Society

Material Topic
Local development
GRI 103-2, 103-3 SDG 11.6, 13.2

Social Project in Cerro Pasco

We understand that the social topic is a fundamental lever for the mining sector and, for this reason, we seek an increasingly closer, transparent and constructive relationship with society. We strive to be able to create a positive and structured legacy with the communities where we operate, promoting positive transformations for local development in a harmonious environment, based on respect and empathy.

Symbolizing the importance we give to the topic and with the goal of a more cohesive administration of the plans and actions related to the subject, we created the Social Management Department within the Sustainability Directorate, merging the Relationship area with Communities and Social Projects.

Another important action during the year was the strategic cooperation alliance signed with the United Nations Development Programme (UNDP) for local development. Furthermore, we saw improvement of Human Development indexes in the territories where we operate, in accordance with the Sustainable Development Goals (SDGs).

Each year we strengthen actions in the local or micro-regions located around our businesses that lead to improved social inclusion, strengthening, transformation and diversification of the local economies, improvement and innovation in public policies, environmental protection and rational use of natural resources, participation and social mobilization, encouragement of youth leadership, and better infrastructure and public facilities.

Since 2015, we have conducted a process of understanding the needs of each location and interactions with social actors through the dialogue established in the social agenda and the Local Development Plans (LDPs). It was by listening to the communities that we established the four strategic axes that have guided our portfolio of social projects since 2018: Local Economic Development, Public Management and Social Participation, Social and Environmental, Childhood and Youth. For 2019, our projects portfolio was adjusted to meet this new strategy, both in Brazil and Peru.

Our self-funded social investments, using official incentive or market-raised money, totaled US$ 14.5 million in the year, up 39% compared to US$ 10.4 million in 2018. GRI 203-1, GRI 413-1 SDG 4.4, 8.6, 10.2

During the period, we sponsored a total of 145 projects in 17 locations in Brazil and Peru, benefiting more than 44 thousand people through initiatives aligned with our four strategic social action axes.

Strategic axis actions SDG 1.3, 4.4, 8.6, 10.2

Local Economic Development Axis

We want to contribute to the sustainable economic development of the territories, through the enhancement of their local resources, the qualification of people and environmental protection actions. The projects are the result of the social dialogue held between 2017 and 2018 as part of the Social Agenda, a process of paramount importance in the construction of social projects adhering to the locations where we operate. Here are some examples of this performance:

Fisheries and Tourism Plan SDG 8.9, 12.b, 14.7

We operated in 2019 on the tourism front, introducing a local development tool in two municipalities with a vocation for the activity as identified through sectorial diagnoses. In Vazante, we ascertained the potential of business, religious and speleological tourism in the region, and began supporting the public authorities in a plan to approve popular validation of Municipal Law 1803/19, which created the municipal tourism policy, within the scope of the Public Management Support Project – Municipal Tourism Plan. The process was carried with local cooperation through workshops within the communities, consultations with the government and public hearings, which attracted 176 people from various tourism-related sectors. The effective startup of actions that derive from the approved plan has been scheduled for 2020.

Another ongoing project on the tourism front is Mais Vazante (More Vazante) which prepares the accommodations and food services sectors through individualized mentoring actions. We are coordinating and training the 28 main service providers in the municipality regarding customer service, hygiene and cleaning, management and governance, with an impact on the quality of service for more than 130 hotel guests and over 900 people served daily by the restaurants involved in the project.

In Três Marias, the tourism front organized individual mentoring over the year to establish commerce, gastronomic and lodging services in the Beira Rio neighborhood on the banks of the São Francisco River, directly involving 38 sectorial leaders. Supporting these actions, the project put together the Municipal Tourism Plan in cooperation with public authorities and the communities, which prepares the municipality for ecotourism, another regional vocation. The creation of the Beira Rio – São Gonçalo do Abaeté brand logo as a tourist destination, established as a goal for 2020, the execution of a strategy to publicize the destination. The goal is to boost the income generated by tourism through greater tourist flows in the region.

