Enablers

People and Organization

We act in this enabler by cultivating talents and promoting inspiring leadership, guaranteeing the main critical resources within the organization in addition to constantly evaluating and improving them. We contribute to bolster business productivity and competitiveness through effective governance and organization, promoting a positive and constructive relationship with decisive stakeholders. (Access People or Corporate Governance for more information on the topics.).

Sustainability

We want to be a benchmark in sustainability, continuously improving the organization’s safety and health culture. At the same time, we seek to reduce the environmental impacts (emissions, waste, water and energy consumption, and similars) of the operations and co-create a relevant legacy for society, based on a constructive relationship with our stakeholders.

In all of our activities, we follow strict sustainability guidelines, as defined in our Sustainability Master Plan, whose practices are supported and monitored by the Sustainability Committee that was created in the past year.

In 2019 we created a General Social Management Department, which is responsible for evaluating all social programs developed in Brazil and Peru, delving more broadly into these activities within the sustainability pillar.

External initiatives GRI 102-12

The voluntary adherence to several of joint initiatives with national and international entities also expresses our commitment to sustainable development:

Global Compact – Since 2017, we have been a signatory of this United Nations Initiative, which aims to mobilize the business community around the world to adopt ten principles that represent fundamental values of human rights, labor relations, the environment and the fight against corruption.

Sustainable Development Goals – Commitment signed in 2017 with the Sustainable Development Goals (SDGs), a global agenda composed of 17 objectives and 169 goals to be achieved by 2030 (United Nations Summit on Sustainable Development – 2015). The agenda includes measures for eradicating poverty, food security, agriculture, health, education, gender equality, reduction in equalities, energy, water and sanitation, sustainable production and consumption patterns, climate change, sustainable cities, protection and sustainable use of oceans and terrestrial ecosystems, including economic growth, infrastructure and industrialization, among others. This report indicates the relationship between the SDGs with our material topics and long-term goals.

Carbon Disclosure Project (CDP) – In 2019, we were invited to participate effectively in the CDP, responding about water security. Reflecting the good water management that we carry out in all of our operations, we were included in the “B-“category. CDP is an international non-profit organization that analyzes and recognizes business initiatives to minimize and manage the environmental impacts of its activities. The initiative operates a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

Project management

We guarantee the development and execution of the various projects in progress at the company, supporting the areas to guarantee the best returns and minimize the risk of deviations. We also monitor and improve the long-term investment plan, focusing not only on the maintenance and modernization projects of our assets, but also on the company’s overall expansion and growth. We always seek better visibility of the projects necessary for the development of the business, their implementation details and proper execution.

Commercial

In 2019, we consolidated our commercial strategy of making Nexa a brand name globally recognized and active, through direct sales, partners and distributors, reducing our exposure to local market volatilities. With commercial offices in Luxembourg, Europe, and Houston (USA), we have increased our share in North America and Asia (which accounts for two-thirds of the world’s zinc consumption), in addition to consolidating our position in South Africa. GRI 102-6

To backstop our global zinc deliveries and anticipate the impacts of changes in the economic scenario, we designed a commercial area that is fully oriented to expand the relationships with our customers, getting closer to their production and sales planning operations through implementation of the Customer Relationship Management (CRM) tool. We organize and participate in market events and associations to exchange information on trends and new applications for zinc, while also publishing our Market Bulletin for all activity sectors, adding even more value to our client relationships.

We seek to differentiate ourselves by offering a product portfolio that goes beyond the 25-kg ingots (standard of the commodity priced at the LME – London Metal Exchange) and adding services that develop and retain the market. In addition, we customize chemical, physical specifications and identification marks for some of our customers. We currently have in our portfolio alloys for the CGG (Continuous Galvanizing Grade) and GG (General Galvanizing) with varying levels of aluminum and other elements, such as magnesium, antimony, bismuth and nickel, in addition to the various Zamac foundry alloys. We also have developed active zinc oxide, which is already being sold and expands our participation in the Brazilian domestic market.

In addition, in line with the standardization strategy between our units and greater flexibility for global service, we changed the standard 1-tonne format from Três Marias to the Strip Jumbo, already produced in Cajamarquilla, and started the production of jumbos at the Juiz de Fora unit.

The sales team is also responsible for managing the concentrate sales portfolio, exploiting the benefits of the integration between smelters and mines, aiming to continuously improve our sales intelligence.

Logistics and Supplies

In order to guarantee a differentiated and customized service and maintain the competitiveness of our commercial effort, in 2019 the logistics and after-sales team gained a more agile and synergistic structure, based on a new customer relationship management tool: Salesforce. We also opened a refined zinc distribution center in Kaohsiung – Free Port Zone, a port city in southern Taiwan, which facilitates the shipping of our product to the Asian market.

At the same time, we implemented the technological management and logistics platform (SAP IBP and SAP TMS), aimed at reducing costs and improving the administration and planning of distribution and production flows, thereby optimizing the logistics process. In addition to the SAP modules, we started using robotic processes (Robotic Process Automatization – RPA) and other tools to merge, simplify and streamline our processes.

