Hindustan Zinc will purchase Vedanta's foreign zinc assets for $2.98 billion | Business Upturn

Hindustan Zinc will purchase Vedanta’s foreign zinc assets for $2.98 billion

Hindustan Zinc’s third-quarter net profit falls 20% due to decreasing output and pricing.


Vedanta announced on Thursday that its board of directors has authorised the sale of its international zinc assets in South Africa and Namibia to subsidiary Hindustan Zinc (HZL) for $2.98 billion.

Vedanta stated in a stock exchange filing that the acquisition would be all-cash and would be completed in stages over the next 18 months. The transaction is subject to regulatory clearances, including shareholder approval, according to Vedanta.

THL Zinc, a Vedanta business that owns the worldwide zinc assets, would become a wholly-owned subsidiary of Hindustan Zinc following the acquisition.

HZL Q3 results

On Thursday, HZL, the world’s second-largest zinc producer, announced a 20% year-on-year (YoY) decline in net profit in the December quarter (Q3) of fiscal year 2022-23 (FY23), owing to lower zinc prices and silver production.

The zinc, silver, and lead miner recorded consolidated Q3 net profit of Rs 2,156 crore, down from Rs 2,701 crore in the same time last year. The decline in net profit was 19% sequentially in Q3, according to the figures. In the second quarter, it earned Rs 2,680 crore.

Meanwhile, revenue from operations fell 2% to Rs 7,628 crore, compared to Rs 7,841 crore in the same period previous year. Sales fell roughly 8.5 percent sequentially in Q3, with revenue in Q2 being Rs 8,336 crore.

The business’s integrated zinc output dipped 1.7% year on year to 210 kilotonnes (kt) owing to a lack of quality ores, while silver production fell nearly 7% year on year to 161 kt due to reduced feed grade at its SK Mine, according to the company.

Zinc consumption has been hampered by increasing inflation, rising interest rates, and China’s slump. While zinc prices have lately firmed due to the reopening in China, experts say the metal remains unpredictable, hurting on HZL’s income.

Furthermore, zinc’s cost of production, before royalty, increased 12.7% in the third quarter due to higher coal and other input commodity costs, as well as decreased domestic coal supply, according to industry analysts.

The corporation has a modest wind energy sector, but mining accounts for more than 99 percent of its income.

HZL’s board of directors also authorised its third interim dividend of Rs 13 per share for FY23, totaling Rs 5,493 crore, the company said.