more sustainable world. Moving to operational performance, with advanced exploration programs and strategic resource to reserve conversion to support our goal of sustaining a 10-year reserve mine line, we have crossed one milestone of 13 million tonnes of metal reserve for the first time since underground transition as — as at the March-end. This represents an increment to over three times of metal reserve as compared to FY 2020 on a net production basis. Our total reserves and resources in terms stood at 453.2 million tonnes, while the overall mine life continues to be more than 25 years. This quarter, we recorded a mined metal production of 310,000 tonnes, our highest-ever 4th-quarter figure since underground transition, which is up 17% quarter-on-quarter and refined metal of 4% quarter-on-quarter and silver up 10% quarter-on-quarter. I am also pleased to share that we achieved our highest-ever domestic zinc sales this year, capturing 77% of the domestic primary zinc market-share. This is an important milestone that reflects our strong customer relationships and market leadership. Notably, we also increased the share of value-added products in our portfolio to 22% in the year, including 10,000 tonne production from plant, reinforcing our commitment to delivering differentiated solutions and driving greater value across the supply-chain. We continue to drive sustainable cost leadership and achieved a 16 quarter lowest-cost of production of $994 per ton during the quarter win and four-year lowest $1,052 per ton on a full-year basis through focused efficiency and optimization, enhanced automation and digitalization across our operations, leading to record production volumes, better mined metal grades and recovery, increased domestic coal and renewable energy usage and better byproduct sales, further supported by softened coal and input commodity prices and operational efficiencies year-on-year. I believe you all appreciate the way the company has increased its production every year despite its transitioning to underground mining and delivering — delivered more than 1 million tonne of mined and refined metal production with minimal capex showcasing our strong focus on capital efficiency, prudent resource allocation and agile execution. Now at our present 160,000 tons per annum project, the commissioning activities have started and will be commissioned by mid quarter one FY ’26. Further, we are also implementing an innovative technology to recover laid and silver from the smelter waste as an alternative to fuming technology. This technology will recover additional 27 tonnes per annum silver and 6,000 tonnes per annum late and is scheduled for commissioning in-quarter four of next financial year. While the smelter debottlenecking at Dariwa and are set to be completed in-quarter two and quarter three of FY ’26, the fertilizer plant at Chanderia is expected to be commissioned as per schedule by quarter-four of FY ’26. With a well-structured capex roadmap in-place, we are confident in sustaining the strong performance in the year ahead with mined metal production expected to be 1,125,000 tonne per annum, meaning 1.125 kilo million tonnes per annum, plus or minus 10,000 tonnes and a refined metal production of 1.1 million ton plus and minus 10,000 tonnes with an expected refined silver production in the range of 700 to 710 tonnes, zinc production at a cost of $1,025 to $2,050 per ton. In conclusion, with a strong focus on operational excellence, sustainability and a long-term value-creation, we are well-equipped to navigate change and capture future opportunities. Our commitment to innovation, safety and responsible business practices will continue to guide us with a pipeline of high-value projects and leadership in future-phasing metals, we are confident in our ability to deliver sustained returns and drive shareholder value in the years ahead. With this, I now hand over to Sanjeep for an update on the financial performances.
