Will the new hot acid leaching technology be more environmentally friendly? And what is the additional silver volume expected?
So I think for the FY '26 guidance, we have not factored anything outcome of this technology because we have to appreciate this is the first time out of the European side, we have 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 sent in the IR deck around 27 ton of the silver and 6 Kt of the lead on an annual basis. But of course, the results will come in the Q4 only when we got to know.
Can you share average coal price and sulfuric acid prices in Q4 or their Q-on-Q change?
While acid is a recovery that we do, perhaps it will not be proper for me to share the exact price here. But we can say we always benchmark with the ADNOC prices on the sulphur and we follow that model. 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 talked about, our overall power cost has fallen by 3% compared to quarter-on-quarter.
IZSG says zinc will be in surplus but you say deficit. Can you explain your theory on deficit?
See, the production centers of zinc production as a mined metal, production center as a finished metal in terms of stand-alone 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. We believe that in another 2 to 3 years' time, at least projects worth 300 million tons steel will be launched in India. That would require the 2 million tons kind of a demand for 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.
Which mines are expiring in FY31 for reauction, and will you expand capacity at mines expiring in 2030?
I think Sindesar Khurd mine is still 2048. Rest, I think 2048 is SK mine, Kayad is 2048, rest all mines RD, Agucha, Zawar are at 2030. Nothing is expiring. In our mind, all the mines are with us and will continue to be with us and hence, we'll spend. 1 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.
FY26 cost of production guidance is higher by $50 per ton vs Q4 lower end. What are the reasons? Also, silver guidance for FY26 is lower than FY24 actuals - is this because you plan more zinc mode this year?
So coming to the cost, I think that it is better to always look for the full year, $1,052 and compare with that. Q4 has a -- you see the best-ever production of the 310 kt of the metal with a 7.85% grade. Obviously, the grade in the quarter 4 has been significantly higher compared to the full year of 7.5%. That's a major reason. And if I compare with the year-on-year, we are doing the guidance. So this year also, we delivered the lower end of the guidance. I'm sure you can expect a similar kind of 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. Coming to the silver guidance, FY '24, we've run almost a whole year of the pyro on the lead mode, so that's how you see the silver number much higher compared to the FY '25. And this year's number, 700 to 710 number which we have given is assuming at this point of time, producing more zinc as you said rightly, with the zinc and lead mode for the whole 12 months.
Can you elaborate on the innovative technology to recover lead and silver from smelting waste? If successful at Dariba, will it be extended to other plants?
Yes. This is a new technology, which is to recover lead and silver cake from jarosite instead of doing it in the fumer route that we do, where we take the weak acid leaching residue into fumer, burn that to produce the oxides and then the sulfates 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 and once it is successful, it will form the future of all fuming processes in Hindustan Zinc. So we will have this implemented everywhere, and we will not follow the typical process of fumer that we have now.
How do you see power cost going forward with renewable energy increasing to 30%? What was Q4 renewable proportion and what is the domestic coal split?
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 a way to look at. Power as a spend base will always remain 30% to 35%. Further power cost reduction as an overall level will also happen through the power cost only. 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 a full year 44%. We expect to remain around 45%. So you can expect the $10 to $15 further power cost reduction at the full year level in FY '26. For the full year, it was 44% and quarter 4, it was 46%.
What was the EBITDA generated by the zinc alloy plant in Q4 and FY25?
So, for the full year basis, we generated EBITDA of INR100 crores for the Hindustan Zinc 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 the part operations. And that at the full year, it should be around INR250 crores to INR275 crores of the EBITDA at a full capacity.
What were strategic hedging gains in FY25 and are there outstanding hedges now?
So we booked INR150 crore during the whole year. At this point of time, there is no outstanding strategic hedging position.
Zinc and lead spot prices are below FY25 average. Can cost savings offset lower LME prices? And what is your price outlook?
So cost of production have, in our case, if you see the major cost of fixed cost is around the O&M and other things, 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. In our view, stable prices should be remaining around $2,800 to $2,900 for the zinc, lead around $2,000 to $2,050 and silver, I think, is quite bullish currently $33-$34, may go $37-$38.
We had a target of 1,000 tons of silver. What is hampering the ramp-up?
