2ND CII NATIONAL 5S EXCELLENCE AWARD - 2017 TO PMP

Pantnagar Metal Plant received first prize under category of Process Industry – Large along with the certificate of gold rating during 2nd CII National 5S Excellence Award - 2017 on 27th October, 2017 at New Delhi. There were around 112 participants in the category. The award was given by Mr. S.S. Gupta – Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Govt of India and Mr. Winfried Damm – Director, Indo – German Energy Program. The award was received by Mr. C. Chandru – Head PMP, Mr. V.K. Singh – Head Civil, PMP and Mr. Sandeep Nain – Head Quality, PMP.

7-8% CONTRIBUTION OF MINING SECTOR IN GDP CAN CREATE 25 MILLION JOBS IN INDIA

Continuous decrease of mining sector share in India's GDP is holding GDP's growth. The mining sector aspires to contribute 7-8% to India's GDP and if this happens, India would realize a GDP of 9% in the coming years.
The development of natural resources dates back to about 50,000 years - in the Middle Paleolithic Chert mines of Nazlet Sabaha (or Safaha), a site on the western banks of the Nile River in Egypt. In India, Zinc mining dates back to over 3000 years in Rajasthan at Zawar.
India produces 87 minerals which include 4 fuel minerals, 10 metallic minerals, 47 non-metallic minerals, 3 atomic minerals and 23 minor minerals.
Mining was important in the ancient times and mining is important today and for the future survival of mankind. Development of natural resources is essential for sustaining economies as it gives birth to industrial development, ancillary industries, employment generation and prosperity. Employment generation is a key result but the end result is eradication of poverty.
But, in the last over a decade, the contribution of mining sector in GDP has been stagnant to nearly 1.2%, which is highly alarming. The Indian mining sector grew at a CAGR of 7.3% in the last decade compared to 22% in China in the same period. The mining sector in India employs a smaller percentage of India's population, just about 0.3% as compared to 3.8% in South Africa, 1.4% in Chile and 0.7% in China.  It is also true that employment in the Indian mining sector has grown at a rate of 3% per annum over the last 10 years.
The McKinsey Global Institute report suggests that development of mining sector will be important if India has to achieve 7% plus GDP growth. The report further says that mining sector alone has the potential to create 6 million additional jobs by 2025. The sector can contribute an additional USD 125 billion to India's output and USD 47 billion to India's GDP by 2025.
About five years back, in the year 2012, mining sector accounted for about 3 million direct jobs and additional 8 million indirectly.
The mining sector contributed 3.4% of India's GDP in 1992-93, which declined to 3% in 1999-2000 and further to 2.3% in 2009-10.
To mention, every 1% increase in the growth rate of mining sector results in 1.2% to 1.4% increment in the growth rate of industrial production and correspondingly increase of 0.3% in the growth rate of India's GDP.
According to a report by FICCI, if India is looking to increase the share of mining sector to 5% of the GDP in the next 20 years, this sector would be required to grow at the rate of 10-12% annually.
The economies are simple. If India is unable to keep pace with the growing demand of infrastructure development, it would only be increasing the import bill. The import not only increases the cost but it also decreases the employment opportunities for the primary country. This becomes important since India currently is dealing with about 30% of unemployed youth.
Example of Angul is unique. Due to Mahanadi Coal Field, large down-stream industries have been set-up and that has resulted in increase in Angul's GDP per capita from INR 39,000/- to INR 101,000/-. Even the lowest income group in Angul has decreased from 67% in 2002 to mere 25% in 2012 and is expected to be less than 5% by 2025.
India is also far behind in expenditure towards exploration.  It accounts for only 0.3% compared to over 19% by Canada, 12% by Australia, 7% by United States, and 4.5% by China. The Geological Survey of India needs to expand its focus on baseline data generation to encourage exploration activities for the development of mining sector. Exploration in India is mostly limited to a depth of 50 to 100 metre as compared to 300 metres in countries such as Australia.
If India's global ranking in production of minerals is an indication, it would not be wrong to say that economies of other countries are growing due to sustainable mining and have been successful in addressing unemployment and poverty issues. We being a country of huge mineral reserves and resources are lagging behind because we are still struggling to implement even the existing policies.
Self-declaration, simple policies and quick decisions are required to promote the mining sector. Policies of self-accountability with provision of stringent punishment will deter mining companies from doing anything wrong.
In India, even for obtaining mining lease, it takes minimum 1 years' time, which can be extended even to more than 5 years, as compared to just 30 days in Canada and 60 days in Australia.
If the government wants to be a regulator and not the owner, then it should give a substantial space for the industries to develop the mining sector.
The fact is that we are already years behind, since mine development itself takes about 3-5 years and further setting up smelters for processing these minerals takes another 2-3 years, even if we start today, we would be able to achieve some results only by 2022.
To `Make in India' we have to `Mine in India' and if we can do this, we would be able to address large unemployment issues.
The strategic plan document by Ministry of Mines has very impressively highlighted improvement in the functioning of GSI, IBM, R&D projects and Human Resource Development as few of the key areas.
The demand of minerals will grow 4-5 times over the next 12-15 years against a backdrop of globally decreasing resources. There would be a huge demand for the metals in view of the rapid urbanization and growth in the manufacturing sector.
The mining sector aspires to contribute 7-8% to India's GDP and if this happens, India would realize a GDP of 9% in the coming years. This is expected to create at least 25 million jobs, directly and indirectly.
But, above all, India will have an edge over other countries in terms of exports of these minerals, employment generation, eradication of poverty and taking a leadership position in the mining sector.