Sandeep Modi — Chief Financial Officer
Thank you, Mr Mishra, and a very good evening, everyone. As Mr Mishra mentioned, our ambition to consistently challenge ourselves and drive year-on-year growth distinguishes us from other major zinc players. Globally, through disciplined capital allocation and a strategic balance between ESG commitment and fiscal prudence, we continue to strengthen our operational efficiencies while delivering sustainable and robust financial performance with a strong balance sheet. A key enabler of this success is our continuous focus on innovation and leveraging technology, process improvement, enhancing recovery and elevating governance standards, particularly in the reporting and transparency practices. Before into the performance numbers, I would like to update you on our primary initiative at where we have taken the lead-in sector for price discovery through platform in case of metal sales, which happened through Veranga Metal Bajar. I’m happy to share that nearly 100% of our silver and 70% of our drink in India were sold through euction platform during the quarter. This progressive transition has helped us to have our premium link to the market as well as improved transparency and customer-centricity. Driven by our record operational performance and better zinc silver prices, I’m happy to share that Hindustan has recorded its best-ever 4th-quarter PAT, second-highest inverse revenue, EBITDA and profit-after-tax, along with the four-year lowest fee cost of production for the full-year with an industry-leading EBITDA margin of 51%, a 400 bps improvement year-on-year. Looking deeper into performance, we have recorded our highest-ever 4th-quarter revenue from operations of INR9,087 crore, up 20% Y-o-Y, driven by higher lag volume and increased zinc and silver prices, further supported by strong dollar, partly offset by lower zinc and silver volume. For the full-year, we achieved the second-highest revenue of INR34,083 crores, up 18% Y-o-Y, driven by highest-ever metal production, highest green high green and silver prices and strong dollar. This was further supported by steady gain and higher sale of, partly offset by lower silver volume and lower prices. We achieved our zinc cost of production to $994 per tonne for the quarter-four and $1,052 per tonne for the full-year, better 6% Y-o-Y, resulting in the second-highest 4th-quarter EBITDA of INR4,816 crores, up 32% Y-o-Y, driven by higher green and silver prices, softer import commodity prices and better backproduct sales. The quarter’s EBITDA margin stood at 53%, up around 500 bps year-on-year. On an annual basis, we have recorded second-best EBITDA of INR17,455 crores, up 28% Y-o-Y in-line with the record metal volume, structurally leaner cost of production, higher pink and silver prices and strong, partly offset by lower silver and volume and net prices. Profit-after-tax recorded its highest-ever 4th-quarter figure of INR3,003 crores, up 47% Y-o-Y in-line with robust EBITDA. The full-year PAT stood at second-highest figure at INR10,353 crore, up 33% Y-o-Y in-line with EBITDA. We have successfully generated a strong free-cash flow from operation at INR13,784 crores during the year. Our return on capital employed of 58% reflects the best returns across the industry. With a strong commitment towards delivering value-accretive returns for all our stakeholders, has distributed INR12,253 crores in dividend to shareholders during the year and contributed INR18,730 crores towards the, significantly increased by almost 42%. This includes contribution towards income tax of INR4,500 crores as well to the government of Rajasthan of INR4,200 crores, which is 35% of total royalty income of the Rajasthan state government. During the year, we delivered one of the best total shareholder returns in the country of 68%. This is 13 times of 50-50 returns and seven times of 50 metal Index. I’m proud to share that Hindustan Inc is among the top three companies in 50 metal Index with a market cap of approximately INR2 lakh crores. On an overall basis, it has improved its ranking from 62nd to March — in March ’24 39 as of March ’25 and in terms of market cap. Hindusan Inc is also the highest market cap company among which the global zinc player. Furthermore, with the company’s recent inclusion in the segment on the NFC, the company’s turnover has grown significantly, which opens ample opportunity for further value-creation. Coming to the outlook on zinc COP, it’s expected to stay around $1,025 to $1,050 per ton during the year, coming down with increasing renewable power unit, which is expected to grow to 30% to 35% versus the 13% in FY ’25 and better production volume. The overall capex for the growth capex project, which is approved till now is expected to be in the range of $225 million to $250 million. Please note that with any further growth projects approval by the Board, the capex guidance will change. To conclude, Hindustan robust financial performance fundamentals, structurally cost base, strategic capital discipline and leadership in critical metal position us to outperform throughout the commodity cycle. Our resilience is not by charge, but by design. As we contribute to prioritize stakeholders’ value, sustainability and returns, we are confident in our ability to lead the industry and deliver consistent superior performance across our — across all market environments. With this, I now hand over to the operator for Q&A. 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 R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Amit Dixit from ICICI Securities. Please go-ahead. Yeah, hi. Good evening, everyone, and congratulations for a good performance. I have two questions. The first one is actually on the guidance, particularly for cost of production and silver. So if I look at-cost of production guidance for FY ’26, that is higher by $50 per ton compared to Q4, I mean, at the lower-end of the range. So just wanted to understand the reasons for the same. Do you expect any element of cost to rise or what is the thinking that goes ahead? Because our production we have guided it will also rise. So just wanted to understand that particular aspect. The second bit on guidance is on silver volume. Now silver volume, if I compare it with FY ’24, I’m not comparing it with FY ’25, we see that the guidance for FY ’26 is lower than the actual volume achieved for FY ’24. So is it that we will be doing more of zinc this year and less of lead and silver at this stage. That’s why the guidance has been kept the same. Yeah.
