Hindustan Zinc Ltd (HZL) is preparing for a significant expansion as it aims to double its metal production over the next three to four years, despite rising costs linked to the ongoing conflict in West Asia. Arun Misra, CEO of HZL, detailed the company’s plans and challenges in a recent interview following the company’s record fourth-quarter performance for fiscal year 2026.

HZL plans to increase its metal output from the current 1 million tonnes to 2 million tonnes annually, which would elevate its zinc production to approximately 1.6 million tonnes. This expansion would position HZL as the world’s largest zinc producer. The company also intends to enhance operational efficiency by upgrading its facilities and increasing reliance on renewable energy, moving from 70 percent renewable energy usage at present to 80–90 percent as production scales up. Alongside zinc, silver production is expected to rise to between 1,200 and 1,500 tonnes over time.

While mined metal production set a new record in fiscal 2026, refined metal output remained stable due to delays in commissioning HZL’s new roaster, R6, in the first half of the year. The delay prevented the company from shutting down older roasters as planned without production losses. However, once R6 became operational in the second half of the year and shutdowns were complete, quarterly refined metal production surged, with the company reporting 280,000 tonnes in Q4 alone — an annualized rate exceeding 1.1 million tonnes.

Despite reporting a record low zinc production cost in the March quarter, HZL has projected a slight cost increase for fiscal 2027, with zinc costs estimated between $975 and $1,000 per tonne. The rise reflects a $50–60 per tonne risk premium attributed to the West Asia conflict. Misra explained that if geopolitical tensions ease, costs could trend toward the lower end of that range, but the company also faces challenges related to ore grade and supply chain disruptions.

The conflict’s effects on HZL are multifaceted. Elevated prices for critical inputs such as coal, propane gas, diesel, and explosives — some near three times previous levels — have increased production costs. Moreover, rising fuel prices affect the company’s customers, particularly smaller domestic buyers who may struggle to absorb higher costs, potentially reducing local demand. This scenario could compel HZL to increase exports, which yield lower prices and involve higher freight expenses.

To sustain growth, HZL plans a capital expenditure program of $500–600 million for fiscal 2027. This investment will support a 250,000-tonne capacity expansion, mine development projects, a fertilizer plant, and groundwork for the next growth phase.

In addition to zinc and silver, HZL is diversifying into critical minerals, securing mining rights through government auctions for tungsten in Andhra Pradesh, rare earth elements in Uttar Pradesh, and manganese in Arunachal Pradesh. The company aims to add at least three new minerals to its portfolio within five years.

HZL’s plans underscore its ambition to expand production and diversify operations amid geopolitical uncertainty and inflationary pressures influencing global commodity markets.