FINANCIAL CHRONICLE - THE SILVER MINING BY SUNIL DUGGAL - CEO, HZL

If we add the amount of solar energy that is absorbed by the earth's atmosphere, land and oceans every year, we end up with approximately 3,850,000 EJ (exajoules or 10^18 joules). To put it in more understandable terms, this amount of energy is equivalent to: 2.7 million earthquakes of the same size as the Tohoku earthquake in Japan (2011); 40,000 times the total energy consumption in the United States; 8,000 times the total consumption in the whole world; 40 per cent of the energy that is required to heat the entire volume of water we have on earth by 1°Celsius. Every square metre of our planet receives around 1,366 watts of direct solar radiation.
In America, one solar panel system is installed every four minutes. NASA is currently working on a solar-powered aircraft.
Globally, California is home to the largest solar power plant in the world, located in the Mojave Desert. It spans 1,000 acres. California also dominates the solar power market, with a market share of 44 per cent in 2015. California, Arizona, and North Carolina are the top three US states for solar power, based on the amount of cumulative solar electric capacity installed. There are now nine states in the US where 100 per cent of new electrical energy comes from solar power. In terms of employment generation, more than 200,000 Americans currently work in the solar power industry. That number is expected to climb to 420,000 by 2020.
India is currently 100 per cent importer of solar parts where Silver is used. The major countries from where it is being imported are China and Japan. Taking forward the vision of our prime minister Narendra Modi to produce 100 GW of solar energy by 2022, and producing solar parts, India's consumption of Silver will be all set to increase by about 4,000 tonnes. It is also true that 40 tonnes of Silver is required to produce panels that would generate 1GW of solar power.
Technically speaking, Silver is a primary ingredient in photovoltaic cells, and 90 per cent of crystalline silicon photovoltaic cells use Silver paste. When sunlight hits the silicon cell it generates electrons. The Silver used in the cell works as a conductor to collect these electrons in order to form a useful electric current. The Silver then transports the electricity out of the cell so that it can be used. Further, the conductive nature of Silver enhances the reflection of the sunlight to improve the energy that is collected. Therefore, if it wasn't for Silver, solar wouldn't be as efficient in turning sunlight into energy.

But, where is the Silver in India. Have we explored Silver in India? Silver is giving jitters to the increasing solar demand in India. Silver is found in zinc-lead mines and there has been no new large mine explored in India in over a decade. Exploring a mine takes its own time and developing a mine takes 3-5 years. Either we rely on imports or we develop our own resources is the decision that India needs to take.
India is the largest consumer and importer of Silver in the world, having a share of about 21 per cent of global Silver demand though it produces only 6-8 per cent of its consumption requirement. The current Silver import in India is touching 7,000 tonnes and here in India we produce close to 500 tonnes which maximum can be extended to 1,000 tonnes in coming 3-5 years, with expansion of Hindustan Zinc mines that produces over 95 per cent of India's Silver. Globally, the highest usage of Silver is industrial fabrication (55 per cent), followed by coins and bars (20 per cent) and jewellery (20 per cent) and lastly Silverware (5 per cent). In India, the highest usage of Silver is jewellery (38 per cent), followed by coins and bars (22 per cent) and lastly Silverware (20 per cent) and industrial fabrication (20 per cent), as per World Silver Institute.
As compared to the world, India has been slow towards utilisation of Silver for industrial usage with mere 20 per cent, as compared to global usage. Though we are growing in terms of utilisation of Silver in jewellery and Silverware, the real boost will come with digital India and development of domestic solar energy market where Silver will be used.
Silver's industrial role is much more than that of gold's and it is for this reason that a shortage of Silver will have higher negative implications than there would be if there was a shortage of Gold. 

