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Decommissioning - Nexa | 2017 Annual Report

Material Issue

GRI 103-1, 103-2, 103-3

To ensure a positive process and leave a sustainability legacy for the community after operations end or a mine and/or an industrial mining facility is decommissioned, planning must be conducted with the same care as was taken during the implementation stage.

Therefore, the decommissioning theme is considered material to our operations and occupies a special position in the company’s business strategy. Toward this aim, new project and operational design stages for mining and metallurgy units are already being conducted with future visualization regarding their eventual shutdown.

In Peru, to obtain a license, it is necessary to prepare the decommissioning plan beginning with the initial project stage. In Brazil, from a legal point of view, it is presented, mainly, in two ways: simplified, at the time a mining permit is requested; and more detailed, two years prior to the ending of mining activities; there is no formal requirement for smelting units.

However, regardless of current legislation, all of our companies’ internal operational guidelines and new projects have decommissioning plans.

These plans are technical documents and contain the guidelines for safe, full and efficient deactivation, in which economic, environmental and social actions are contemplated.

The document also includes forwardlooking studies regarding alternatives future use of the areas, with these detail levels: Conceptual Plan, Basic Project and Executive Project.

In 2017, we completed the review of the plans for all the units installed in Brazil and for Cajamarquilla and we also prepared alternative future-use studies for all the units in operation in Peru. By 2018, we expect to complete our Peruvian mining units’ plans.

To enable this, we have conducted a diagnosis of the areas’ physical, biotic and socio-economic resources, surveying constraints and local development potentials in the short- and long-term. We also studied civil structures and equipment to identify what can be reused and what should be correctly disposed of after decommissioning.

After collecting the data, we prepared a physical-financial schedule for the plants, including pre-decommissioning, decommissioning and post-closing measures.

The work was accompanied by the Corporate Committee for Approval of Plans and Decommissioning Projects that was restructured in 2017 to ensure the evaluation and approval of all the plans prepared for the projects under the company’s management.

Decommissioning Plan

1. Preparation of the decommissioning plan:

Step 1: Diagnosis

In this stage, the socioenvironmental diagnosis of the areas of the unit and the municipalities where these operations are inserted is conducted. The diagnosis considers the characterization of potentialities and limitations related to the physical, biotic and socioeconomic environment and its objective is to map potential future uses for the area.

Step 2: Alternatives for Future Use

In this step, based on the diagnosis of the previous phase, the mapped future uses are evaluated by means of a multi-criteria analysis that assesses risks and identifies the most indicated future use from a technical and economic point of view for the area in question.

Step 3: Definition of the Decommissioning Actions

This stage defines the decommissioning actions that must be implemented for the physical, biotic and socio-economic environments to achieve the intended future use.

Step 4: Valuation of decommissioning actions

In this stage, the decommissioning actions defined in step 3 are evaluated, which will base the execution of the plans and whose overall value will subsidize the financial provision for the decommissioning of the unit.

At the end of the fourth stage, the decommissioning plan is consolidated and the unit monitors it. This document is prepared in its first version at the conceptual level and should evolve to the basic project executive level resulting from the approximation of the unit’s end of useful life and the structures that comprise it.

2. Implementation Report on the Decommissioning Actions

Corresponds to the report that accompanies the execution of the decommissioning actions. This document involves the status of the actions, the evolution of their implementation and the results obtained in this stage. The period of decommissioning implementation varies according to the complexity of the unit and the structures that comprise it.

3. Decommissioning Actions Monitoring Report

After the implementation of the decommissioning actions, the post-decommissioning monitoring period will begin. This stage includes monitoring of physical, biotic and socio-economic indicators, designed to oversee the effectiveness of the implemented actions.

Monitoring will be conducted for at least five years, and this period may be extended if the indicators do not reach the desired results and/or stability.

Vazante Decommissioning

The evolution of the decommissioning plan for the Vazante unit in Minas Gerais illustrates how we conduct this process, which aims to achieve physical, chemical and biological stability in the area. Furthermore, we seek to reduce negative impacts, leaving a positive socio-economic and cultural legacy.

We initiated zinc mining in Vazante in 1969 and, ever since, we have invested in extending the useful life of the unit. The current forecast, based on probable and proven reserves, is that the mine will operate until 2027. However, we are conducting ongoing mineral resource research and development activities that could extend this horizon out even more.

The current plan was based on a diagnosis of the physical, biotic and socio-economic environment that identified the potentialities and limitations of the region and supported the construction of a future-use plan for the area, which is to be reviewed every five years.

In the survey, the potential of developing ecotourism activities (taking advantage of the natural potential of caves and cavities in the region), teaching (unit mining structures) and religious tourism (Festa da Nossa Senhora da Lapa) was identified.

In line with this process, a Social Agenda was created, representing participatory dialogue with community representatives, public authorities and civil society entities. The end purpose was the preparation of a local development plan (detailed in the Community chapter).

In this context, the current plan also calls for environmental measures (physical, chemical and biological), such as actions to recover degraded areas, and alternatives for local development after the demobilization of Nexa’s assets.

On the environmental side, the plan is consistently moving forward. The investment in the last five years was US$ 2.5 million, a little more than 10% of the US$ 21.4 million budgeted for the next five years, culminating in:

❯ Recovery of 292 hectares, equivalent to about 600 football fields;
❯ Decommissioning of two former ore processing and concentrating units, including one that was not operated by Nexa but was incorporated into its service area as a result of extended life projects;
❯ One decommissioned mining pit and four partially decommissioned, of a total of ten existing;
❯ Five uncompensated sterile stacks of a total of eight existing;
❯ One of the two tailings dams decommissioned by the State Environmental Foundation of Minas Gerais (Feam).
❯ The replenished vegetation cover in these areas has created a favorable environment for the expansion of fauna species and the monitoring of this indicator has shown important evolution in the last five years.

As an example, the number of species of fauna found in the Lumiadeira pit and Sterile Stacks LCA 01 to 05 rose 108% for mammals, 140% for reptiles, 174% for birds and 250% for amphibians between 2013 and 2017. For birds, the number of species almost tripled and, currently, approximately 17% of the species in the Brazilian Cerrado are found in this area.

Flora and wildlife indicators (Amount of species)