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 India's Hindustan Zinc, owned by mining conglomerate Vedanta Group, reported a drop in third-quarter profit on Thursday, hit by lower zinc prices and silver production.

The zinc, silver and lead miner said consolidated net profit fell 20.2% year-over-year to 21.56 billion rupees (about $265 million) in the quarter ended Dec. 31.

The company's integrated zinc production fell 2% to 210 thousand tonnes (kt) due to the unavailability of quality ores, while silver production dropped 7% to 161 kt on account of lower feed grade at its SK Mine, as was planned.

The demand for zinc has been hit by high inflation, rising interest rates and the slowdown in China. Zinc prices in the latest October-December period were lower than in the same period last year, weighing on Hindustan Zinc's revenue.

Moreover, zinc's cost of production, before royalty, jumped 12.7% in the quarter due to higher prices of coal and other input commodities as well as lower domestic coal availability.

Hindustan Zinc's consolidated revenue from operations fell 2.7% to 76.28 billion rupees. The company has a small wind energy business, but more than 99% revenue comes from mining.

Hindustan Zinc said it approved the purchase of THL Zinc Ltd, a unit of Vedanta that holds zinc assets in South Africa and Namibia, for a cash consideration of up to $2.98 billion.

It also approved a long-term group captive renewable energy power development program up to a capacity of about 250 MW for a further investment of up to 4.38 billion rupees. ($1 = 81.3300 Indian rupees)