I can understand how you feel. You and I should join hands to make Dhiraj sell his holdings…why should he have all the fun? 
@dd1474 The article linked in the previous post talks not just about Zinc, but other metals too. I am still holding onto some metal stocks, but am on high alert for correction in metal prices.
Thanks for your suggestion. Unfortunately, I am also holding Hind Zinc only since Dec2016-Jan 2017 so not a major growth for me as well.
I appreciate your view about same being applicable to all matter. However, in my limited understanding, metal cycle generally last for 3-4 years upswing with 1-2 year downswing followed with stabilisation for 2-3 years. There was intersting Chart in Macquarie report on Metal in May 2017 which I received on whatsapp. I am enclosing same for everyone reference which indicate stage of cycle for various commodities.
Interesting pictoral presenation of Zinc Global inventory and price soruced from Teck Resources presentation
As on November 2017
May 2017
Positive in long term While negative in near term in my view. Positive in sense that if this additional supply absorbed in market without any Price impact as suggested by the management, it would take away otherwise fear of what would happen if glencore restart production. It may have marginal negative impact in short term.
Hindustan Zinc announced its Q3FY18 results today afternoon followed with conference call at 3:30 pm. the results and press release are available at following link
http://www.bseindia.com/xml-data/corpfiling/AttachLive/2fa6af93-b310-4589-9f4f-8b8216b31cac.pdf
Key points of discussion over earning call:
My View:
In my opinion, HZL numbers are quite mediocare due to quarter specific factors. The increased production of ore from Rampura Agucha mine and scaling up of underground operations would be key to increased profitability going forward. During Q4FY18, the advance contract sale of 70,000 tonnes of Zinc and 15000 tonne of Lead at price of $ 3084 and $ 2148 respectively would cap the benefit of price increase in LME market. However, saving on coal and high scale of operation. The company indicated production greater than FY17 for Zinc+Lead (>950,000 tones) and Silver (150 tonnes). If we go by same, we shall expect at least 247,000 tonnes production of Zinc+Lead and 113 tonnes of silver. During Q4FY17, the company has higher production of 260,000 tonnes for Lead+Zinc and 139 tonnes of Silver.
While production cost at around $ 1000 for year (my esitmate) is higher by around $ 200 per tonne (Q4FY17 cost of $ 800 per tonne), realisation are also likely to increase to by $ 500 per tonne for Zinc and $ 250 per tonne for Lead for around 2/3 of quantity in Q4FY18 (balance being already sold in forward market). Q4FY17 was exceptationally good quarter for the company and if it can replicate same during Q4FY18, it would be great reinforcement to strong execution capacity of HZL management.
Disclosure: Hind Zinc is among my top 5 holdings and my view may be biased due to that. investor are advised to do own due diligence before taking any decision.
This is from investing news
According to the International Lead and Zinc Study Group, global refined zinc metal production is forecast to fall by 1.4 percent this year, to 13.53 million tonnes. However, next year the group predicts an increase of 3.9 percent, to 14.06 million tonnes.
That said, CRU Group analysts expect around 775,000 tonnes of new zinc mine supply to come onstream next year, with MMG’s (HKEX:1208) Dugald River mine and Vedanta’s (LSE:VED) Gamsberg mine being notable contributors to production.
Aside from those projects, Li expects East Siberian Metals’ Ozernoye field project and Mehdiabad mine to bring new production between 2018 and 2022. “These are expected to help significantly ease the tightness in the refined zinc market during the later years of the forecast period,” she said.
Despite those additions, CRU Group analysts believe global zinc stocks will continue to be rapidly drawn down in the first half of 2018, although this depletion will slow down in the second half of the year.
“Combined exchange zinc stocks at LME-registered and SHFE-registered warehouses could rise probably in the second half of 2018,” said Li, explaining that this will be a consequence of refined supplies rising and demand growth underperforming due to a slowdown in China’s economic growth.
“[That’s because] the government [will] rein in its debt problems while tackling pollution. However, because of the sheer size of the Chinese market, demand will increase but at a slower pace,” she added.
Similarly, CRU Group analysts expect Chinese zinc demand to grow next year, but at a slower rate. “High prices will also begin to constrain demand growth next year in China and elsewhere,” they added.
