Hindustan Zinc Ltd (HZL) plans to advance the mining of high-silver ore zones in the second half of FY25 to mine more and capitalise on the ongoing silver price rally and meet its annual guidance of 680 tonnes, chief executive Officer Arun Misra told Moneycontrol in an interview.
The latest saleable silver production guidance is lower than 700-710 tonne projected earlier. Silver is primarily recovered as a byproduct of zinc and lead smelting, where it is extracted from ores containing trace amounts of precious metals. Beyond its role as an investment and jewelry metal, silver has extensive industrial applications and finds its use in electronics, solar photovoltaic cells, electrical contacts, and medical devices.
Silver prices surged all-time high of $54.42 per ounce last week driven by safe-haven demand amid global uncertainities. However, prices tumbled from $54 per ounce to $51.5 an ounce, this week, as trade tensions between U.S. and China softened.
The Vedanta group company capitalised on the ongoing silver rally, reporting strong results with profit rising 14% year-on-year and 19% sequentially. Silver sales accounted for nearly 40% of its second-quarter profit. In Q2, saleable silver production declined 22% YoY and 4% QoQ to 144kt, in line with lower lead production.
"As of now the ore grade is a lean grade we are not getting as much silver in the ore as we should be getting when the prices are high. But nevertheless, we are prioritizing those areas in mind where there are slightly better grades and then using all that concentrate for producing silver currently and hence the new guidance of 680 tonnes we should be able to achieve," said Misra.
"We are trying to extract as much of the product from the residues as possible but most important thing on silver is that we will try to see in H2 if we can prepond those mining areas where there is good silver," he added.
The world's largest integrated zinc producer expects silver's contribution to the EBITDA to be more than 45-46 per cent in the near term when the prices are high. Analysts estimate that every $1 per ounce rise in silver adds nearly ₹1.8 billion to EBITDA, highlighting the leverage inherent in the business. With silver’s production cost at just 12 per cent of revenue, it is among the highest-margin segments in the portfolio and a key reason investors see room for earnings expansion and valuation catch-up.
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