Sterlite Industries (India) Limited - Sterlite Industries India Ltd.

HZL’s remaining operations source their required power from liquid fuel-based captive power plants or from local power companies. The
liquid fuel is sourced from third party suppliers on yearly contracts.
Metallurgical Coke
In addition, HZL’s pyrometallurgical smelter at Chanderiya requires metallurgical coke that is used in the smelting process. HZL currently
sources its metallurgical coke requirements from third parties under long-term contracts and the open market.
Distribution, Logistics and Transport
Zinc and lead concentrates from HZL’s lead-zinc mines are transported to the Chanderiya and Debari smelters by road. Zinc concentrate
from HZL’s mines is also transported by road, or a combination of road and rail, to the Vizag smelter, which is located approximately 1,200
kilometers southeast of the mines. Zinc concentrate may also be shipped for export. Zinc and lead ingots and silver, and sulphuric acid byproducts
are transported by road to customers in India.
Sales and Marketing
HZL’s ten largest customers accounted for approximately 47.0%, 36.4% and 23.6% of its net sales in fiscal 2007, 2008 and 2009,
respectively. No customer accounted for greater than 10% of HZL’s net sales in fiscal 2007, 2008 or 2009.
HZL’s marketing office is located in Mumbai, and it has field sales and marketing offices in most major metropolitan centers in India. In
fiscal 2009, HZL sold approximately 65% of the zinc and lead metal it produces in the Indian market and exports approximately 35%.
Approximately 97% of the zinc metal that HZL produced in fiscal 2009 was sold under annual contracts specifying quantity, grade and
price, with the remainder sold on the spot market. In some of the contracts, a premium over the LME price is fixed while in other contracts
sales take place at a price equal to HZL’s list price less an agreed discount. HZL’s list prices are based on the LME prices, the prevailing
market premium, tariffs and logistics costs. HZL periodically revises its list prices based on LME price trends. Thus, the price that HZL
receives for its zinc is dependent upon, and subject to fluctuations in, the LME price.
Projects and Developments
HZL has expansion projects in the amount of approximately Rs. 28,800 million ($566.1 million) to increase its total integrated lead-zinc
capacity to 1,065,000 tpa with fully integrated mining and captive power generation capacities. These projects include:
• Establishing two brownfield smelters which are expected to increase the production capacities of zinc and lead by approximately
210,000 tons and 100,000 tons, respectively, at HZL’s Rajpura Dariba complex in the State of Rajasthan in Northwest India, and
which are expected to be completed by mid-2010;
• Expanding its ore production capacity at the Rampura Agucha mine from approximately 5.0 million tpa to 6.0 million tpa, which is
scheduled for completion in mid-2010, and at the Sindesar Khurd mine from approximately 0.3 million tpa to 1.5 million tpa, which is
scheduled to be progressively completed from mid-2010. The ramp portal connecting the Sindesar Khurd mine surface to the ore body
has been completed and resources have been mobilized to achieve accelerated mine development;
• Starting mining activity at the Kayar mine which is expected to begin progressively from mid-2010 and to have a production capacity
of 360,000 tpa;
• Setting up an associated captive thermal power plant with a capacity of 160 MW at Rajpura Dariba which is expected to be completed
by mid-2010; and
• Increasing its silver production from the current levels of approximately 105 tpa to approximately 500 tpa in large part from additional
production at the Sindesar Khurd mine.
These projects are expected to be financed by internal sources and/or debt financing.
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