Arun Misra
Thanks, Anit. So coming to the cost, I think that’s better to always look for the full-year, $1,052 and compare with that. Q4 has — you see the best-ever production of the 310 kt of the metal with a 7.85% grade. Obviously, the grade in the quarter-four has been significantly higher compared to the full-year of 7.5%. That’s the major reason. And if I compare with the year-on-year, we are giving the guidance. So this year also we deliver the lower-end of the guidance. I’m sure you can expect the similar kind of a delivery at the year end. The major driver for cost-reduction will happen with the renewable energy, as I said, 13% to 30%, which will take cost around $10, $12 lower and also the volume. Obviously, that has remain a positive element of surprise at the year-end when the cost and every quarter value deliver. Coming to the silver guidance, FY ’24, we done almost a whole year-on the Pyro or the land board. So that’s how you see the silver number much higher compared to the FY ’25. And this year number 700 to 710 number which we have given is assuming at this point of time, the progress in the mode as you said rightly will zinc and lad a mode for the whole 12 months
Amit Dixit
Okay, great. The second one is actually a very interesting comment you made on implementing an innovative technology for recovery of lead and silver from its melting wasted. So can you throw some more light on this innovative technology? And if we are successful at Dariba, will it be extended to the other parts of the company as well?.
Arun Misra
This is a new technology, which is to recover lead and silver cake from zerocyte instead of doing it in the fumor route that we do where we take the weak acid leaching into fumor, burn that to produce the oxide and then the sulfides and all that. So instead of that, this will be a cake that will be produced and it’s a direct process and we will do that in Dariba. Once it is successful, it will form the future of all fuming processes in zinc. So we will have this implemented everywhere and we’ll not follow the typical process of fumor that we have now.
Amit Dixit
Sir, just two sub-parts here. One is that since you mentioned that it will be instead of humor and it won’t involve burning and also will it be more environment-friendly in that case?
Arun Misra
Yeah. It will be more in learning friendly. Absolutely correct.
Amit Dixit
And can you just repeat the number that you mentioned in the prepared remarks on the additional volume of silver and lead that we expect?
Arun Misra
Yeah. So I think for the FY ’26 guidance, we have not factored anything outcome of this technology because we have to as we said this is the first time-out of the European side, we are first time implementing and we don’t want to have any negative surprise later on. So let us keep that positive element in our hand and in case this technology becomes successful, we can achieve whatever the numbers we have send in the IR tech around 25 tonne of the silver and 6KT of the lead on an annual basis. But of course, the results which come in the Q4 only when we got to know.
Amit Dixit
Okay. Okay. Great, sir. Thank you and all the best.
Arun Misra
Thank you.
Sandeep Modi
Thank you, Amit.
Operator
Thank you. We’ll take our next question from the line of Manav Gogia from YES Securities. Please go-ahead.
Manav Gogia
Hello. Hi, a very good evening and thank you for the opportunity.
Operator
Can you use your handset mode, please [Technical Issues] ladies and gentlemen, we are sorry for this. We will begin the question-and-answer now mister. MR. Mana Gogia from Yes Securities. Are you able to hear that? Hello. Yeah. Can you please go-ahead?
Manav Gogia
Yes, really sorry for the trouble. First of all, congratulations, sir, on the good performance for the quarter. So wanted to ask one particular question on how should we see the power cost going-forward? We have mentioned the increase across renewable energy in the shares. What would be that percentage for Q4? Where do we stand right now?
Sandeep Modi
Yeah. So Q4, it was around 15%. And as I said for full-year for the next year, we are targeting 30%. So power cost, it is the way to look at power as a spend base will always remain 32% to 35%. We will hedge — because now the next phase of cost-reduction, of course, the power has been lot, further power cost-reduction as an overall level will also happen to the power cost only. Both numerator and will go down. So with the 13% to 30%, when we go through the renewable energy, $10 cost-reduction should happen through the power cost itself. Of course, the domestic coal materialization has been almost 46% in the Q4 and the full-year 44%. We expect to remain around 45%. So you can expect $10 to $15 further power cost-reduction at the full-year level in FY ’26.
Manav Gogia
Got it, got it. And sir, can you just provide me the split of the percentage of domestic coal that we have in our coal mix right now?