So at a production plan of 1.2 million tons in our internal workings, we said that we'll be close to 750 tons of silver. So while 1,000 tons silver-making capacity we are anticipating or we are trying to execute in our Pantnagar plant was with the assumption that this 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 1.1 million tons metals. And in that case, anywhere between 680 to 690 to up to 725 tons 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 LME and likelihood of the LME remaining at 2700, 2800 kind of a number. And then silver should be around 710 tons, 720 tons.
When should we expect production from Bamnia Kalan mine? And how do you see zinc/silver prices given the US trade war?
Bamnia Kalan currently development is taking place in terms of portal formation and all that. So it will take another 2 years' time, so roughly about 24 months for the mineral to be struck and first production to come. Price is -- yes, current situation, yes, this trend will continue for a couple of quarters till the time the world supply chain in the new order or restore to old order happens because of various tariff negotiations or countries joining hands to set new area to business with each other. But as far as we are concerned, we are primarily a domestic player, and Indian growth by 5%, 6% will remain.
On a sequential basis, was the Q4 cost improvement driven by coal prices or metal grade and volume?
There was both combination. So 2/3 was on account of the metal grade and 1/3 was on account of the commercial efficiency in case of the coal and other items.
How much of the hedging gains were recorded in Q4? And what is the capex breakdown between growth and sustaining?
So on the full year basis, it was basically -- so fourth quarter is around INR55 crores. For the year. Yes, yes. Total growth capex and sustaining capex put together INR4,300 crores. So growth capex was around INR1,500 crores, a remaining INR2800 crores was sustaining capex. Sustaining should be in the range of INR3,000 crore to INR3,200 crores on an annual basis.
We've been preparing for 2x growth expansion from 1.2 to 2 million tons - when can we expect an announcement?
So 2x design, we are absolutely aggressively working on it. And first, it will see -- there are 8 mines, so while we are preparing the design right now, we have almost frozen design in 2 of the largest mines, which is Agucha and SK mine. Then we'll now extend the design onto the balance mines, which is Rajpura Dariba and the 4 mines in Zawar. Now of that, almost we are ready with the numbers between Agucha expansion, corresponding concentrate plants and corresponding smelter. There, a few loose ends have 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. We hope that in 3 to 4 months of time, we complete all the announcements related to 1 million tons.
Are you working to maintain 25+ year mine reserves even as you expand to 2 million tons?
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.
Why is silver guidance so low given production potential?
This was a factor of production strategy based on the metal prices, at the same time the grade of the ore that we mined. So year 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 zinc mode and also we encountered 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 grades. But this year, the change in strategy, the whole year will operate in zinc plus lead mode. To that account, silver production will also be affected.
To reach 1.2 million tons mine metal production, what is the constraint - smelting or grades?
No, just smelter capacity. Mine metal-wise, you look at consistently in a few years, and the last quarter, we have demonstrated 300 KT production of mined metal. So there's no doubt in that. It's just that every year, we have finally settled with huge stocks of mined metal. Whereas finished metal, our design capacity is about 1.123 million tons, on the smelters, the debottlenecking, we say that we do once the mines achieve that capacity, those debottlenecking projects are on. And yes, by the next year, we should be there in 1.2 million ton metal exit capacity in next fiscal year itself.
Given current zinc price volatility, are you open to hedging again opportunistically? And what is the maximum hedge quantity?
So it will all depend upon -- it's a dynamic situation. So -- and we have been always agile. We don't want to be -- there's 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 an overall Hindustan Zinc level. So I think we'll remain opportunistic and see what level we should do. But of course, we would be -- not be too much aggressive about it. 15% to 20%, not more than that.
Was there a delay in the Roaster commissioning versus original schedule?
Yes. We can say technically a couple of months delay, but we took in very aggressive position. It's not what the suppliers are telling that when they can commission. We always make them run 3, 4 months ahead of what they commit. So to that account, we are putting a pressure on, but yes, we'll be very happy if it starts production from maybe by May 10th or 12th.
Is 700-710 tons of silver a sustainable level for FY27 and beyond, or can it rise to 800 tons?
No, you have already answered it. So it will rise. You have answered correctly that the more Zawar expense will get from Baroi mine, good silver concentrate from Zawar. SK mine will expand. In that 2 million ton program, we'll get more good silver content. Agucha, as we go below now in the further expansion at many zones, we 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 ton expansion plan, we should be hitting 1,200-1,300 tons of silver.