India's Hindustan Zinc Ltd (HZL), the world's second largest zinc miner, expects its output to grow in 2019/20 after a drop in the previous financial year, a senior executive said, a move that could put pressure on global prices.
The company's refined zinc production fell 12 percent in 2018/19 to 696,000 tonnes due to the closure of its open cast mines, prompting a switch to underground mines. The company did not give a figure for the expected output rise in 2019/20.
"The capacity increase will happen towards the middle of the year. We expect to show growth," a senior company executive said, asking not to be named, adding that formal guidance would be issued on Thursday.
HZL, majority owned by Vedanta Group which is controlled by billionaire Anil Agarwal, is betting on higher use of galvanized steel by automakers and more investment in infrastructure to meet demand from India's expanding middle class.
Zinc prices, the second best LME performer in the year to date after nickel with gains of 14 percent, are expected to be weighed down by rising supply this year, a Reuters poll showed on Wednesday.
The refined zinc market has been tight due to bottlenecks in processing rising output from mines into metal. But analysts now expect excess supplies to weigh on prices.
However, the executive said HZL expected prices to be higher as uncertainties ease over the trade war between the United States and China.
"We are pretty confident that the market is pretty tight and the price should do well this year," the executive said.
(By Sudarshan Varadhan; Editing by Edmund Blair)