Sandeep Modi
So for the full-year, it was 44% and quarter-four, it was 46%.
Manav Gogia
Okay, okay. Sure, sir. And sir, secondly, for the zinc alloy plant, can you give me the generated EBITDA for the particular quarter and the past?
Sandeep Modi
Yeah. So for the full-year basis, we generated EBITDA of INR100 crore for the Hindustan Jink Alloy Private Limited and with the overall production of 10 kt. So at a full capacity, when we run the next year, the plant capacity is 28 kt and this year it was a part operations and that a full-year, it should be around INR250 crore to INR275 crores of the EBITDA at a full capacity.
Manav Gogia
Sure. Got it. I’ll rejoin for more questions. Thank you so much.
Arun Misra
Thank you.
Sandeep Modi
Thank you.
Operator
Thank you. We’ll take our next question from the line of Pallav Agarwal from Antique Stock Broking. Please go-ahead.
Pallav Agarwal
Yeah, good evening, sir. So just to check-in what are the strategic hedging gains that were booked during FY ’25 and whether we have any more outstanding hedges right now.
Sandeep Modi
So we booked at INR50 crore during the whole year. At this point of time, there is no outstanding strategic hedging position.
Pallav Agarwal
Sure, sir. And also just coming back to again our cost of production. So I think given the sensitivity levels, and you’ve seen that both zinc and lead spot prices have been weak of late. So current spot prices are below the FY ’25 average levels. So assuming this continues, can our cost-savings offset the negative impact of lower LME prices.
Arun Misra
So cost of production have — in our case, if you see the major cost of fixed-cost is around and other thing, manpower and the commodity-linked prices are like power cost what I said in terms of the coal cost. So coal cost is also going down. So we expect that if that kind of things continue, there is a further room to reduce the cost by $25, $30 in terms of the cost and current level of LME, we believe it’s more like a volatile environment even within the month of upgrade of 2024 days, NME working days of, 18 90, we have seen a plus-minus $20 $50, so $250. So it has gone around 250 also, it has been jumped around $2,800 also. That is more of a volatile environment. In our view, the stable prices should be remaining around $2,800 to $2,900 for the zinc led around INR2,20 to INR4,050 and sales were I think is quite bullish currently 33, may go, 37, 380 38 and the cost of production, we will keep working upon that. And we believe that lower-end of the guidance because just the start of the year, I want to keep the numbers hold 1,025 to INR1,050. But of course, the reduction in the commodity input cost is majorly on the coal, met coke and diesel. If the diesel prices flown to user because there is a quantity restriction in case of the coking coal by Government of India for the crude, of course, it has fallen, but the prices have not been passed on to consumer. So these two large commodities we are not able to get passed on for the old, which has got the index down, we are able to get passed on.
Pallav Agarwal
So lastly on, we had a target of 1,000 tonnes. So what is like is it the grades or what is hampering our ramp-up to that 1,000 ton level in? No.
Arun Misra
So at a production plan of 1.2 million ton in our internal workings, we said that we’ll be close to 750 tons of silver. So while 1,000 tonnes silver making capacity we are anticipating or we are trying to execute in our Kantanagar plant was with the assumption that the metal making capacity will go up to 1.5 million tons. So those are the kind of numbers we have thought of. The reality is we are at around 1 million tonne to 1.1 million tonne metal and in that case, anywhere between 680 to 690 to up to 725 tonnes of silver is possible depending upon the grade that we mine. Last year, we encountered inferior grade in SK mine and which is reflected in the silver production. Next year, we’ll be producing more of zinc looking at the LNE and likelihood of the LNE remaining at 27 28 kind of a number. And then silver would be around 700 tonnes, 420 ton.
Pallav Agarwal
Sure, sir. Yeah. Thank you.
Arun Misra
Thanks.
Operator
Thank you. We’ll take our next question from the line of Shivani from Dolat Capital. Please go-ahead..
Shivani Tanna
Yes, I just have two questions. By when should we expect production to come from mine? And another one is, how do you see the price going-forward considering the US trade war?
