Regarding the third axis of the strategy, the metallic zinc market, the focus is to maintain our leadership position in South America in addition to developing new markets and products. We prioritize end customers to add value in a sustainable manner over the long run and leverage new opportunities.
In recent years, we have sought to increase our shares in new markets in Africa, the United States, and, more recently, in the Asian market. To do so, we are diversifying our product — with emphasis on galvanization, which accounts for approximately 60% of the world’s zinc consumption — and creating strategies that differentiate our products and levels of after-sales service to customers.
We maintain a diversified product portfolio, seeking innovations and customizations to meet the demands of our end customers and keep up with market trends. In the same way, we also sell co-products from our operations, such as Zincal de Morro Agudo, which was previously used for dam construction and is now sold as a zinc-rich limestone powder to be used as an agricultural input. With this change in the technological direction, we reduced the amount of waste from the unit in an initiative that allowed us to transform what was once an environmental concern into a source of revenue.
Also aligned with the metallic zinc strategy adapted for copper and lead concentrate sales, we diversified regional sales, previously concentrated on two large customers, and the direct sales to copper and lead smelters.
During the year, we restructured the Sales Department, which now reports to the Logistics and Supply Chain, allowing us a clearer view of the logistical reinforcement we need to ensure better service to our customers and to differentiate ourselves in the market. Throughout the year, the S&OP (Sales and Operation Planning), with joint production, commercial and logistics planning to maximize the delivery of quality and level of service, as well as boost productivity and costs. We are introducing a new project, a Logistics Roadmap, which will translate the sales strategy into a logistics strategy, improving the possibilities of capturing results.
We also adopted one-off actions to achieve our strategic goals. One such action was to create global teams. Another was to hire a new General Sales Manager, based in Luxembourg, to gain a more direct and comprehensive view of the international market. In addition to Europe, we have sales offices in the United States and Peru, the latter covering the sales of concentrates, Latin America metals (Latam), ex-Mercosur, and coproducts.
We restructured internal positions to obtain greater knowledge and better market segmentation. In Brazil, one of the most important changes was the separation of our accounts into two areas: Steel accounts and General Galvanization and Foundries accounts. This project has already yielded its first result: through a more dynamic approach and closer proximity to the market, we have been able to improve our positions with clients that are important to our business, signing long-term contracts.
We also restructured the Global Planning and Marketing area, which now includes Strategic Marketing; Market Development and Competitive Intelligence; Product Development, Quality and Technical Assistance; S&OP (Sales & Operation Planning); and Sales Performance, to support our sales teams with efforts from the design to the execution of strategy. This structure allows us to continuously evolve initiatives, aligned with Market Development’s strategic axes.
We maintained our market leadership in Latin America. In Asia, the final volume of sales was higher than had been initially estimated and above our historical average, which enhanced our global presence.
Our focus in 2018 will be to move closer to our customers and markets. This position is in line with the challenge of strengthening Nexa’s image as a global player.
Throughout 2017, we made major changes in the joint planning process for the production, commercial and logistics areas, seeking to maximize the quality of delivery and minimize the costs. The project was based on the Logistics Roadmap (see mor on Information Technology), which is designed to integrate logistics control and database systems globally, allowing for speedier reactions and real-time decision-making based on reliable data.
The first tests with the new system, which is expected to be implemented in 2018, have already shown improvements in indicators, such as an evolution in the perception of customer satisfaction, fewer complaints and returned materials, among others. Thanks to this project, we have approved the largest logistics investment plan in the last five years, totaling some US$ 5 million.
Another highlight for 2017 was greater internal logistics integration (mine/smelter), mainly between the units in Peru. We improved the logistical flows between shipping and receiving, which led to operational improvements and reduced freight costs for the year by US$ 2.9 million. One example was the optimization the truck flows at the Cerro Lindo unit, reducing circulation by 30% through planning activities alone, such as better understanding of the convoy trains, the adoption of staggered schedules, and others. In addition to the financial yields, these activities also translated into security and mobility gains.
Also noteworthy were the initiatives carried out in Cajamarquilla to mitigate the adverse effects of the El Niño weather phenomenon on logistics issues. In the rainy season, we adopted an alternative route system, with better use of rail transportation, less affected by rainfall than truck transport.