By Sunil Duggal
CEO, Hindustan Zinc

FORBES MAGAZINE - BENEATH THE SURFACE

4th August, 2017 I By Varsha Meghani

Hindustan Zinc - India's Super 50 Companies 2017 by Forbes India.

What makes it Super

• Access to high quality grades of ore lends it a ‘natural’ advantage
• Tight control on costs helps it retain it healthy margins
• Quick adoption of the best-in-class technologies
• The integrated nature of their operations adds to their cost advantage.

A 100-tonne truck emerges from pitch darkness and rumbles past us. Outfitted with helmets, rubber boots and fluorescent overalls, we’re seated in an SUV, waiting to plunge into the same abyss. Around us hills dot the dry landscape.

We’re at the mouth off the Sindesar Khurd, an underground zinc-lead mine operated by Hindustan Zinc in Dariba on the outskirts of Udaipur in Rajasthan. About an hour ago, a blasting had been carried out in the 500-metre deep mine. The truck that crossed us had scooped up the broken rock and was on its way to a nearby mill where the zinc-lead ore would be separated from the waste.

This extraction of zinc and lead - and silver as a by-product–is a thriving business; one that has catapulted Hindustan Zinc from deep losses, when it was a government run–entity, to huge profits after Anil Agarwal’s Vedanta Ltd (formerly Sesa Sterlite) bought its first tranche of the company’s shares in 2002. Last fiscal, the company – 29.5 percent of it is still owned by the government–reported earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs. 9,734 crore on revenues of Rs. 18,642 crore. Meanwhile, cash reserves stood at Rs. 16,065 crore. This, despite declaring an interim and special dividend totalling Rs. 27,157 crore–the highest ever paid by an Indian company in a single financial year claims the company, which trades at Rs. 274 on both the BSE and the NSE (as of July 14). “When our balance sheet became very fat, we decided to share the money with the government, our shareholders and us”, jokes Sunil Duggal, CEO, Hindustan Zinc.

Despite the huge outflow, the company’s expansion plans remain undented. With a current output of 1 million metric tonnes per annum (MMTPA) of refined metal, Hindustan Zinc is the second largest Zinc producer in the world – after Anglo-Swiss mining giant Glencore – and seems well on its way to achieving a targeted output of 1.2 MMTPA by FY2019. It is among the world’s least expensive zinc producers, and also Vedanta’s most profitable unit. In India, it enjoys a near-monopoly (the only other Zinc producer, Binani Zinc, produces 0.03 MMTPA), meeting 80 percent of the domestic demand for the metal that is largely used as a coating to protect steel from rusting. Clearly, Duggal, 55, has much to smile to about.

Our SUV makes its way into the mine. Floodlights blinking, we drive through the mine passages, first 300 metres underground and then 200 metres further. The air becomes heavy and the darkness is interrupted by light bulbs hanging from the rock ceiling at intervals of a few metres. Jumbos–large vehicles that blast through the ore body–navigate the rocky terrain, making way for our car.

Huge mineral wealth is buried deep within those rocks. In fact, some of the richest ore bodies are found in the five zinc–lead mines owned by Hindustan zinc spread across Rajasthan. At Sindesar Khurd, the ore grade–the concentration of mineral within an ore–is 6 percent. While at Rampura Agucha–the company’s flagship mine, and also the world’s largest zinc-producing mine – the ore grade is even higher: “The open cast pit mine at Rampura Agucha has a grade quality of 13 percent, while the underground mine has a grade of 14.1 percent. Globally the average is about 3 percent”, says Ashutosh Somani, metals and mining analyst, institutional equities research, JM Financial.