Outside of China, Li expects demand in the US and Europe to increase next year as industrial activities in both economies continue to gather pace.
With all that in mind, analysts forecast that the refined zinc market will remain in deficit in 2018. CRU Group estimates that the deficit will moderate from this year’s 750,000 tonnes to around 200,000 tonnes. Meanwhile, CPM Group expects the refined zinc market deficit to reach 400,000 tonnes in 2017, but come off to approximately 220,000 tonnes in 2018.
Secondly demand could pickup to a new high for zinc
Interesting read
ZINC INVESTING
What is Zinc Oxide?
Zinc oxide is considered a niche market, but its range of industrial applications is widening. Find out more about why it’s important in this article.
« Arizona Mining Says New P…
Investing News Network • January 18, 2018
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zinc oxide
Whether it’s the rubber and tire industry, ceramics like cookware and tableware, cement and paint, sunscreen and ointments or galvanized steel in our bridges and buildings, zinc oxide is a part of our everyday lives.
So why do we know so little about a compound that we come in contact with so often?
Zinc oxide is the most widely used zinc compound, and it plays an important role in a multitude of applications. World usage of zinc oxide is estimated at over 1.5 million tonnes. The galvanization of steel products accounts for half of global zinc consumption due in large part to the metal’s critically important corrosion-resistant properties. Zinc oxide is also a critical material in the manufacturing of tires, where it increases resilience and elasticity, literally putting the bounce in rubber.
Ceramics is another major market for zinc oxide. The compound’s durability is what makes up many of today’s ceramic tiles, cookware and tableware. Sunscreen and skincare companies rely on zinc oxide for its UV-absorbing properties and the protection it provides from the sun. Its regenerative effect on the skin makes it an integral component in baby creams and wound-care ointments.
Analysts are forecasting that the global zinc oxide market will grow at a CAGR of 3.94 percent between 2017 and 2021. A prominent trend in this market is growing demand for zinc oxide in the semiconductor industry. “Global sales of semiconductor reached more than $325 billion in 2016 and are expected to grow during the forecast period, which will drive the demand for zinc oxide,” says a recent Research and Markets report. Another driver is growing demand for nano zinc oxide, a specialized nanomaterial that displays physio-chemical characteristics such as anti-corrosion, catalytic and UV-filtering properties.
Zinc oxide in the next generation of transparent electronic devices
Zinc oxide is a wide-band-gap semiconductor with several favorable properties — including good transparency, high electron mobility and strong room-temperature luminescence — that make it an excellent material for emerging applications, such as transparent electrodes in liquid-crystal displays, energy-saving windows and thin-film transistors in electronics.
Analysts at 360 Market Updates forecast that the global wide-band-gap power semiconductor device market will grow at a CAGR of 37.9 percent between 2017 and 2021. This significant growth is seen being driven by rising demand in the electronic devices market for transparent displays, smart windows and concealed circuits that require translucent components.
Researchers at the Saudi Arabia-based King Abdullah University of Science and Technology (KAUST), a world-recognized leader in science and technology research, have designed a strategy for creating fully transparent 2D electronic devices and circuits such as transistors, inverters, rectifiers and sensors.
The KAUST research team has integrated aluminum-doped zinc oxide (AZO) contacts with molybdenum sulfide (MoS2) monolayers to produce ultrathin semiconductor sheets.
Previously, incorporating MoS2 monolayers into circuits had “relied on silicon substrates and metal electrodes, such as gold and aluminum. The opacity of these materials has stalled attempts to develop fully transparent 2D electronic devices,” reports Printed Electronics World. The use of AZO contacts resulted in electronic devices that “outperformed their equivalents equipped with opaque metal contacts, such as gate, source and drain electrodes, which demonstrates the high compatibility between transparent conducting metal-oxide contacts and MoS2 monolayers
Zinc oxide for water-free cleaning of solar panels
Of the many beneficial properties of zinc oxide, its role in solar and nanotechnology is said to be an industry game changer. Solar panels collect dust and other particles that can affect their ability to absorb sunlight. And like anything that gets dirty, solar panels need to be cleaned. But in climates where water resources are scarce, zinc oxide is a necessary alternative.