We increasingly are investing in multimodal operations, seeking to improve the delivery reliability rate and service flexibility. As an example, in 2019, 78% of the refined zinc flow was delivered by rail to the ports of origin or internal customers.

In addition, we obtained Authorized Economic Operator (AEO) certification for Brazil, a certificate that we already obtained for the Cajamarquilla unit since 2015 and that facilitates the import and export process.

We took some measures to raise our operational efficiency ratings: we optimized our loads, from the matching of receipt flows with shipping, thus maximizing the use of assets and adjusting transport vehicles; we reduced the wait time for receiving cargo in Três Marias by 50%; we augmented Cajamarquilla’s efficiency in shipping sulfuric acid by 80%; we introduced the cross docking operation in the United States, cutting delivery times to customers. To reduce logistics costs, we renegotiated contracts with suppliers in Peru and Brazil.

We are focused on making the transportation of equipment and structures feasible for the construction and operation of the new Aripuanã mine, which is in the implementation phase and is expected to start operating in 2021.

In the safety aspect, we reduced the internal accident rate by 13% compared to 2018, and decreased our environmental accident rates by 79%.

Risk management

We identify and manage the main risks from both an operational and a strategic point of view, reducing and mitigating impacts to maintain business sustainability. We are especially focused on preventive systems, through our Risk and Business Management Policy, which classifies and addresses risks in four major topics: Compliance, Business Risks, Internal Controls and Financial Risks. (Acess Risk Management for more information.)

Capital structure

Our priorities are optimize cash management, ensuring liquidity and availability of investment resources; safeguard adequate working capital; and to guarantee financial resources (capital and debt) pursuant to our strategy. Acess Capital Management for more information.

Employees from Atacocha

Technology, automation and innovation

The technology acts as an enabler of our growth and operational excellence strategic axes, since it makes our operations safer, minimizes waste and optimizes production. Our efforts to be innovative have been recognized every year by the Valor Inovação Brasil yearbook; in the fifth edition (2019), we reached the position of most innovative company in the Mining, Smelting and Steelmaking category.

Our investments in research and development reached US$ 8.9 million in 2019, compared to US$ 9.2 million in the previous year. Aiding in the development of our innovation projects is access to funding from the Financiadora de Estudos e Projetos (FINEP) (Financier of Studies and Projects) program, which we execute in partnership with other institutions, such as Empresa Brasileira de Pesquisa e Inovação Industrial (Embrapii).

As a result of investments in innovative processes, we were the first mining company to operate with an electric scoop in Atacocha, following the global trend of using vehicles that dramatically reduce greenhouse gas emissions, thereby generating environmental benefits and reducing the energy consumption of fans in mines, leading to less noise and higher energy efficiency. Initiatives like these make Nexa a potential playing field for innovation, allowing suppliers to dare to propose new ways of working that make our operations more efficient and productive.

In 2019, on this pathway that anticipates the future of mining, we helped found the Mining Hub, which joins together 22 mining companies, various suppliers in the sector and the Brazilian Mining Institute (Ibram) team. The initiative takes place in Belo Horizonte (MG), designed to be a direct channel of open innovation, a congregation of the trends in the sector and relationships among members. For the same purpose, we helped found the Hub of Innovación Minera in Peru.

Based on this initiative, we have already moved on to a project to use waste materials in Vazante to build houses in partnership with a startup selected during the 1st Waste Challenge Cycle at the Mining Hub, in Brazil. Tests were carried out using different proportions of Vazante tailings in the composition of concrete slabs for civil construction. The resistance tests proved the technical feasibility of the product.

Employees from Cajamarquilla

Our innovation pillars

People – make it happen
Intelligence – anticipates trends, reflects on the future of mining
Processes to innovate – plans execution together with the areas involved
Results – accountability and incentives for new projects

Mining Lab Platform

The Mining Lab Program has sought innovative mining and smelting solutions for our operations in Brazil and Peru since the end of 2015, constituting the main tool for open innovation in Nexa’s strategy.

After the first few editions, we arrived at the current format: to be a continuous challenge for innovation, with registration open throughout the year. Hence, entrepreneurs can register an innovative idea for the sector without necessarily fulfilling the requirements of any of the categories proposed by the company.

Based on the previous editions experience and good results, last year the company sought to attract more international partners approaching the main sources of global innovation. This is an initiative that injects oxygen into the company’s environment and makes room for the development of new ideas, within the intelligent mining concept and the innovative nature of The Nexa Way.

In these four years, we have prospected 599 innovative projects in different fields, such as circular economy, renewable energy, industrial automation, nanotechnology, effluents and water management, artificial intelligence, logistics, legal knowledge management, mineral exploration, employer branding and local and social development. To date, we have selected 31 companies from Canada, Israel, Chile, the U.S., Brazil and Peru to develop transformational projects (see the table below for the projects selected in the latest edition).

The Mining Lab challenge ended up expanding over the years and turns to a platform that has several programs: Mining Lab Challenge, Mining Toons, University Challenges. They are marathons in a variety of professional spheres for speedy resolution of internal and sector problems.