Paracatu Movimenta – Innovation Ecosystem

Institutional support project for the Paracatu Sustainable Development Agency (Adesp) aims to strengthen the institution so that it is able to lead innovation processes and projects for sustainable economic development in the municipality. In 2019, the association created the Vale do Paracatu Innovation Ecosystem, approved by the Municipal Fund for Sustainable Development, with an investment of R$ 300 thousand for the works to be developed in 2020.

Rural Technical Assistance

We offer rural agricultural technical assistance to small milk producers in the vicinity of the Morro Agudo unit, in Paracatu, through the Good Rural Practices project, and in the rural area of Vazante, through the Strong Rural Project. In all, 54 small rural producers (90% of milk producers) benefited directly from the project, which represents just over 240 people directly impacted. Small producers received technical guidance from an animal husbandry specialist, agronomist and agricultural technician, with a focus on bolstering productivity through the proper management of pasturelands and the preparation of livestock feed, in addition to the implementation of good management practices for rural properties.

In 2019, Morro Agudo producers recorded a 1.8% increase in the amount of milk produced, despite a 9% decrease in the number of lactating animals. That is, there was a significant rise in productivity. In Vazante, in turn, the project delivered better results in terms of rural property management, reducing milk production costs by approximately 1.7%.

Projects in Juiz de Fora

We have developed two social projects focused on income generation, preparation and access to the job market for young people and adults living in the Igrejinha neighborhood, neighboring our unit in Juiz de Fora. The Community in Action Project, introduced in 2019, offers individual consultancies and training for 30 formal and informal entrepreneurs from the Igrejinha neighborhood and surrounding region, designed to help strengthen socio-emotional skills and entrepreneurial behavior, hence increasing income. With a similar objective, the QualificAção (Qualification) project offered professional training for 40 young people and adults, linking socio-behavioral and technical education for entering the job market. In 2019, a talent bank was consolidated and an employability network activated for selection processes in 2020.

Fostering the entrepreneurial environment

A survey of the commerce and services sectors value chain in Três Marias in 2019 oriented the guidelines for the development of two projects aimed at promoting the business startup environment: the Entrepreneurial Vocation project, in conjunction with the Commercial and Business Association and the Shopkeepers Chamber in the municipality (ACE/CDL), and the Public Management Support Project – Fostering the Entrepreneurial Environment, in partnership with the Economic Development Secretariat.

The actions focused on two distinct fronts: one for strengthening and structuring the strategic planning governance of the ACE/CDL, with the purpose of engaging entrepreneurs from the trade and services sector to join the association, and the other to structure an integrated planning strategy and proactive approach among government leaders and sector’s entrepreneurs.

The new opportunities to foster the development of new businesses in Três Marias are beginning to materialize through the elaboration and approval of an Action Plan. The initiatives will be fully integrated into the fields of entrepreneurship and social innovation, designed to incorporate 30% of the existing MEIs in the city with ACE/CDL’s activities in 2020.

Another important result was the joint preparation and development, with more than 75 public management leaders from several secretariats related to the theme (among the Três Marias Development Agency, CDL, sector leaders and Development Secretariat), of a draft bill for an establishing a law to create an Entrepreneurial Environment Municipal Plan. The objectives are to facilitate and reduce the red tape involving the setting up and formalization of new businesses in the municipality, benefiting the entire commerce and services sector.

Competitive management of the Conchucos Livestock Chain

The project aims to improve the productivity, competitiveness and profitability of livestock chains in the Conchucos Peasant Community close to the Magistral project in Peru. We support the community organization by endorsing and applying its technical capabilities regarding the genetic enhancement of cattle through the adoption of a differentiated management of cattle feed and local hygiene practices. With the contribution of community members dedicated to livestock activities, an efficient management of water resources has been implemented to try to mitigate any type of local water table contamination. The project got underway in 2016 and is expected to be concluded in 2022.

Social Project in Cerro Pasco

Public Administration and Social Participation Axis

In this strategic area, our objective is to stimulate social participation, strengthening citizenship and the pro-activism of civil society while also encouraging better public administration. The final goal is more effective public policy development.

