Hindustan Zinc To Buy Vedanta’s Foreign Zinc Assets for $2.98 billion

Vedanta, a major mining and metals company, announced on Thursday that its board has sanctioned the $2.98 billion acquisition of its global zinc assets in Namibia and South Africa to a subsidiary called Hindustan Zinc (HZL).

Vedanta stated in a filing to the stock exchanges that the deal was entirely cash-based and would be finished over 18 months. According to Vedanta, the agreement is contingent on regulatory requirements, particularly shareholder approval.

After the deal, THL Zinc, a division of Vedanta, which currently owns the global zinc assets, will transform into a completely owned subsidiary of Hindustan Zinc.

Third Quarter Results of Hindustan Zinc

In response to lower zinc prices decreasing silver production, Hindustan Zinc Limited, the second-largest supplier of zinc in the globe, announced a 20% year-over-year (YoY) decline in net profit for the third quarter of the fiscal year 2022–2023 (FY23) on Thursday. The Lead, Silver, and Zinc miner announced its combined third-quarter net profit of Rs 2,156 crore, as opposed to Rs 2,701 crore, at a comparable time last year. According to the third quarter’s figures, the net profit decreased by 19% on a pro-forma basis. In Q2, it revealed a profit of Rs 2,680 crore.

In the meantime, operating revenue fell 2% to Rs 7,628 crore from Rs 7,841 crore at the very same time last year. Sequentially, Q3 sales decreased by over 8.5 percent from Q2, when it totaled Rs 8,336 crore. Soaring interest rates, rampant inflation, and the recession in China have all reduced demand for zinc. Although zinc prices have lately stabilized due to the resumption in China, they continue to be erratic, analysts noted, which hurts HZL’s revenue.

Additionally, according to industry analysts, increased prices for coal as well as other raw materials and also decreased domestic coal supply caused a 12.7% increase in zinc’s cost of production during the quarter. Although the corporation operates a little wind energy division, mining accounts for more than 98% of its revenue.