Arun Misra
So is currently development is taking place in terms of total permission and all that. So it will take another two years’ time for roughly about 24 months for the mineral to be struck and first production to come. Second was what was the question? [Speech Overlap] And also like the price is rising at the current — yeah, current situation we are — this trend will continue for a couple of quarters till the time the whole supply-chain in the new order or restored to old order happens because of various tariff negotiations or countries joining hands to set new area to business with each other. So I think that’s a very changing space, changing almost every day, every hour. But as far as we are concerned, we are primarily domestic player and Indian growth by 5%, 6% will remain. As long as the tariff for the economic situation does not impact overall prices of fuel or coal, we are safe as far as our cost is concerned and as far as our volume or ability to sell is concerned.
Shivani Tanna
Okay. Thank you.
Arun Misra
Thank you. Okay.
Operator
Thank you. We’ll take our next question from the line of Rashi Chopra from Citigroup. Please go-ahead.
Rashi Chopra
Thank you. Just to understand on the cost, I know I missed this. On a sequential basis, the improvement, do you also see an improvement in the coal prices or this is more metal grade and better volume sequentially?
Arun Misra
So there was both combination now. So two-third was on account of the metal grid and one-third was on account of the commercial efficiencies in case of the coal and other items.
Rashi Chopra
Coal prices were also lower sequentially.
Arun Misra
Yeah, yeah.
Rashi Chopra
Okay. In the hedging gains that you mentioned, how much of them were recorded in the 4th-quarter?
Sandeep Modi
So for the full-year basis, it was basically so 4th-quarter is around INR55 crore okay.
Rashi Chopra
My next question is on the capex. The total capex, I think is about INR4,300 crores, right, for the year.
Sandeep Modi
For the year? Yeah, yeah. Total growth capex and sustaining capex put together INR4,300 crores.
Rashi Chopra
So how do you break that up between growth and sustaining?
Sandeep Modi
So growth capex was around INR1,500 crore, a remaining INR2,800 crore was the sustaining capex.
Rashi Chopra
And should continue until the next
Sandeep Modi
Yeah, sustaining should be in the range of INR3,000 to INR3,200 crores on annual basis.
Rashi Chopra
Got it. Thank you. I thanks guys.
Operator
We’ll take our next question from the line of Ashish Ketriwal from Nuvama Institutional Equities. Please go-ahead.
Ashish Kejriwal
Yeah, hi, good evening. Thanks for taking my question. Thank you. Is it possible to share a our average coal price and sulfuric acid prices in 4th-quarter or at least now the change which we have seen on a quarter-on-quarter basis.
Arun Misra
So while actually this recovery that we do, perhaps it will not be proper for me to share the exact prices. But we can say we always benchmark with the prices in the sulfur and we follow that model. And yes, it’s competitive in the market.
Sandeep Modi
Yeah, we do in the auction basis. So as I said, we use more like now selling anything through auction. So everything getting discovered through auction we got from the market accordingly.
Ashish Kejriwal
So what is the change, sir? I’m not asking for the absolute number, but is it possible to share how much price increase we have witnessed in sulfury acids and how much price reduction we have seen in coal in this quarter versus 3rd-quarter?
Sandeep Modi
Yeah. So from the acid, I don’t think we’ll be able to share, it’s not a standard disclosure. Coal prices have fallen by 2% to 3% in terms of the overall power cost I talk about, our overall power cost has fallen by 3% compared to quarter-on-quarter.
Ashish Kejriwal
And entire fall is because of coal.
Arun Misra
So largely on account of the coal.
Ashish Kejriwal
Okay. And second, look, for last six months, we have been saying that we are preparing for the next phase of growth where we plan to expand our mine metals from 1.2 to 1.5 and then 2 million tonnes. But we haven’t heard anything of that. So by when we can expect some announcement or we think it is too early to comment on that.
Arun Misra
So 2X design, we are absolutely aggressively working on it. First it will save, but there are eight mines. So while we are preparing the design right now, we have almost frozen design-in two of the largest mines, which is Abucha and SK mine. Then we’ll now extend the design onto the balance mines, which is River and the four mines in Javar. Now of that, almost we are ready with the numbers between expansion, corresponding concentrate plant and corresponding smelter. The few loose ends are to be tied-up and we should be finally doing it in a month’s time, take Board approval and then go public and announce the number for the first phase of that 1 million ton expansion work. That does not mean that other works are not happening. It will be in a time span of, say, 15 days to one month from one announcement to another. We hope that in three to four months of time, we’ll complete all the announcements related to-1 million ton.
