The company wants to expand the existing capacities of zinc smelter from 30,000 tpa to 40,000 tpa. However, before Binani's declaration Hindustan Zinc Ltd had already announced their intention to put up 70,000 to 100,000 green field zinc smelter as they have the necessary raw material base for the venture, in terms of mines and concentrates. The project has also been cleared by the government and is likely to cost about $175 million.

Hindustan Zinc is also putting up a captive power plant for 100 mw which would reduced its dependence on outside power by 20 per cent. HZL is increasing capacities of two of its zinc smelters by 10,000 tonnes each. With the import duties likely to be reduced during the coming years, domestic producers may be under pressure with profits falling. Since market forces determine the fortunes of companies, Binani Zinc and HZL will have to plan theirinvestments.

According to a study by Paribas Capital Markets, zinc consumption is likely to increase at the rate of 6.5 per cent annually till the year 2000 AD. The major demand will be from the galvanising sector with growth in vehicles production, housing and repairs of bridges.

Thus zinc consumption which was 190,000 tonnes in 1995 will increase to 285,750 tonnes in 2001. In 1995 galvanising accounted for 136,000 tonnes which would rise to 214,313 tonne in 2001.

The bank report states that during 1989-1995 demand growth rate was 4.4 per cent which increased to 9.8 per cent during 1992-1995 and therefore a projected rate of 6.5 per cent during 1997 to 2001 was reasonable.

Analysing the galvanised market further during 2001 tubes will account for 75,010 tonnes or 35 per cent, sheet 30 per cent or 77,153 tonnes, structurals 49,292 tonnes or 23 per cent and wire six per cent at 12,859 tonnes.

There are only two primary zinc producers in the country. They are HZL and Binani and from the demandforecasts it does not appear that there will be room for two green field smelters with a capacity of nearly 200,000 that cost over $350 million.

Binani, a private sector company, may have an edge over the state-run HZL as far as decision-making is concerned but resource-wise HZL is better endowed because the public sector unit has a monopoly over the mining rights.

HZL has also been earning good profits and has internal accruals to finance large expansion. HZL zinc smelting capacity installed at three places is 149,000 tonnes though the working is at much lower capacity with production hovering around 120,000 tonnes. It has an ore-raising capacity of nearly 10,000 tonnes per day and it is surplus in zinc concentrates which it exports.

It is increasing Rampura Agucha mine capacity from 3000 tpd to 4500 tpd, which is a world class mine. It is raising smelter capacity by 20,000 tonnes and already on way in implementing a 100 MW power plant.

HZL is tied up with BHP for exploration of base and preciousmetal and also with others for gold prospecting in Vietnam and Africa.

It may be therefore be worthwhile for Binani and HZL to have a joint venture for one zinc smelter and bring out the best in private and public sector management.y