CEO's Message
Creating Smarter
Value Sustainably
Dear Stakeholders,
I am delighted to share that we delivered a healthy performance in a challenging market scenario. We progressively ramped up our production during the year and achieved accelerated production rate in the final quarter, before operations were halted in late March 2020 on account of lockdown to combat the spread of COVID-19. This translated into record ore production of 14.5 mn MT, up 5% from a year ago, led by Rampura Agucha and Zawar mines.
Mined and refined metal production were lower from last year by 2-3%, primarily due to fewer days of production in March. On account of 12% fall in zinc and 8% decline in lead London Metal Exchange (LME) prices, the revenue and PAT were down 12% and 14% to `18,561 Crore and `6,805 Crore, respectively, for the year.
FY 2019-20 was a muted year for zinc as prices declined in the first half of the year due to global trade tensions, raising concerns around consumption slowdown. Prices turned around thereafter only to fall back sharply after the outbreak of the novel coronavirus and eventual pandemic that has impacted demand as well as supply globally. While the headwinds for zinc consumption may sustain, supply will also witness some curtailment on account of restrictions due to the pandemic. Also, the current prices will not only make high-cost mines unviable but also lead to interruption in the project pipeline of new supply. Hence, we expect that zinc metal supply to match the demand in the near-term and offer support to zinc prices going forward.
I am glad to report successful completion of the first phase of our mining capacity expansion project. The project that started in 2013 has quadrupled our underground mining capacity from c.300 kT annually to 1.2 mn MT per annum. In addition, we debottlenecked our smelting capacity to 1.123 mn MT per annum to match up to a higher mining capacity.
We remain focused on strengthening our sustainability efforts, technology and digitalisation initiatives to build on our industry leadership and deliver superior returns to our shareholders.
Exploration for Resource Sustainability
We are working relentlessly towards realising our
long-term business growth potential and are in
advanced stages of implementing brownfield
exploration programme across all our mining leases.
The focus is not only to upgrade resource to reserve
but also to add new resources to maintain a
25-year mine life. To this end, we have deployed advanced
surface and geophysical technologies for target
identification and higher drilling accuracy to improve
the success rate of exploration.
I am delighted to report that our efforts have yielded the targeted results and our ore reserve at the end of the year increased by 22 mn MT to 114.7 mn MT and we added 14.5 mn MT of ore on a gross basis. Total ore reserve and mineral resource is 403 mn MT with a total metal content of 32 mn MT, implying a mine life of 25+ years.
Smart Mining for Sustainable Future
Smart mining is all about re-imagining our entire value chain to improve productivity and safety of operations and enhance sustainability by leveraging best-in-class technologies and data analytics. In the long-term, this will lead to efficient usage of resources, minimise waste, improve our bottom line and enhance stakeholder relationships.
In line with our overarching goal of creating ‘mines of the future’, we are digitalising Rampura Agucha and Sindesar Khurd mines in partnership with leading global experts. We are now tracking equipment in real time leading to higher equipment effectiveness and efficient traffic management. As we leverage data analytics, we will reap benefits from automated task scheduling, preventive maintenance and cycle-time optimisation. I am excited to share that we have started operating production drilling equipment and loaders on tele-remote and we plan to deploy this IT architecture to other mines as well.
Our recently launched Digital Collaboration Centre at Udaipur is providing us with intelligence across the value chain by integrating operational data from all our locations on a single analytics platform with the ultimate goal of increasing the ore-to-metal ratio. It is a matter of pride for all of us that this centre is among the world’s top integrated technology centres in the mining industry.
During the year, we automated our logistics supply chain through a state-of-the-art control tower for real-time tracking of key inputs and intermediate materials, including concentrate. This has made the reliability of our supply chain quite robust and we have already achieved substantial reduction in the in-plant as well as in-transit (mine to smelter) vehicle turnaround time. Furthermore, we expect optimisation of working capital through better inventory planning and dynamic allocation of concentrate to smelters.
Reinforcing our ESG Commitment
I am proud to say that we are a 2.41 water positive company and during the year, we have completed sewage treatment plant expansion and community projects in water harvesting. Our freshwater consumption is lower and we have made more water available to our communities in the water-scarce state of Rajasthan.
In our Vision 2025 for sustainability, we have committed to step change towards decarbonisation, water conservation, gainful utilisation of waste, safety and inclusive growth. This will create long-term value for our stakeholders and strengthen our efforts to become a sustainable and caring business.
During the year, we completed two key projects at Zawar to strengthen the management of our tailing dams and minimise our environmental footprint. The first was the commissioning India’s first dry tailing plant, which will recover up to 90% of the process water and reduce land requirement for storage. The second was completion of back-fill plants for using tailings to fill voids in mines, which will lead to better mine stability, increase in life of tailing dam and eventual recovery of ore from old pillars in future. I am proud to say that all our mining locations are now using this technology, resulting in significant reduction in waste.
We have made substantial progress in minor metal extraction from smelter residues to recycle our waste to generate wealth. During the year, we successfully replicated Dariba’s ancillary ecosystem at Chanderiya, where we are treating smelter residues to recover zinc, lead, copper and silver. The fumer plant is set to be commissioned, which will be a game changer not only in terms of higher silver recovery but also in eventual elimination of Jarosite, reducing our land footprint. We are augmenting our minor metal production capacity over the next two years in partnerships with leading global technology and execution experts, which will take us closer to our target of `1,000 Crore contribution from minor metals.
Committed to Growth
Our key strategic priorities for the current year are ramp-up of underground mines towards their designed capacity; optimisation of cost of production through efficient ore hauling, higher volume and grades and higher productivity through ongoing efforts in automation and digitalisation; refocused capital investments to enhance profitability and sustainability; and sustained exploration to add and upgrade resources.
It is also noteworthy that we have commenced a detailed exercise for the next phase of expansion. For this, a detailed life-of-mine-planning and feasibility study is currently being done by a renowned global expert. I am quite excited about this new phase in our Company, which will be technology driven and will ensure that our growth story continues well into the future, creating long-term sustainable value for our stakeholders.
Sincerely,
Sunil Duggal