Ashish Kejriwal
So we are going ahead to 2 million tonne and we can expect announcement related to that within next quarter.
Arun Misra
Correct. Correct, correct. Absolutely.
Ashish Kejriwal
Okay. So even after that, do we think that we will have our mine metal or mine reserves, which normally we have 25 years plus. So are we working on those lines also to maintain our mine reserves for?
Arun Misra
Absolutely. We are in the process of global tendering, going for global exploration agencies to help us to increase the resource base and actually double the resource base that we have currently.
Ashish Kejriwal
And sir, lastly, in any case, we are going for a huge capex then. And then is there any capital allocation policy that beyond net-debt to EBITDA or something like that, we will not go-ahead with it?
Arun Misra
No, we could look at it like I say, our operations as we are still consistently also a huge cash producer. So this kind of expansion is almost commensurate with our ability to produce cash. So there is no worry on that count at all.
Ashish Kejriwal
Okay. No, because why I’m asking is because we normally give higher dividend also. So both will do one to hand.
Arun Misra
As long as we are able to produce cash, as long as we can phase the expansion, that is not that we wait for — neither we wait for whole 2 million ton design to be over or nor we wait for whole 2 million ton expansion to be completed. So there’ll be one part will come up very fast. Whatever is the low-hanging food, we’ll catch it as fast as possible. So we’ll generate the delta cash that is required to fund the project and also in case the Board so decides how to keep the shareholders happy, we’ll take care of that as well.
Ashish Kejriwal
That’s great. Lastly, only that one you are saying 1 million to 2 million tonne, it will be in phases. So from 1.2, can we expect 1.5 first and then 1.8 or something?
Arun Misra
You were spot all. First one is 1.2 to 1.5, that announcement we should make very quickly.
Ashish Kejriwal
Okay. Okay. Great, sir. Thank you and all the best.
Arun Misra
Thank you.
Operator
Thank you. We’ll take our next question from the line of Jainan Shah from Securities and Finance Limited. Please go ahead.
Jainam Shah
Yes, sir, am I audible?
Arun Misra
Yes.
Operator
Yes.
Jainam Shah
So congratulations on the good set of results. My question would be that in the opening comments, you said that zinc will be in deficit going-forward, right? But recently, we saw the zinc outlook by international zinc study Group and they said that it is going to be in. So just wanted to understand what is your theory and how that deficit is going to be for FY ’25?
Arun Misra
No, see the production centers of zinc production as a mined metal, production centers as a finished metal in terms of standalone smelters and integrated smelters and consumption centers where the growth of emerging economy, the growth of steel is required. We are basing our calculations based on India’s ambition to have 300 million tons of steel production, you must-have heard one of the largest Indian steel maker making an announcement in Maharashtra, they will put up world’s largest steel plant, right, not even India’s largest, world largest steel plant. So we will believe that in another two to three years’ time at least projects worth 300 million tons steel will be launched in India, that would require the 2 million ton kind of a demand for a zinc plus lead-in India itself. So we want to capture that opportunities and hence, we are very bullish as far as demand for zinc is concerned. Globally, if you look at geographical area-wide that imbalances will continue. So we are not so much a targeting that we produce and sell-in other parts of the globe. We are completely focused in domestic India. Maybe our nearby growth centers in Southeast Asia up to the Middle-East, but otherwise, we are very bullish as far as demand of zinc in India and in nearby areas is concerned.
Jainam Shah
Your deficit is based on India as a whole as a standalone, right?
Arun Misra
Correct.
Jainam Shah
Okay. And also, sir, in silver, we basically have a very lower guidance when it comes to silver sales and production. Why is that to just give an idea?
Arun Misra
Let’s based on the factor of production strategy based on the metal prices, at the same time the grade of the ore that we mine. So last year we experienced — we here before last, we operated mostly on lead mode, hence we produced highest amount of silver. Last year we operated quite good time in lead plus rainforce and also we encounted lower-grade in the SK mine. So this year we are slightly conservative on that count and we are putting the numbers around 700 tons. So we will see if we really encounter good grade, but this year the change in strategy is the whole year will operate in zinc plus lead mode. So that account, silver production will also be affected. But if the metal prices vary differently or we hit very-high grades in SK, we may change our strategy midway.