This natural bounty has ensured that Hindustan Zinc maintains its advantage on the cost of production of zinc. At around $800 per tonne, the company’s cost of production is around 30 percent lower than that of its global peers, says Andrew Thomas, principal analyst, zinc markets, at Wood Mackenzie, an Edinburgh-headquartered research consultancy.

Remarkably, Hindustan Zinc has been able to maintain this cost over the years; around 15 years ago, at the time Vedanta stepped in, the cost was the same. What was different, however, was the price of zinc on the London Metal Exchange (LME). Back then it hovered around $800 to $850 per tonne, says Duggal, which meant that the company was largely loss making. So much so that in 2002 when Vedanta bid for a controlling stake in Hindustan Zinc, it encountered little competition; it bought a 26 percent stake from the government for Rs. 445 crore, while another 20 percent was acquired from the public. (In 2003, Vedanta acquired an additional 18.9 percent stake from the government for Rs. 324 crore, taking its total ownership in Hindustan Zinc to 64.9 per cent.)

Around the mid–2000s a China driven commodities boom began, with the prices of oil to iron ore and zinc shooting up. Hindustan Zinc’s profit followed suit; in fact its margins only became fatter as its cost of production remained steady.

Today, zinc prices move between $2500 to $2700 per tonne on the LME. “We never look at commodity cycles when looking at production,” says Duggal, pointing out that even at about $1400 per tonne – the lowest zinc prices have sunk to over the last five to six years–Hindustan Zinc still pocketed a good margin, given its $800 per tonne cost of production. Even at the height of the global financial meltdown in 2009, when zinc prices plummeted to around $1100 per tonne and prompted producers worldwide to shut mines or halt production, Hindustan Zinc made money. “So that [global zinc prices] is not a topic for me. The only topic is first to control costs and second to increase volumes”, adds Duggal.

Apart from the low cost of labour in India, Hindustan Zinc’s access to abundant, and high grade, ore is just one of the factors that enables it to maintain its low cost of production. After all, these resources were available to it even when it was an unprofitable, state–run company.

In fact, at the time of Vedanta take over in 2002, Hindustan Zinc produced only 0.2 MMTPA of refined metal. “Globally, we were nowhere,” says Naveen Singhal, president and director, projects, at Hindustan Zinc. “But our chairman’s [Anil Agarwal], vision was to make the company a global first or second.”

Upping production was key to that vision. And so from 2003 to 2005, Hindustan Zinc undertook what Singhal describes as “Phase 1 of the expansion journey, targeting 0.5 MMTPA of ramped up capacity. The challenge however, was to keep capex costs low so as to make the project financially viable, given the low zinc prices at that time, says Singhal. Also, project delays had to be avoided so as not to get caught in a spiral of interest payments. “We engaged the best of contractors with the right technology and right infrastructure practices so that they could do our project right”, he says.

In addition to mine expansion, zinc and lead smelters, and the company’s first thermal capacity power plant were built. “Our smelters are power intensive. If we didn’t have a power plant, firstly our costs would be higher and secondly getting reliable power would be an issue. Without reliable power, we can lose millions of dollars in a day”, says Singhal. This integrated project was completed in record time and at a cost 40 percent lower than the global benchmark, because of the right technology partners, as well as the low cost of labour that India enjoys, he adds.

By the time the project ended, metal prices started soaring and Hindustan Zinc began raking in the profits. Hungry for more, it eyed large volumes, targeting 0.8 MMTPA of capacity expansion by 2008 as part of Phase 2. This time too, the company ramped up not just its mines, but also the capacity of its smelters and power plants. “Each time we spent money, we spent it in all three areas”, says Singhal. The fact that Hindustan Zinc’s mines and smelters and power plants are located close to each other reduces transportation costs, while the power plants meet 94 percent of company’s energy needs, says Somani. “The integrated nature of their operations adds to their cost advantage,” he says.

Currently, Hindustan Zinc produces 0.9 MMTPA of metal and is on track to meet its next target of 1.2 MMTPA by FY 2019. As part of this phase, in 2012, it found that the open pit production at Rampura Agucha, responsible for 70 to 85 percent of the total output was tapering. Exploration studies revealed that a kilometre beneath the earth’s surface the reserves were still rich. Swiftly, the management implemented a transition from open cast mining to underground mining. Here too, investments in world–class technology, including the building of 1 km–long shafts at Rampura Agucha and Sindesar Khurd mines, are underway to increase efficiencies. Digital technologies, such as wifi infrastructure within their mines, are also being built to connect their operations and resources in real time. “It is the next generation of underground mining,” says Duggal.

