Vedanta doubles zinc capacity in South Africa: How the expansion fits into its 3-million-tonne ambition

Vedanta shares are expected to be on investors' radar on Monday, October 19, after Vedanta Group’s flagship company announced on Sunday that it doubled its annual zinc production capacity to 500,000 tonnes (Metal-in-concentrate (MIC)) at its South African zinc operations.

The capacity expansion at Gamsberg's Phase II project was backed by an investment of nearly $600 million by Vedanta Zinc International (VZI). South African President Cyril Ramaphosa and Vedanta Limited Director Priya Agarwal-Hebbar inaugurated the project.

Gamsberg, in South Africa’s Northern Cape province, has one of the world’s most significant zinc deposits and VZI’s flagship zinc mine. This expansion marks one of the largest mining investments in South Africa in this decade, the press release added.

Other details

Vedanta Ltd said the expansion further advances its position as the world’s largest (Refined Metal, including MIC) zinc producer, with a vision of achieving 3 million tonnes of annual production across India and South Africa.

Of this, 2 million tonnes are targeted from its subsidiary, Hindustan Zinc Limited, the world’s largest integrated zinc producer, while Vedanta Zinc International business aims to contribute 1 million tonnes annually.

Zinc consumption outlook

The press release said that zinc consumption is growing rapidly as it is essential to modern industrial and infrastructure development. Through galvanisation, it protects steel, the world’s most widely used metal, from corrosion, extending its service life and supporting applications across construction, automotive, manufacturing and other sectors.

Together, Hindustan Zinc and Vedanta Zinc International strengthen Vedanta Limited’s position to serve this growing global demand for zinc.

This expansion forms part of the ZAR 21 Bn (nearly US$ 1.5 Bn) investment commitment Vedanta made at the 2018 South Africa Investment Conference.

"At last month’s 18th BRICS Summit in New Delhi, President Ramaphosa called for increased Indian investment in key South African industries. Vedanta’s continued investment in the Northern Cape demonstrates the tangible value of this growing economic partnership," it added.

What South Africa President said

“We have come to celebrate an investment that has moved from commitment to construction, and from construction to production. We welcome Vedanta’s ambition to establish zinc smelting capacity in the Northern Cape. Government must work with Vedanta and other partners to address their requirements,” said South Africa President Ramaphosa.

What Vedanta said

“For Vedanta, Gamsberg Phase II is more than an expansion of its zinc business. It is a commitment to South Africa’s future. My father, Vedanta founder and Chairman Anil Agarwal, made that commitment with the belief that the country’s mineral wealth could become a foundation for industrial growth, jobs and opportunity. Today, I am proud to see that vision coming to life," said Priya Agarwal-Hebbar, Director - Vedanta, and Chairperson of Hindustan Zinc.

Hebbar added," Our ambition is to build a globally significant zinc and industrial hub in the region, creating lasting value for the country and its people. The true measure of our success is not just what we produce, but the prosperity we help create for generations to come."

About Vedanta Ltd

Vedanta Limited is a diversified natural resources company with operations in metals, mining and related businesses. The company has a presence across India and international markets, including Africa, the Middle East and East Asia. Its business interests span several sectors, including aluminium, zinc, oil and gas, iron ore, steel and power.