Biswajit Das and his team at the University of Nevada, Las Vegas are developing a water-free cleaning technology using zinc oxide that will be cost effective for large-scale photovoltaic use.
Nanoparticles comprised of zinc oxide provide an electrical field that can modify the electrical properties of dust particles. Once the dust particles are charged, an electrical field can be used to attract them and sweep them away from solar panels without the use of water. The transparency of zinc oxide makes it the ideal material for cleaning solar panels, since transparency is key to ensuring that the nanoparticles don’t block the sun from the panels.
”We are very encouraged by the achievements we have made so far, and hopeful that will be able to develop a low cost technology for charging and electrically manipulating dust particles,” said Das. “We believe that this will be a big step towards sustainable generation of solar energy.”
Zinc oxide production methods
One of the most common production methods for zinc oxide is volatization and recondensation, where oxidized zinc bearers are reduced by carbon, and then metal vapor is oxidized by air combustion to produce zinc oxide.
Due to zinc’s relatively high volatility, this metallurgical process results in consistent grades and recoveries. “This, combined with the simplicity of construction and operation, and lack of water required, make volatization methods a particularly attractive option in zinc beneficiation projects,” notes a report by project development and management group Novopro.
One of the most commonly used proven methods of zinc recovery through volatization is the Waelz kiln, a German-invented refractory-lined continuous kiln that can approach zinc recoveries of 90 percent. In addition to high zinc recoveries, other advantages of the Waelz process include low capital and operating costs as well as simple construction and operation.
“The efficiency of the Waelz kiln is a direct function of the input zinc grade. For instance, about 90 percent of Waelz kiln production is the processing of electric arc furnace dust from steel mills whose zinc grades are commonly 20 to 24 percent,”
Zinc prices at all-time highs
The price of zinc has grown by more than 90 percent since January 2016 ($1,510 to $3,180 per tonne as of December 2017), and hit a 10-year high last August. The price surge is expected to continue as heavy demand crosses paths with zinc stockpiles crashing to historical lows. Recent key mine closures in China, Australia, Ireland and Canada will no doubt have a long-term impact on global zinc supply, causing end users in industrial markets to search for other viable sources.
I have read so many interesting article about demand for zinc and many big time zinc miner like glencore report also suggesting an upward movement in prices further.
Hindustan zinc is the only option for Indian retail investors in this segment I do expect something big in 2018 in the price front it is TAKEN AS IMHO
DISL. Invested
Zinc Prices Break Decade Highs On Sweeping Reforms From China
January 19, 2018 | Under: Base Metal Trading | Print Friendly Format
Zinc Prices Break Decade Highs On Sweeping Reforms From China
Zinc Prices Break Decade Highs On Sweeping Reforms From China
Like most of the base metals, zinc had a great second half of 2017. So far 2018 is looking good as well, with the cash contract for zinc holding steady above $3400 USD/tonne on the LME.
There have been some observations made in recent weeks about the speculative nature of the buying in the base metals complex, but when it comes to zinc, this isn’t the case. By most estimates there is less than a week’s supply of zinc in LME warehouses, and the ongoing enforcement of environmental standards in China may represent a fundamental shift in the broader base metals market.
The current action in the zinc market has a lot to do with the changing economic picture in China, and when commodity powerhouse Glencore decides to bring their zinc assets back online. They took a lot of zinc production out of the market in late 2016, in an attempt to stabilize a then flagging zinc price.
As a result of Glencore’s move in 2016, and the recent unexpected crackdown on Chinese mines and smelters that are not following environmental regulations, it looks like zinc consumers may be in for some much higher prices going forward. But the meat of this story has a lot to do with China’s ability to sustain their production levels, even with rising efforts to clean up their country.
The Dangers of a Binary Paradigm
A recent note from Goldman Sachs came to the aid of zinc bulls, describing a market where environmental efforts in China won’t seriously effect the demand side of the commodity equation.
From the note, “Ongoing supply-side reforms and environmental cuts in China translate into higher commodity prices and less Chinese production, both of which benefit ex-China producers.”
This statement flies in the face of the idea that if China was going to pivot away from the economy that helped them build their industrial base, there would be big economic problems for the nation. While the reliability of the economic data from the Chinese statistical bureau is debated, the import records for raw materials are far more likely to be accurate.
