Hindustan Zinc Ltd was incorporated in 1966. For production of cobalt and indigenous lead-zinc ores factory were commissioned during 1990. In-house technology for the recovery of cobalt made possible through R&D and Cooperation with BARC. The application for prospecting license for gold for Bhukia Jagpura Banswara District and Dungarpur District Rajasthan was subletted to Rajasthan Government in 1993. In 1996 Company entered into a MOU with BHP minerals Ltd., Australia for joint venture project for exploration of base precious minerals in Rajasthan. Another MOU was entered into with Vigego, Vietnam and La-Sarce France for a joint venture project for exploration at Pac-Lang Gold prospect in Vietnam. Company also developed Sindesar Khurd Lead-Zinc Silver deposit in Rajsamand, Rajasthan as a replacement mine to Rajpura-Dariba with a capacity to produce 1000 tpd Ore. Hindustan Zinc has agreements with various international mining majors for diversification into mining and prospecting of previous minerals in India and abroad.

Company also formed a joint venture with BRMG of France and Vietnam Rare & Precious Minerals Corporation to explore and develop gold mines in the Southeast Asian country. Company has joint venture with Nuigini Mining for exploration of gold in Andhra Pradesh, Uttar Pradesh, Madhya Pradesh and Karnataka. Company formed joint venture with the Australian major, Broken Hill Proprietaries for prospecting of non-ferrous metals like zinc, lead, copper as well as gold in Rajasthan. Company has MoU with CSIR for setting up a nickel technology proving plant for extraction of nickel from overburden of chromite at Sukhinda mines in Orissa. Rampura-Agucha mines of Hindustan Zinc Limited has awarded ISO 9002 certificate for quality management system by SGS Yarsley International Certificate Services Limited. In the year 2002, US$1.3 billion Sterlite Group acquired of a 26% equity stake in Hindustan Zinc Ltd (HZL) for Rs
4450 million ($91.30 m) through Sterlite Opportunities and Ventures Ltd, a Special Purpose Vehicle set up for the same. Sterlite Group, on April 11, 2002 made payment of Rs 4450 million to the Govt. of India and completed the acquisition of 26% stake in Hindustan Zinc Ltd.

Products & services:

Hindustan zinc is India's leading Zinc producer. Company is one of the low cost producers of non-ferrous metals in the world and increasing its operating efficiency with the help of Sterlite group. Company's product mix includes zinc, lead, silver, along with sulphuric acid and cadmium as by products. Company is the only integrated producer of zinc and lead in the country. Company's operations are fully integrated from mining to production of metal and are also geographically well diversified. Company has the advantage of having its own mining and beneficiation facilities, whereas its competitors import their concentrated ore requirements. Although, Imports are the main threat to the domestic manufacturers, as domestic prices closely follow the London Metal Exchange price movements.

Recent developments:

Hindustan Zinc met the Rajasthan Government with an offer to set up a "Metal Park" for ancillary units, downstream metal product manufacturers and silver jewellery industry. The company was in talks with three-four states, but the Rajasthan government was showing eager which would help most of the metal units were in the state. The company has guaranteed the government the supply of zinc and silver, besides electricity at a concessional rate. For the last two quarters, the company's silver production has been growing following the expansion at its Sindesar Khurd mine in Rajasthan. The use of the latest technology in the new smelters has improved the recovery of silver from the ores generated from Khurd mines. The silver occurrence in the ores is about 200 ppm (part per million).

Company is ready with Rs 80 billion for buying the government's residual equity in Balco and Hindustan Zinc (HZL). In the face of the huge fiscal deficit, the government also needs to raise money from different sources and Vedanta Resources is ready to exercise his option to buy equity in the two erstwhile public sector undertakings
(PSUs) in which Vedanta had acquired a majority stake during the national democratic alliance (NDA) rule. Besides, Agarwal said that he would be interested in buying some loss-making PSUs if the government decides to put them on the block. The government's stake in Balco is 49% and in HZL 29.5%, while the balance of HZL's equity is held by the public.

Valuation:

Strong revival in Zinc prices in the world market are boosting profit for the zinc producers. Company is planning to focus on new projects, including the expansion of new mining fields & reduction in its operating costs. At current market price, Stock is trading 12.34 multiple of its FY2010 Estimated EPS. We recommend investors to "BUY" "Hindustan Zinc" at every correction for medium to long-term investment horizon.