The challenge, however, will be to compensate for declining output from open cast mining, while still meeting the 1.2 MMTPA target. This is important for retaining volume and, therefore, cost advantage. At present, the company produces 0.4 MMTPA of metal from underground mining operations. “We are not going from 0.9 to 1.2 MMTPA, but from 0.4 to 1.2 MMTPA. It is a three-fold expansion,” says Singhal, adding that over the last 10 to 12 years the company has spent more than $3 billion on expansion work.

As we drive through the mine passages, making our way back to the top, the air becomes lighter. Metres away from the mouth of the mine sunlight floods into the SUV. The full extent of the riches that lie beneath the surface become astonishingly clear.

INTERNATIONAL GALVANIZING CONFERENCE 2016 FOCUS ON NEW MARKET DEVELOPMENT

International Galvanizing Conference on 20th – 21st October 2016 in Delhi

The 2nd International Galvanizing Conference was inaugurated by Hon'ble Union Minister of Steel – Shri Chaudhary Birender Singh in Delhi on 20th October, 2016. The conference saw global participation from Zinc and Alloy Industries.
Speaking on the occasion, the CEO of Hindustan Zinc – Mr. Sunil Duggal spoke about expanding Zinc market in India and the scope of Zinc in automobile industries, fertilizers, rebars, as a nutrient and towards galvanizing the rail tracks. He spoke about the ancient history of Zinc and India being pioneering country giving Zinc to the world.
Mr. Sunil Duggal said “Hindustan Zinc is ready to meet 100% die-casting requirement in India. For meeting 1% of GDP through mining, Indian mining industry needs to grow 27% and Hindustan Zinc at-least 50%. Delhi's Lotus Temple structure built lasts for 1000 years. HZL has been approached to provide Zinc for Krishna's temple in Vrindawan, since the focus is on building corrosion free structure.”
The Chief Guest of the Conference, Shri Chaudhary Birender Singh – Hon'ble Union Minister of Steel ensured industries of full support from the government and also how Zinc will play an important role towards building infrastructure for the nation.
He said “Like an ant can kill an elephant, you need Zinc coating to make Steel corrosion free. To achieve long life in bridges, India needs galvanized steel structures. Consumption of Zinc is directly related to Steel market. India needs to grow on the basis of USA's metal industry. Whatever produced, needs to be consumed. Coastal area structures are prone to corrosion incurring loss of over 1000 crores every year. The structures built on 8000 Km coastal line of India needs to be protected by choosing galvanized bar. Prime Minister - Narendra Modi's Smart City project will be built on reformed structures that will promote usage of Steel and Zinc. We need to focus on Research & Development and Exploration.”
Mr. Stephen Wilkinson - Executive Director of International Zinc Association said, “Car makers in Europe, North America, Korea and Japan have been using galvanised steel for body panels for decades. These car companies provide anti-corrosion and perforation warranties for a minimum of 10 years. But there is no such protection for most cars made for the Indian consumers. Here, the customers are advised to pay for extra coatings to protect the body of the car after purchase. More than 60% of the cars in India have surface rust which reduces steel strength and the life of the car.”
Mr. Duggal said, “India loses around 4-5% of GDP annually on account of corrosion losses. Western countries, which are far ahead of us in terms of Infrastructure, mandate the use of Galvanizing for the Steel Structures used for bridges, highways, public utility, Airports, Metro Stations, Railways stations, etc. and that is how they are able to preserve long-lasting and robust structures. For instance, Athens Bridge Pennsylvania & Curtis Road Bridge Michigan are structures that utilize Galvanized Steel rebars and have much longer life-span than the conventional bridges built with normal black steel rebar, as galvanized rebar can withstand chloride concentration at least four to five times higher than the black steel rebar and remains passivated at lower pH levels, substantially slowing the rate of corrosion. The country is going through the phase of urbanization and in the upcoming Infrastructure boom, Galvanizing, indeed plays a very important and irreplaceable role.”
The Steel Minister also launched the new product of Hindustan Zinc - 'HZDA' (Hindustan Zinc Die-Casting Alloy). The new product was launched as part of inauguration ceremony. The unique product is produced using Primary Zinc and pure aluminium. 'HZDA' will cater to the need of the die-casting sector for applications in automobile components, house hold appliances, sanitary-ware and defence. Company will also start production of the Toning Alloy series for consumption in steel galvanizing sector for precise control of aluminium in galvanizing bath.
On the occasion, CEO, HZL also said "The launch of 'HZDA' is in line with the support of Prime Minister's flag-ship program 'Make in India' and is expected to replace the imported zinc alloys and to cater to the need of Auto and Steel Industry. Hindustan Zinc is ready to meet 100% die-casting requirement in India.”
The conference deliberated on various applications of Zinc in the global economy and how Zinc is to play significant role towards improving Global Infrastructure.