Hindustan Zinc secures potash block, adds to REE and tungsten assets in critical minerals push
Hindustan Zinc
Limited (HZL) on Wednesday said it has received a Letter of Intent (LoI) from the Ministry of Mines for a potash block located in Hanumangarh district of Rajasthan. The company secured the block under Tranche V of the Centre's e-auction process conducted in May 2025.
The block spans over 1,800 hectares and is among the first potash blocks awarded in the country. This is Hindustan Zinc's third acquisition in the critical minerals segment in 2025. Earlier this month, the company had received an LoI from the Uttar Pradesh government for a
Rare Earth Elements
(REE) block and previously secured a Tungsten and Associated Minerals block in Andhra Pradesh.
Arun Misra, CEO of Hindustan Zinc Limited, said, 'At Hindustan Zinc, we have deep expertise in strategic mineral exploration. This acquisition is in line with our strategic foray into the critical minerals segment to support the nation's
mineral security
goals for rapid economic growth.'
Potash is a key input for the fertiliser industry, especially in the production of
NPK fertilisers
. India currently imports all its potash requirements from countries including Canada, Belarus, Jordan, and South Korea. The auction of the country's first potash and halite blocks is seen as a step towards reducing import dependence and supporting domestic agricultural inputs.
Hindustan Zinc, a Vedanta Group company, is India's only and the world's largest integrated zinc producer. It holds around 77% share in India's primary zinc market and supplies to over 40 countries. The company is among the top five silver producers globally.
Hindustan Zinc said its recent mineral acquisitions align with its strategy to build a portfolio of high-quality critical mineral assets with long-term mining potential. The company said it aims to leverage its in-house exploration and mining capabilities to develop these assets and contribute to India's goal of strengthening domestic mineral security.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
4 days ago
- The Hindu
Vedanta declared preferred bidder for Janthakal iron ore mine in Karnataka
Vedanta Limited, a natural resources and critical minerals company, has been declared as the preferred bidder for the Janthakal iron ore mine in Chitradurga. The company emerged successful in the e-auction process conducted by the Department of State Mines and Geology. The Janthakal block spans 71.16 hectares and is categorised as a G3 level exploration site, according to a company release. The award is subject to subsequent approvals, clearances, and fulfilment of conditions laid out in the tender. During the quarter, Hindustan Zinc Limited (a Vedanta Group company) secured two critical mineral blocks, Potash in Rajasthan and Rare Earth Elements (REEs) in Uttar Pradesh, the company's release said.
Mint
4 days ago
- Mint
Vedanta Group promoters siphoning profits via exclusive HZL supply deal: Viceroy
American short-seller Viceroy Research on Wednesday said that the promoters of the Vedanta Group were 'siphoning margins' from listed group company Hindustan Zinc Ltd (HZL) by supplying commodity goods to it at inflated prices on an exclusive basis. It alleged that Minova Runaya Pvt. Ltd (MRPL), a 49% promoter-owned entity, has an exclusive contract with HZL for the supply of products including resin capsules, rock bolting systems and wire mesh. Used in mining, these products are typically commoditized and low-margin, but MRPL was selling them at a 30% mark-up to HZL, the short-seller alleged, adding the company does little manufacturing itself. HZL was MRPL's only customer, Viceroy added. 'This company (MRPL) has only one purpose, to buy commoditized products, slap a 30% markup on them, and then sell them to a captured HZL,' the short-seller said in its note, adding that there was 'more to come.' Between FY21 and FY24, Minova Runaya made an aggregate revenue of ₹ 553 crore with a profit of ₹ 92 crore, the short-seller disclosed citing the company's regulatory filings. Vedanta has denied all allegations. 'The said short sellers have consistently shared extremely ill-informed 'reports' with misleading information,' a Hindustan Zinc spokesperson said. The latest allegations disregard the 'stringent' governance protocols followed by Hindustan Zinc, the spokesperson said. Earlier, former Chief Justice of India D.Y. Chandrachud said in a legal opinion to Vedanta that Viceroy's report lacked credibility and is based on dubious credentials. He further said the report contains serious, reputationally damaging allegations. Shares of Vedanta and HZL had fallen following the publication of Viceroy's first report on 9 July, but have since recovered and not reacted to its subsequent eight reports. Hindustan Zinc's shares gained 0.82% to close at ₹ 446.9 on the BSE on Wednesday. Vedanta Ltd's shares settled 1.12% higher at ₹ 455.6. The benchmark Sensex closed 0.66% higher. Viceroy Research has a short position of undisclosed size on the debt of London-based group holding company Vedanta Resources. While the Vedanta Group holds a 49% stake in MRPL, the remaining 51% stake in the company is held by Minova Minetek, which is a Hyderabad-based manufacturer of mining, quarrying and construction equipment, as per private company data platform Tracxn. 'MRPL has a long-term sales contract with HZL, which provides it with strong revenue visibility,' Crisil Ratings noted in November 2024, when it rated HZL's long-term debt as A- with a stable outlook. 'As per the contract, HZL must procure its entire ground support product requirement from MRPL. This ensures healthy utilisation for the manufacturing capacities of MRPL,' the rating agency had noted. MRPL was onboarded by Hindustan Zinc as a reliable supplier for ground support after undergoing due screening processes and approvals from the Audit Committee and Board, as per the company spokesperson. The company has developed solutions that meet the unique specifications and standards of Hindustan Zinc's underground mines, they said. Transactions with MRPL were supported by benchmarking by independent firms, they said. Regarding the lack of MRPL's manufacturing capabilities, Viceroy noted that the company's accounts acknowledge that it manufactured nothing until at least FY24. "Even then, the only product it manufactured was wire mesh, a product so simple and cheap that a fully automated line can be set up for under ₹ 1 crore,' the short-seller said. Viceroy also pointed to some discrepancies in the financial statements of MRPL. For instance, income from HZL accounted for 114% of MRPL's revenue in FY24. The same year, MRPL declared ₹ 216 crore of tangible asset sales while only carrying ₹ 66 crore of tangible assets on its balance sheet. These discrepancies were persistently observed in preceding years too.
