Hindustan Zinc cuts its cost guidance, but the new range sits above today's costs

Hindustan Zinc has lowered its guidance for what it costs to produce a tonne of zinc this financial year to $825-850, from the $975-1,000 it set in April. That is a cut of $150 a tonne at both ends of the range. The measure leaves out royalty and is net of the money the company makes selling by-products such as sulphuric acid, so it describes the mines and smelters after those credits, not a line in the income statement.

Even after the cut, the range sits above what the plants are delivering now. Zinc cost $703 a tonne in the September 2026 quarter and averaged $776 over the first half. If the two halves of the year carry equal volumes, which is our assumption, a full-year figure inside the new range means the second half has to average roughly $874-924 a tonne, calculated from the guidance and the first-half average. Last year went the other way: cost per tonne fell from one quarter to the next, and the second half was cheaper than the first.

The company has guided above its outcome before. At the start of last financial year it guided $1,025-1,050 a tonne; in October 2025 it cut that to around $1,000, and the year still ended at $959. In July it kept this year's range unchanged after a first quarter well below it, saying costs were broadly in line and that the extra benefit came from higher by-product realisation. This cut came after results had already beaten the old range by a wide margin. Last year's revised figure also sat above the quarter it followed, but only by about $6; the new range sits $122-147 above the cost just reported.

What management said points both ways. Asked on the call for the cost figure without sulphuric acid credits and for acid revenue in the first half, management described the by-product benefit as significant but said it reports cost as one overall number, and that it gives no guidance on acid because it sells it at auction at market prices. Other inputs moved against it. The share of cheaper domestic coal in its fuel fell to 32% last quarter from more than half a year earlier, and management said geopolitical issues had added to costs. Costs still fell, so savings elsewhere outweighed the coal mix; because cost is reported as one number, the part owed to acid prices, which the company does not control, cannot be read from it.

For profit, the cost range matters less than the metal prices it is netted against. Operating margin reached 61.3% last quarter, calculated from the filed results. Sales rose far more than expenses from the quarter before, so most of the added revenue reached operating profit.

That leaves the cost guidance as a statement about the second half. The next quarterly cost figure will show whether the costs management described are arriving or whether, as last year, the range was set above what the plants deliver.