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Hindustan Zinc's smelter likely to get the nod

The cabinet meeting on Wednesday, is expected to pass a proposal by state-run Hindustan Zinc Limited to set up a greenfield smelter with a 100,000 tonnes annual capacity, a government official said.

The official, who did not wish to be identified, told Reuters that plans to build the smelter at Kapasan, Rajasthan would be discussed by the cabinet economic affairs committee and also that it was likely to be approved.

"The project would cost about Rs 12 billion and is expected to be completed in 48 months from the date of approval," a senior company official of the company told Reuters.

Hindustan Zinc Limited, India's largest zinc producer, operates five lead-zinc mines with an annual mining capacity of 3.49 million tonnes.

It has four lead-zinc smelters with a combined capacity of 152,000 tonnes per annum of zinc and 65,000 tonnes of lead. The company official said that cost of the project would be met through internal resources and borrowings from the market.

The government, which holds 75.92 per cent of Hindustan Zinc, last month, invited proposals from strategic partners to take a 26 per cent stake in the firm and also have a management role. Potential partners were asked to confirm their interests by January 15.

Analysts say that in India, zinc demand is estimated at about 270,000 tonnes annually compared to domestic production capacity of about 182,000 tonnes.

Hindustan Zinc shares were off Rs 0.40 at 21.65 on the Bombay Stock Exchange. The company posted pre-tax profit of Rs 1.822 billion on turnover of Rs 15.156 billion for the financial year ended March 31.

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