HINDUSTAN ZINC’S TRANSITION TO A FULLY UNDER-GROUND MINING COMPANY BY FY 2019

India's only and the world's second largest integrated zinc producing company, Hindustan Zinc, is all set to become a fully underground mining company by year 2019.
Rampura Agucha Mine of Hindustan Zinc, the world's second largest zinc producing mine and responsible for 75% of company's total output, is gradually moving from open-cast to underground mine operations. The company is expected to close the open-cast mining operations by 2019 and would operate only under-ground mine. The 955 meters depth shaft sinking work at Rampura Agucha Mine has already been completed and commissioned.
In the year 2016-17, Rampura Agucha mine produced ore both from open-cast and under-ground mine. The contribution of open-cast was 3.3 million tonnes and under-ground as 1.4 million tonnes. Rampura Agucha mine ore production capacity is expected to reach about 4.50 million tonnes by 2019-20. The ore production capacity of Rampura Agucha mine as on 31st March 2017 stands as 6.15 million tonnes.
According to the metals and mining analyst, the grade at Rampura Agucha open cast mine is 13 percent and the under-ground mine would be also similar. Globally the average grade varies between 3-6 percent and that gives a huge advantage to Hindustan Zinc in global market.  Even the cost of production of Hindustan Zinc, which is about $ 800 per tonne, is 30 percent lower than that of the global peers.
Hindustan Zinc is on its way towards transition to a fully underground mining company with next generation of technology. This transition will be completed either by the end of current financial year or maximum by early next year. Certainly the production level at open cast mine are much easier when compared to underground mine and initially we are expecting the production levels to be slightly challenging at Rampura Agucha. But since they are ramping up all the other mines, they are well placed to meet the requirements of their smelters and also the production levels. Gradually, the production level at Rampura Agucha under-ground mine will pick-up and will further support the expansion plans.
This transition is part of series of systematic decision and this is the reason they have already speeded up expansion in our other underground mines to ensure that the overall mine production is not impacted.
By 2019-20, Hindustan Zinc will be expanding its all mines to meet the growing demand. Rajpura Dariba mine is being expanded to 1.5 million tonnes from the current capacity of 0.9 million tonnes. The silver rich Sindesar Khurd mine is being expanded from the current capacity of 4 million tonnes to 6 million tonnes. Zawar mines are all set to reach the capacity of 2.5 million tonnes from 1.8 million tonnes in the current financial year and subsequently to 4.5 million tonnes in next 3 years. The company's Kayad mine in Ajmer has ore production capacity of 1 million tonnes and efforts are being made to expand this mine as well.
The shaft sinking work has been completed at Sindesar Khurd mine which has reached the depth of 1050 meters and a new mill of 1.5 mtpa capacity has already been commissioned last year to support the enhanced ore production at Sindesar Khurd mine. The Company is also setting up Fumer Plant to further improve recovery of metals from the slag.
Though ore production capacity of all the mines put together is 12.20 mtpa, the actual ore production in the year 2016-17 was 11.87 million tonnes. The company is aiming to expand the mine production levels to 13.10 mtpa in the current financial year and reaching to 17.50 mtpa in the next three years, i.e. by FY 2020.
Since disinvested in 2002, Hindustan Zinc has invested over USD 3 Billion towards its 4 phases of expansion programs to reach to metal production capacity of 1 million tonne and within three years the company is expected to expand the capacity of metal production to 1.2 million tonne an eventually to 1.5 million tonnes in the next 5 years.
The global zinc market is expected to grow at a CAGR of 3.96% during the period 2017-2021. The zinc consumption in India is too increasing every year and eventually the issue of corrosion in the new sectors like automobiles, railways, use of galvanised re-bars in coastal structures, electricity distribution network will also drive zinc consumption in India.
Agriculture is another area where zinc can improve the yield of crops since a large agriculture land in India is suffering from zinc deficiency which is not only impacting the mineral value in crops but also affected the overall production.
Hindustan Zinc is counted amongst the top 50 companies in all sectors in India. The company has high quality of grades of ore but also keeps tight control on the costs, best in class technology and substantial cash accruals to meet expansion plans.

HINDU BUSINESS LINE - WE NEED TO ‘GALVANISE’ THE ECONOMY

9^th August 2017 – Opinion Page

Galvanised steel will bolster rail safety. Cars and infra projects will suffer fewer corrosion and maintenance issues.

SUNIL DUGGAL  

Consumption of zinc has grown in India over time, helping sectors such as infrastructure, cosmetics, medicines, paints, rubber, surgical tools, plastics, textiles, soaps and batteries expand and grow. But corrosion losses impact India’s GDP considerably every year.

This can be checked if we promote galvanisation (cover metals with zinc) in construction. Western countries mandate the use of galvanising for steel structures used in building bridges, highways, airports, metro stations, railway stations, etc.

Zinc is the fourth most widely consumed metal in the world — after iron, aluminium and copper. Almost 50 per cent of the zinc mined across the world is used for galvanising, 17 per cent for zinc alloying, 17 per cent for brass and bronze making, 6 per cent in zinc semi-manufactures, 6 per cent in chemicals, and 4 per cent for other miscellaneous purposes.

