Bangladesh’s economy has lured many Indian companies like Adani, Hero and now, Hindustan Zinc is ready to tap the growth in India’s neighbouring country.
Bangladesh’s per capita income surpassed India’s last year, and its GDP has been growing steadily.
Hindustan Zinc is looking to set up a processing unit in India to export products to the South Asian market.
India’s largest zinc miner Hindustan Zinc is looking to make a segway into Bangladesh, given the economic boom in the country, which shares nearly two third of its borders with India. In 2020, Bangladesh surpassed its larger neighbour India in per capita income (PCI).
Hindustan Zinc is also working on setting up a maintenance and processing factory in Gujarat to supply Zinc to other South Asian countries. The Chief Executive Officer (CEO) of Hindustan Zinc, Arun Misra, told Business Insider that 70% of the Gujarat plant’s 0.3 million tonne capacity will go to Bangladesh and other Southeast Asian markets.
Currently, miners in Africa, mostly Chinese, sell commodities to South Korea for processing Asian markets and conversion to zinc (by competitors), before hitting the South Asian markets. “We realised that we [Hindustan Zinc] could stop that traffic midway and do it in Gujarat and then convert to metal and then supply to Southeast Asia, which is going very fast and very stable economies as of now,” CEO Misra told Business Insider in an exclusive interview as he completed his first year in the corner office.
The company currently has facilities located in five regions of Rajasthan and a zinc-lead processing and refining facilities as well as a silver refinery at Pantnagar in Uttarakhand.
Misra also highlighted two points behind their latest interest in the Bangladesh market. First, the country’s economy has been doing well. Second, Bangladesh is a land of rivers, which leads to more corrosion of metal. “We'll have more zinc galvanisation in their country. So, nearby countries have a good future for zinc,” he added.
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Corrosion is a degradation of a material, especially metal, due to chemical reactions. Most metals are susceptible to corrosion and the most common form of corrosion is rusting. Water can make metal rust faster, which makes it almost a necessity to apply a protective zinc coating (galvanising) to steel or iron.
More importantly, Bangladesh is witnessing an economic upswing — an average growth of 5.4% in gross domestic product (GDP) in last 5 years — leading to a massive investments in infrastructure. The government in Dhaka plans to increase its spending on infrastructure as well.
According to Bangladesh’s Dhaka Chamber of Commerce and Industry, the country needs to invest approximately $25 billion annually till 2030 to meet its infrastructure needs. It will also help the country maintain as well as further accelerate its GDP growth momentum.
And, Misra sees opportunities unravelling there. “We have just entered Bangladesh. Looking at it, there's a possibility [of business growing], directly we are entering. So we are not yet a big mover inside Bangladesh, as of now. But we are still in Bangladesh and Southeast Asia, as a big base for growth, Misra told Business Insider.
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The company is getting environment clearance procedures and other regulatory processes to make this project into a reality.
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Hindustan Zinc has seen a spectacular year as commodity prices including iron ore, copper and coal, around th e world have seen a spike in the last one year. Misra believes that this uptrend in commodity prices is likely to last for at least another two years. “Quote”
However, global financial services firm Macquarie, in its June 2021 report, projected a cooling down in commodity prices particularly in steel, iron ore and zinc over the next 12 months, after a stellar rally that many have called the ‘supercycle’ in commodities.
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Even other Indian companies have started to take notice of the Bangladesh market. Last year, Adani Group registered a wholly owned subsidiary company named Adani Bangladesh Ports Private (ABPPL) in Bangladesh. It will also start a 1,000 acre India Special Economic Zone (ISEZ) to help Indian companies set up shop in the neighbouring country.
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