According to Mining,com, “Shipments of copper concentrate to China hit a monthly record of 1.78m tonnes in November and the tally for the year should beat last year’s record 17m tonnes.”
Although refined copper imports to the Middle Kingdom are looking a little weaker than 2016, it is important to remember that 2016 was a record year for imports. These figures don’t support the narrative of a major slowdown in China, and a series of stable PMI’s only reinforce the idea that China’s transition towards quality over quantity will continue uninterrupted.
Zinc imports to China have surged on a year-on-year basis, rising more than 40% when compared to the first 11 months of 2016. As mentioned above, the supplies in LME warehouses are slim, and this will probably make any sort of pullback in the zinc price unlikely.
Holistic Solutions
It is important to realize that the same social currents that are supporting zinc, are a big part of the shift in China towards a more sustainable growth model that doesn’t poison their environment.
A big part of the Chinese pollution problem can be traced back to petroleum and coal power, and Beijing is going full force to create solutions that reduce their dependence on imported fuels that create toxic emissions. While this philosophy may upset the balance of power in oil producing nations that don’t have diverse economies, it could make China a new energy superpower.
China is already the largest producer of solar technology, as well as the largest market for Electric Vehicles on earth. This will put China in a position to produce and sell next generation energy technology to their trading partners, and give those nations that work with China a huge advantage over countries that have to use outdated fuel sources like thermal coal.
The transition away from heat driven mechanical force to electricity means a big demand for ‘energy metals’ and this in turn presents a massive opportunity for the resource sector.
While there will surely be mining companies that benefit greatly from this trend, not all miners are created equal. Take a look at this panel discussion for more info about how Rick Rule chooses who to write a check for, and a number of other topics from investors that know how to invest successfully in resources.
The Next Big Move
China’s rise to their current position as the dominant manufacturing force in the world economy was powered by the same fuel that built England’s economy back in the 18th century.
But today, China is moving away from fossil fuels, and with this innovation, a massive power shift could be afoot. It is hard to overstate the advantage that cheap power from renewable sources creates for nations that embrace it on scale, let alone the strategic advantages it gives to those who can manufacture it at competitive prices.
The trade off is that metals like copper, nickel, cobalt and lithium, among others, will become the backbone of the world’s infrastructure. If offshore wind is going to continue to be developed as a realistic large-scale power source, a whole bunch of high grade steel is going to be needed to stand up to harsh conditions in the open ocean.
As the current cobalt and zinc crunches demonstrate, there are going to be new sources of supply for vital elements brought online over the next decades, if development is to continue. – Nicholas Say
Please check back for new articles and updates at Commoditytrademantra.com
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Base Metals complex , Cobalt , Commodity Prices , Copper , Nickel , Zinc , Zinc Bulls , Zinc Imports , Zinc Market , Zinc Prices
request your views on the above article
All this report suggest better days ahead for Hindustan zinc
Only Rs 6 Dividend per share in March 2018 as against Rs 27.5 per share divided declared in March 2017. Major disappointment for me as I was looking at continuation of at least last year divided given the high probablity. I would continue to monitor development closely.
Even i was disappointed with the dividend. I guess the reason is the expansion plans they have for coming year. I have exited Hindustan zinc completely. Reasons for exit -
1)Zinc prices seem to have peaked. Zinc inventory is going up. High zinc prices have made some mines viable which had closed down because of low zinc prices. This will increase the supply
LME warehouse stocks soar by 14% at start of 2018
The article’s central point is metal coming back to LME apporved warehouse. Something concerning warehousing rules of LME. It does look pointing to oversupply of metals.
Counter points most welcome.
Another big dividend stock in the metals & mining space, NMDC, also chose not to approve an interim dividend proposal:
Hindustan Zinc announced its Q4FY18 results today afternoon followed with conference call at 5:30 pm. The results and press release are available at following link
Key points of discussion over earning call:
Operational performance
The company is on path to achieve production capacity of 1.2 mn tpa by Q4FY19. During FY20, the management reconfirm their confidence to achieve production of around 1.2 mn tpa The management also indicated higher production target silver at around 650-700 tpa during FY19 and further going up to 1,000 tpa when the company achieve 1.2 mn tpa of metal production. During the current quarter as well as in FY18, the company achieved record production of lead and silver. Further, the silver refining plant of the company is now got approval for LME.