India’s consumption of zinc is rising day by day as new sectors are being explored to take advantage of zinc. But its potential remains unrealised..

Coastal infrastructure

Use of Galvanised rebars in construction near coastal areas: Corrosion is one of the major reasons for deterioration of concrete structures built near coastal areas. Coastal salts coupled with humidity can corrode exposed metal surfaces and penetrate any opening in the building.

Coastal infrastructure within a range of 5 km is more prone to corrosions and becomes progressively worse closer to the marine source.

According to a study by the American Institute of Architects, it is essential to use hot dip galvanised steel to make such coastal infrastructure-decay resistant. Galvanised steel provides the much needed strength to rebars.

Auto sector

Use of galvanised car bodies: Globally there has been a discrepancy in using galvanised car bodies. Indian car manufacturers use about 3 per cent galvanised steel for cars manufactured and sold in the domestic market. However, they over 70 per cent galvanised steel in exports to markets in Europe, Asia and Africa.

Indian consumers don’t demand galvanised steel due to lack of awareness on the long term benefits of galvanised vehicles. 

Car makers in Europe, North America, Korea and Japan have been using galvanised steel for car body panels for decades and provide anti-corrosion and perforation warranties for a minimum of 10 years.

In India, the customers are advised to pay for extra coatings to protect the body of the car after purchase. More than 60 per cent of the cars in India have surface rust which reduces steel strength and the life of the car, leading to safety hazard.

Steel has been used to make automobiles since the early 1900s but corrosion resistance features became standard in vehicles beginning in the early 1980s when Japanese cars gained entrance to the US market.

Globally, the annual consumption of zinc for auto-bodies today is roughly 120,000 tonnes. There is almost no galvanised steel on Chinese-made vehicles except for exports from China by Volkswagen, General Motors and others which also means that 20 million cars in China are not using galvanised steel.

Globally, galvanised steel car bodies have been shown to experience minimal corrosion attack which protects the structural integrity and safety of the vehicle, improves the resale value, provides consumer protection due to anticipated warranty improvements by the car companies, lowers maintenance costs of under-body and structural components due to the use of zinc coated steel, and saves consumers the costs of after-market anti-corrosion treatments and annual inspections.

The railways

Corrosion of rails and fish plates: Galvanising of railway tracks would not only be a significant initiative towards safety of trains but would also give more life to the railway tracks. India’s rail tracks, spanning over 125,000 km, happen to be the world’s third largest. The annual loss due to pre-replacement of corroded rails is about Rs 440 crore. Many accidents have been attributed to fishplates. Not just the fish-plates, even the bolts need protection, protection from corrosion.

Experts have estimated losses of almost 4 per cent of GDP per year on account of corrosion which may be avoided if the railway tracks are galvanised. One of the significant aspects of railway track maintenance is the detection of corrosion and the replacement of corroded rails.

Corrosion reduces the life of rails to nearly half its expected life. The rails have a life of 800 gross million tonnes which works to approximately 12-13 years under normal traffic conditions in India. The shorter life of rails resulting from absence of galvanising increases track maintenance workload. Corrosion increases the pace of rails replacement and interferes with normal railway movement causing inconvenience to passengers and freight movers and revenue losses to the Railways. 

According to a site inspection carried out by the Commissioner of Railway Safety (eastern circle) PK Acharya, rusted rails could have caused derailment near Kanpur that left 146 people dead and over 200 injured. The International Zinc Association advocates that Indian Railways require corrosion- free tracks in case India is considering Bullet Trains.

Energy sector

Zinc powers the electricity distribution network: Since the advent of high voltage lines, hot-dip galvanised steel has been used in the electric utility market. Whether in a generation facility, substation, lattice tower, or renewable energy components, galvanised steel has been a backbone of any global economy.

According to a study by the American Iron and Steel Institute, close to 1 million steel distribution poles have been installed in the United States since 1998 and are being used by more than 600 US electric utilities. India might be having more poles but how many are galvanised is still to be assessed.

When India is looking ahead providing electricity in every village and progressively moving towards Smart Cities project, Digital India and Make in India, the very basis of infrastructure, the power transmission, needs to be protected for many years.

If these four sectors mandate to address the issue of corrosion and related safety, it would lead to not just efficiency and savings worth millions of dollars for the Indian economy, but also build long-lasting infrastructure. 

The writer is CEO of Hindustan Zinc.