Jainam Shah
Okay. Understood. And sir, just like you question — answered the previous participant when you were saying that they are going to go from 1.2 to 1.5. Can you specify the timeline for that?
Arun Misra
So as I said that 1 million ton expansion maybe all announcement because these are designs that are happening in-part by part, one mine is getting designed or smelter modules are getting designed. Maybe an announcement will phase-out between two to three months-to complete the complete 1 million ton announcement. As I look at the project implementation, you know, effort versus ease of implementation metrics, then 1.5 is the next best option, most economic option to do, followed by other expenses. So can we assume that by FY ’27 end, we’ll be able to reach at 1.5 million 1.5%. And 27 and let me put it this way. Say another one month if I’m able to make the announcement and place orders, then yes, another 24 months for completion of the project. So that could go up till 27 28 March or so.
Jainam Shah
Okay. Thank you. Thank you, sir. Thank you for answer.
Arun Misra
Thank you.
Operator
Thank you. We’ll take our next question from the line of Sumangal Nevatia from Kotak Securities. Please go-ahead.
Sumangal Nevatia
Yeah, thank you, sir for the chance. Sir, first question is to reach 1.2 million tons in terms of mine metal production, what is our constraint? Because since long our capacity is now 1.2 million tonnes, but our production guidance is still well below that. This year also, we are almost 10% below that. So just want to understand what is the concern? Is it the melting capacity or is it the grade or some other factor?
Arun Misra
No, it’s just melting capacity, do you mind, but otherwise you look at consistently in a few years in the last quarter, we have demonstrated 300 KTE production of mine metals. So there is no doubt in that. It’s just that the — every year we have finally settled with huge capacity — huge tops of mine metal. Whereas finished metal, our design capacity is about 1.123 million tons of smelters. The debottleneckings we said that we would do once the mines achieve that capacity, those debottlenecking projects are on. And yeah, by the next year, we should be there in 1.2 million tonne metal exit capacity in the next fiscal year itself.
Sumangal Nevatia
Okay. So in the past, we’ve also sold nine metal. Is refined or so
Arun Misra
We have never sold. We have never — talking very, very long back. I’m here for five years. I have never sold. So maybe so 10, 12 years back and we are not in the business of doing this. We always want to remain integrated player.
Sumangal Nevatia
Understood. Understood. Sir, can you remind us how many — which all mines and what proportion of today’s production will be coming up for reoption in FY 31?
Arun Misra
And you are saying I said 2030 is an auction of the mines.
Sumangal Nevatia
Yes, that’s right now.
Arun Misra
I think code mine is still 2048. Rest, I think 2049 is SK mine. Kayat is 2048 rest all mines, Hardi, Abucha, Javar are at 2030.
Sumangal Nevatia
Okay. And sir, the next phase of expansion, will we be spending and working on a capacity expansion at the mines which are expiring in 31?
Arun Misra
Nothing is expiring in our mind. All the mines are with us and will continue to be with us and hence we’ll spend.
Sumangal Nevatia
Okay, sir. So we are of the view that we will be able to retain the mine given the option of first site of refusion. Is that the right way to understand?
Arun Misra
Whichever way you understand, they will remain with us.
Sumangal Nevatia
Okay, sir, because this is — I mean, if you can get — give us some more clarity on the thought process, because this is a very substantial development
Arun Misra
One kilometer below ground, we have invested, developed the mine. Is that possible for us to let it go or anybody else to come and just take it over and operate? Not possible.
Sumangal Nevatia
Okay. Okay. So do we expect any change in policy or we are confident of retaining it by matching the bid — highest bid
Arun Misra
As on-date, we are confident and as I say, Fortune the, who knows?
Sumangal Nevatia
Okay. Okay. And can you share what is the change in royalty we are anticipating in our internal estimates we are kind of spending so working towards expansion at this 90 to
Arun Misra
We are far away from that. We are — we are planning everything as we stand today. So we are not factoring in royalty increase and things like that.
Sumangal Nevatia
Understood. All right, sir, that’s all. Thank you and all the best to the teams. Thank you.
Operator
Thank you. We’ll take our next question from the line of Prateek Singh from DAM Capital. Please go-ahead.