Cost of production and mine development
During Q4FY18, the company managed to get its cost of production lower to $ 925 per tonne as compared with Q3FY18 Cost of $ 1022 per tonne (although higher than $ 794 per tonne In Q3FY18). The company manages to get higher coal linkage and domestic coal and also benefited by lower prices. The company has received requisite Environment approval so that it can achieve production capacity of 1.2 mn tpa by end of FY19.
The company expected shaft to operational by Q3FY19, stabilizing Q4FY19 and providing full benefit of capacity during FY20. The company continues to have more than 25 years of mine life. During FY18, it added gross R&R of 19.5 mn tonne prior to depletion of 12.6 mn tonne. As on March 31 2018, the combined R&R were estimated to be 411.3 mn tonne (as compared with 404.4 mn tonne as on March 31 2017).
Outlook
The management is confident about strong outlook of Global Zinc market. While there are expectations of supply commencing during H2CY18, the material from same would take time hence would not result in material increase during CY18 which would continue to remain deficient year. Zinc inventory in global market has declined further, from 7 days to 6 days. Average inventory level in past are around 20 days. So even with increase in production, the inventory level are continue to remain lower than normal averages and market is expected to remain in short supply during CY18 as well as CY19, despite expected increase in production. Considering the tight demand supply situation, the management expect zinc price to remain firm during medium term.
The company expects to achieve production capacity of 1.2 mn tones and also approved first phase capex of Rs 4500 Cr over next 3 years, which would enhance the production capacity to 1.35 mn tonne. During FY19, it expects to produce silver metal of 650-700 tonne. Further, with various shaft coming operational, the company is expected to move full production to underground mining. With support of modern technology, it intends to improve production efficiency resulting in lower Cost of production of $950-975 per tonne during FY19.
On Dividend policy, the management indicated that Board has provided broad guideline for dividend distribution and MD would like comment on Dividend payment as same being under authority of board. The company has fairly large financial investment which can take care of capex.
Given the tight demand supply situation for zinc, the company has no intention to hedge its production in near future.
My View:
In my opinion, HZL numbers has improved significantly as compared with Q3FY18, but continue to remain lower than Q4FY17 which was exceptionally good quarter. The increased production of ore from Rampura Agucha mine and scaling up of underground operations would be key to increased profitability going forward. Despite major jump in production volume (depleted 84.84 mn tonnes of ore durng FY08-FY18 period, while added almost three times R&R during same period at 280 mn tones), the company has established its credential of sustainable production (with mine life of 25 years+) and control of cost.
With tight zinc global market, higher silver production and stable to lower cost (depending on coal/diesel price and coal linkage), the company is likely to show moderate growth in FY19 and with major jump in financials during FY20.
Disclosure: Hind Zinc is among my top 5 holdings and my view may be biased due to that. Investors are advised to do own due diligence before taking any decision.
Please find enclosed an interview of CEO-HZL – Mr. Sunil Duggal in today’s issue of Hindu Business Line, all editions.
Meet the CEO
What will propel the growth of mining?
Self-declaration, simple policies and quick decisions, says Sunil Duggal, CEO, Hindustan Zinc
Hindustan Zinc, a dominant player in zinc and silver in India envisions to increase its production from about one million tonnes per annum (mtpa) to 1.5 mtpa in the coming years. Also, it has been increasing its focus on the silver business and hopes to become the third largest manufacturer of silver globally in the next five to six years. In an interview, Sunil Duggal, CEO of Hindustan Zinc shares his outlook on the Indian mining industry and company’s business. Edited excerpts:
Your comments on the mining industry in India?
Over the last decade, the contribution of the Indian mining sector to the country’s GDP has been stagnant at nearly 1.2 per cent. And the Indian mining sector grew at a compounded annual growth rate (CAGR of 7.3 per cent over the last decade compared with 22 per cent in China.
If India is unable to keep the pace with the growing demand of infrastructure development, it would only be increasing the import bill. Not just that, it also decreases the employment opportunities. Just 10 per cent of the value of metals imported to India is produced domestically (excluding iron, precious metals and hydrocarbons).
