Hindustan Zinc to renew push for demerger approval amid silver price rally

Even as silver prices continue their bullish run, Vedanta subsidiary Hindustan Zinc Limited (HZL) , the world’s largest integrated zinc producer and one among the Top 5 producers of silver globally, plans to renew its attempts to convince the company’s biggest minority stake holder—the central government—to demerge the zinc and the steel businesses into two separate entities.

The government, which has close to 30% stake in HZL, holds the key to such a strategic decision as the company needs the approval of a ‘majority’ of the minority stakeholders to go ahead. Earlier attempts by HZL to demerge the company into specialised entities did not materialise as the Ministry of Mines was not supportive of the idea.

“Now with the silver prices, it makes more sense. This is the time we should demerge. Look at Fresnillo’s (the world’s top primary silver producer) market cap; it has gone up some 4-5 times. Our share prices would have gone up in a similar manner had we been separate [entities] today,” says Arun Misra, CEO, HZL.

In an exclusive interaction with Fortune India, Misra said that such a decision can unlock value in a big way for the shareholders. “There will be strategic buyers across the board that would come and like to invest in a silver company, but not in a zinc company. Similarly, there are players who would invest in a zinc company, not in a silver company. By January of next year, the silver prices may go up further, so we should get that benefit in the market. If the silver demerger had happened earlier, we would have seen the results by now. So many retail shareholders would have benefitted today,” Misra explains.

HZL is India’s only primary silver producer. Its silver production grew over 20x in the last two decades—from 47 metric tonnes (MT) in FY03 to 687 MT in FY25—and continues to contribute significantly to the profitability. The company plans to augment silver production to 750 MT by FY27.

However, Misra clarifies that the government’s objection to the demerger should not be seen as its intervention in the running of the company. “It is a misconception that the government is interfering. They are only exercising their right as the ‘majority’ minority stakeholder. We are a private business; we know how to take risk. The government is not in the business of taking risks. That’s where the difference in perception is,” he says.

Earlier, the government had opposed HZL’s move to buy its parent entity Vedanta’s international zinc assets to consolidate all zinc assets of the promoter group under one company, compelling HZL to shelve that plan.