Prateek Singh
Hi, thanks for the opportunity. So as a policy, given the volatility that we’re seeing right now in commodity prices, and you said that, 2,800, 2,900 bank is something which you see coming or you’re comfortable with. If you see that kind of a pricing, would we be open to hedge again opportunistically or hedging is sort of a question right now?
Arun Misra
So I think it will all depend on — it’s a dynamic situation. So — and we have been always as we don’t want to be — there is no — at this point of time, it’s only all like what we say is opportunistic, which we say strategic hedging. And given our EBITDA margin of 53% 54%, even I take the LME of current LME, that also gives me 51% of EBITDA margin at a over into level. So I think we remain opportunistic and see what level we should do. But of course, we would be not be too much aggressive about it, we will go in-line with the market and whatever market and other feedback comes to us, but we remain open for it.
Prateek Singh
Understood. Just hypothetically from your experience, if you really want to hedge, what kind of quantity can you hedge back to me? I mean, obviously, we cannot hedge — there is a cap on how much we can hedge. So from your experience, what kind of quantity we can hedge if you really want to —
Arun Misra
15% to 20%, not more than that.
Prateek Singh
Understood, sir. And is there any hedging instrument for as well?
Sandeep Modi
We remain plain adoption?
Prateek Singh
Okay, understood. And so sir, so we have seen gold move-up a lot. Silver also kind of is considered a store of value like gold along with that, the industrial application of silver is also quite decent. So in your view, what is it that’s holding silver behind? I mean, why is it not calling gold? The gold receivable issue is that right now. So what is it that’s holding it back?
Arun Misra
So I think you are the best people who knows about. But in our view, silver should be also closing in the way of gold has been there. It’s only a timing issue. There is no new silver mine is coming globally. Silver consumption has increased significantly in the industrial uses. So we believe that gold has already renewed and this is how the turn of the silver. So silver should also in a similar manner.
Prateek Singh
Thanks. And my last question was so is my understanding correct that there has been a delay? I think the last call was supposed to come mid-Feb, now we are seeing mid 1Q?
Sandeep Modi
Yeah. We can say technically couple of months delay, but we took a very aggressive position. It’s not what the suppliers were telling that when they can commission, we always make them run three, four months ahead of what they commit. So to that account, we are putting the pressure on, but yes, we’ll be very happy if it starts production from maybe by May 14 or 12.
Prateek Singh
Understood, sir. That’s all from my side and all the best.
Arun Misra
Thank you. Thanks.
Operator
Thanks. Thank you. We’ll take our next question from the line of Aditya from Axis Securities. Please go-ahead.
Aditya Walekar
Yeah. Thanks for the opportunity. Sir, just one question on — once again on the silver, silver production guidance of 700 to 710. So is it fair to assume that in ’27 and post that this level will be a sustainable level or it can fall or it can rise to 800 million tons means depending upon the sour mine silver grade. So can — if you can throw some light on that?
Arun Misra
No, you have already answered it. So it will rise. You have answered correctly that the more Jawar expands we’ll get from the mine good silver concentrate from Javar. SK mine will expand in that 2 million tonne program, we’ll get more good silver content. Abuja, as we go below now in the further expansion at many will cut the Galena zone and we expect that at the Galena, it will be full of lead and silver, so we’ll get more silver out of there. So yes, we are very hopeful in that 2 million tonne expansion plan, we should be hitting 1,200 to 1,300 tons of.
Aditya Walekar
Got it, sir. Thanks. Thanks a lot.
Arun Misra
Thank you.
Operator
Thank you. We’ll take our next question from the line of Shreyan from Barclays. Please go-ahead.
Shreyans Jain
Thank you for taking my question. My question is on the dividend policy. Do we know when does the Board sit for the next announcement of dividends? Thanks.
Arun Misra
No, we only know they only have the sales and the sole power for declaring dividend.
Shreyans Jain
Okay. That’s it from me. Thanks.
Arun Misra
Thank you.
Shreyans Jain
Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms Raksha Jain for closing comments. Over to you, ma’am.
Raksha Jain
Thank you. Thank you, operator. Thank you everyone for joining us today on this call. If there are any follow-up questions or any clarifications required, you can reach-out to the Investor Relations team. Thank you.
Operator
Thank you, members of the management team. On behalf of Hindustan Zinc, that concludes this conference. Thank you for joining us and you may now disconnect your lines.