Projects under development

All selected projects must pass through the Research & Development (R&D) phase to validate the business model and technology in specific scenarios within our operations. If the R&D results are proven, the project will move to the industrial implementation phase.

We currently are initiating the industrial phase of projects that help us at strategic points reduce our waste generation and transform tailings into products, reduce greenhouse gases (GHG), migrate our energy matrix to renewables, enhance safety in deep mining operations and reduce costs.

Among them, rock stability is a highlight, in partnership with the Canadian Rockmass Technologies startup. In December 2018, the new technology for the evaluation of structures was tested in Vazante and Morro Agudo. The tests validated the technology and the expected benefits, which were reinforced throughout 2019 with the large-scale application of Axismapper. The equipment eliminates the use of paper on work fronts during geotechnical assessment operations, hence progressing the automation of our processes. The commercial version was ready at the end of 2019. After further tests, we confirmed that we have obtained more reliable data, higher productivity and greater safety at critical points. The next stage of the project will be to hire the company as a Nexa supplier. The device started operating in 2019 and testing will continue in 2020 at the Morro Agudo and Vazante mines.

Another example is the Brazilian startup ZEG, which has an innovative and patented solution that transforms solid waste into steam. The initiative seeks to reduce the use of fossil fuels and the impacts caused using these inputs, using technology that replaced up to 65% of the natural gas volumes used in the Juiz de Fora plant’s operations. Pre-tests validated the post-implementation financial, environmental and social gains. In addition, the project integrates Nexa and ZEG into local communities, reutilizing waste with high environmental impacts and generating local jobs and income.

Mining Lab Challenge – 2019 Cycle

R&D Projects SDG 8.2

Our innovation projects are also carried out in the scope of Research & Development (R&D), highlighting the following, which are in the testing phase:

Concrete Project – Development of a technological route to use the final waste from the zinc processing of Três Marias in the production of sulfoaluminous preclinker, by means of heat treatment, for application in concrete. The tests performed demonstrated the technical viability of the process and the product generated. The consumption potential of this waste is around 30% of what is currently generated. An industrial test is planned for 2020 in one of the largest Brazilian concrete companies to evaluate the product on a larger scale.

Synthetic granite – Study conducted in partnership with a startup selected in Mining Lab 2, which proposed the transformation of the waste generated at the Três Marias Unit into a synthetic granite, through a pyrometallurgical process. A pilot test was contracted with a partner institution, promoted by Embrapii, to produce a batch of synthetic granite pieces. Analyses of product performance will be carried out according to ceramic standards, the refinement of the mass and energy balances of the process, in addition to the evaluation of the potential market for the product.

Transformation of Vazante waste into product – A technological route was developed, in partnership with USP and fostered by Embrapii, to separate the hematite contained in Vazante’s fresh waste (current generation) for use in other sectors, such as the steel industry. The project also has high potential for processing the tailings stored in dams.

User experience

Created in 2017, the User Experience program seeks to bring to the corporate environment incremental innovations from solutions already available in the market. In 2019, in addition to implementing and expanding initiatives received from the full collaboration within the company, the program began to increasingly focus on the operations in the plants, applying methodologies such as user experience and journey and design thinking. Furthermore, a process was started to strengthen ties with universities, researchers and startups at different levels of maturity.

User Experience Solutions

Automation

Pursuant to the Automation and Information Master Plan (PDAI) for the digital transformation of our current production units as for new units, we are highlighting the following projects:

El Porvenir Concentrating Plant

In order to reduce operational variability and increase capacity utilization, the project contemplates the automation of comminution, flotation and reagent areas. Flotation uses a computer intelligence system for advanced control through image analysis. It seeks the standardize operational and process controls, while also reducing the direct intervention of operators in the command of equipment and improve safety rates.

The great challenge of the project is the changeover from the current local manual, operational model to one with remote operation from a local control room. The project is in the implementation phase, starting operations in June 2020.

Employess from El Porvenir

Automation of Cerro Lindo fans

The project includes the monitoring and controls of the main fans in the underground mine from the mine control room. For the main air extracting fans, monitoring also includes the content of carbon monoxide and nitrous gases, oxygen and circulating air temperature. In the implementation phase, it is scheduled to be put into operation in July 2020.

Fleet management and mine operation in Vazante

In 2019, we implemented the fleet management and mine operations system, known as the dispatch system. It helps manage the activities that take place on the equipment and status of the underground operations fronts, including the performance of teams and operators. The main information, with data input from tablets installed in all mine production and development equipment, is centralized in the surface mine control room. These speeds up actions both during shifts and shift changes, occasions when the main activities of each equipment, operator and front are already programmed and aligned with each mine’s planning actions.

The system also permits integration of all production and quality data, including automatically generated reports with all key indicators (KPIs) for mine control and planning and interconnection with the Manufacturing Execution System (MES) managing real-time information. With the solution, production increases and cost reductions are expected, coupled with better activity planning and control. The system is scheduled to be implemented in Cerro Lindo in 2020, and in 2021 at Aripuanã.