Indian Express
4 days ago
- Indian Express
Hindustan Zinc pays out as dividend more than it earns, alleges US research firm Viceroy
US-based Viceroy Research has alleged that Hindustan Zinc Ltd (HZL), belonging to the Vedanta group led by Anil Agarwal, has paid out far more in dividends than it earned, purportedly borrowing to make up the shortfall. The research house has estimated a shortfall in free cash flow (FCF) of HZL — once a public sector firm — in the first quarter ended June 2025 to be around Rs 3,600 crore ($371m). 'HZL CFO Sandeep Modi's 'Rs 10,000 crore ($1.17b) free cash flow' claim collapses under scrutiny. Cash flows are subsidized by debt. If HZL's dividend remains the same as last year, we estimate HZL will incur an annual FCF shortfall of at least Rs 5,000 crore ($580m) and must be funded by more debt,' it said. When contacted, HZL spokesperson said. 'the Viceroy report is a combination of selective misinformation and baseless allegations. All resolutions are detailed and part of Board undertakings which are taken to them after rigorous due diligence. In the past 20 years the company's zinc production capacity has grown more than 4 times and silver by 20 times.' 'Hindustan Zinc is steered through a stringent governance framework wherein all matters are taken to the Board and this process is followed for all proposals,' HZL said. Viceroy alleged that HZL has not generated Rs 10,000 crore in FCF since 2023, at which point FCF has fallen sequentially. On an annualized run rate: we expect HZL FCF at Rs 7,000 crore. In FY 23, during a short commodities rally post covid, HZL generated Rs 12,000 crore FCF, and paid Rs 31,000 crore in dividends, accruing an enormous deficit. Leverage increased sharply vs Q1 2024, with the debt-equity ratio rising from 0.8x to 1.2x. FCF represents the amount of cash a business generates after accounting for capital expenditures needed to maintain or expand its asset base. In simpler terms, it's the cash left over after a company pays for its operating expenses and investments in equipment, property, or other assets. Vedanta acquired HZL from the government in 2002. Disclosures suggest HZL incurred Rs 2,000 crore ($232m) of new debt in the June quarter of FY26. HZL's auditor, SR Batliboi, failed to investigate material concerns, relying entirely on management assertions while the company's capital base deteriorated and governance collapsed, Viceroy alleged. HZL spokesperson said it has become the world's largest integrated zinc producer and is amongst the top 5 primary silver producers. 'It has created immense stakeholder value through increase in market cap by more than 500 times, in addition to dividends to shareholders and exchequer contribution. HZL contributes nearly 35 percent of the declared dividend to the government treasury, including dividend to government and tax deducted at source (TDS),' he said. According to HZL, this quarter amidst commodity headwinds the company delivered beyond market expectations and registered record high first quarter mined metal production and lowest cost of production. In FY25, the company clocked its second-best profit, up 33% YoY. Hindustan Zinc's bank facilities and debt programmes are Crisil AAA rated highlighting our efficient & integrated operations, and strong financial risk profile. And this consistent performance reflects the growing trust of our stakeholders, HZL said. The research firm also questioned the brand fees paid out by HZL. In the earnings call, HZL's CEO Arun Misra 'credited offshore brand fees (paid in advance) as justifiable by past 'risks' undertaken by Vedanta as a shareholder of HZL. This is preposterous,' the research firm said. 'HZL CEO Arun Misra's defense of the controversial 3 per cent brand fee, a fee that results in hundreds of crores in annual payments to VRL (Vedanta Resources), was the centrepiece of his narrative during the Q1FY26 Earnings Call,' the US firm said. 'We reiterate our belief that this 'brand fee' is an uncommercial contract with VEDL (Vedanta Ltd), who does not appear to provide any brand, management, or other auxiliary services to HZL. There are no employees or substantial operations at VRL to justify brand fee payments,' Viceroy said. 'Vedanta's shares in HZL bear the same risk as every other equity holder, including the government of India. If anything, it is the non-promoter shareholders that have borne the outsized risk of HZL taking outsized loans to bail out promoters,' it alleged. HZL said 'Vedanta' is a prominent global brand in the natural resources sector and the brand is a registered intellectual property of Vedanta Resources. 'HZL and other group companies use the brand under a brand license/sub-license agreement and pay a Board-approved brand and strategic services fee for its usage. This structure reflects a standard intercompany licensing model used globally by diversified groups and is fully compliant with Indian accounting, tax and governance regulations, and follows internationally accepted practices,' HZL spokesperson said.