These imports largely impact foreign exchange, employment, and, ultimately, the development of the country.
India should grow. For that, it should become a resource-friendly country. Some of the liberal approaches have to be taken in this industry. Self-declaration, simple policies and quick decisions are needed.
The mining sector, which aims to contribute 7-8 per cent to the GDP, could create 25 million jobs in the country, directly and indirectly, and has the potential to propel GDP growth to 9 per cent.
How is FY-19 expected to be for Hindustan Zinc?
It is going to be a landmark year for us as we transform to a fully underground mining company (open pit mine contributed nearly 24 per cent of total metal production in FY-18). We will make up for the reduction from open cast mines by ramping up our production from underground mines. The metal production in FY-19 would be better than in FY-18.
We are targeting another record year of production in FY-19 (with run rate of 1.2 mtpa in some quarter), in line with our expectation of delivering 1.2 mtpa in FY-20. Silver production is expected to be in the range of 650 to 700 tonnes this year.
With expansion of our mines, implementation of new technologies, debottlenecking of smelters, installation of fumers, commissioning of shafts at our mines and two new mills becoming functional this year, it is going to be an exciting year. Our strategic vision is to grow our output to 1.5 mtpa and our silver portfolio to 1,500 tonnes in the next few years.
What do you foresee the demand for zinc?
The global zinc market is expected to grow at a CAGR of 3.96 per cent during 2017-2021. Zinc consumption in India is also increasing every year. The issues of rust and corrosion in steel will drive the consumption of zinc in sectors such as automobiles, railways, galvanised re-bars in coastal structures, electricity distribution network, defence and agriculture.
Setting up of two new mills at a capital cost of ₹600 crore is a part of our plan to match the growing demand for zinc in India. With three million-plus tonnes of additional treatment of ore, we would be able to increase the volume of the metal substantially.
What is your outlook for lead?
Lead, zinc’s sister metal, was in deficit in 2017, driven by shortage in mine supply. Globally, refined production grew at 1.1 per cent in 2017 to 12.5 million tonnes but fell short of demand, which recorded a 2.2 per cent growth.
In India, lead consumption has grown at over 8 per cent CAGR for the past five years, driven primarily by growth in the automotive segment of e-rickshaws, cars, UVs and two-wheelers, which comprise 55 per cent of consumption. Lead consumption is expected to grow at 7 per cent CAGR during 2017-2022, as estimated by CRISIL in a recent lead market study.
Looks like there is an increased focus on your silver business…
Silver is our top-up product (the company derived nearly 10 and 16.65 per cent of its revenue and operating profit respectively from the silver segment in FY-18). Margins on silver are close to 80-85 per cent and most of the revenue from it is contributing to our bottomline.
The CAGR of our silver production is also much faster compared to that of zinc. In the last 15 years, we grew from 40 tonnes to 555 tonnes.
There is an increase in our silver-rich resources and many recovery measures are in place to extract silver from the waste. For instance, fumer plant is to be commissioned soon, which will help us recover lead and silver from the waste.
Also, our silver refinery has been recently added to the LBMA’s (London Bullion Market Association) good delivery list. This recognition gives us an edge, as LBMA-certified products fetch a premium. So, we are quite bullish on silver. Last year, we were ranked as the tenth largest manufacturer of silver in the world. We plan to produce nearly 1,500 tpa of silver in the next five to six years and aim to become the third largest producer globally.
But aren’t silver prices too volatile?
Nobody can control the price movements. Silver prices are at their multi-year low. Five years back, it was $30 per ounce and now it hovers at $16 per ounce. Silver being a rare metal and with constraints on its supply, I believe that it has the potential to bounce back to $30 per ounce.
Is Hindustan Zinc exploring to separate its silver business?
We are exploring various options in the interest of our stakeholders. Ultimately, it should benefit the overall business.
I have started slowly exiting from Hindustan Zinc. Nothing negative on business or managment. It is more to align my requirement of cash for personal reasons. Among all my holdings, Hindustan Zinc is most prone to global risk and hence decided to reduce my exposure. Since I was regular contributor to this thread, thought it would good to share development at my end. Wish all the best to investors who are holding this share.
Discl: My view may be biased and investor shall do its own due diligence before making any decision.