Social Agenda – Community Local Development Network

We have strengthened ties with communities in participatory processes that we have termed the Social Agenda (2017 – 2019). Through it, in dialogue with the entire community, Local Development Plans for units in Brazil have already been drawn up, as well as the overall configuration of social projects. To continue this process, the new stage encourages the formation of a community development network to promote well-being and local development. The proposal is to invite participants to consolidate a group that strengthens and is able to build joint solutions to their needs. In addition, they act collaboratively and inclusively to achieve common goals autonomously.

Integrated Solid Waste Management

In 2018, the project developed and obtained the approval of Municipal Law 32/2018 that establishes the Integrated Solid Waste Management Program (PGIRS) in the municipality of Vazante. In 2019, the project fulfilled 100% of the Action Plan prepared for the implementation of the PGIRS: formalized the waste pickers association, created and strengthened 11 Environmental Education Centers (NEAs), implemented 16 Voluntary Solid waste Delivery Sites (Levos) in the urban center and rural area of the city and established governance policy between public authorities, the waste pickers association and local entrepreneurs to implement selective collection – which occurred on a daily door-to-door basis.

These actions directly impacted more than 500 people directly and almost 2 thousand people indirectly, approximately 30% of them residing in Vazante. For 2020, efforts will be intensified to strengthen the waste value chain, as well as the waste pickers association, to expand the generation of income from recycling, with the aim of enlarging the volume of solid waste disposed of by the association by 100%. The project also incorporates the organic waste composting front, aiming to reduce 1 tonne of organic waste now destined for landfill just in 2020 alone. The project also is linked to the Socioenvironmental axis.

Social Project in Cerro Pasco

Water Supply System Management

The project is based on a diagnosis of water supply conditions prepared jointly with Aripuanã’s municipal administrators. This analysis pointed to a daily consumption of 404 liters per inhabitant, water losses above 50%, only 40% of micro-measurement, in addition to problems in water distribution and quality. In conjunction with public administrators, an Action Plan (2019/2020) was drawn up whose immediate and shortterm goals include actions to improve and modernize the city’s water supply system. The main initiatives include the purchase and installation of 2.8 thousand water meters, renovation of the Water Treatment Station (ETA) and the capture of raw water, re-registration of nonresidential connections and studies for tariff recovery. The immediate impact of the plan will be to permit the financial self-sufficiency of the Department of Water and Sewage (DAE), now dependent on funding from the city government, plus an improvement in the quality of services provided to the more than 11,600 inhabitants of the urban core of the municipality.

Fiscal balance

It aims to support the public administration of Aripuanã, to balance municipal accounts through the control of its expenses and revenues. The project seeks to optimize the impacts of public investment in increasing own revenues, ISS and transfers (ICMS, Royalties CFEM); reduction of pressure on basic infrastructure, equipment and social services; government procurement services; and working towards financial balance, efficiency and effectiveness of government in the use of the municipality’s own resources. In 2019, the work carried out with the administrators and the process for training municipal suppliers guaranteed an increase of approximately 40% in the collection of the municipal ISS tax, with funds that remained in Aripuanã.

Local Development in El Porvenir

In order to strengthen local development processes based on economic, social and institutional management, we focused on supporting the development of spaces for dialogue and interaction with public, private and community institutions. From this, local governments, service providers and users began to manage drinking water services more sustainably, improving their performance in the management of public services and their role in local development, making traditional economic activities competitive.

Volunteering – All of us

Our volunteer program is transversal, present in all operations and offices, contributing to the creation of a legacy together with the community and as support to the initiatives that integrate the four strategic axes of our social management. Its proposal is to promote social participation and the development of networks and local alliances, providing dialogue and greater engagement of communities and businesses for local sustainable development.

It relies on the active engagement of the company’s leadership, at various levels, and uses our business strategy as a tool for empathy and social engagement. In 2019, it gained breadth and visibility, expressed by more than 20 thousand hours dedicated to actions, the involvement of around 1.2 thousand direct employees and third parties, in addition to hundreds of people from the community, and approximately 34 thousand beneficiaries.

Some highlights of 2019 were:

We are Talent – Recognizing the different talents and the potential for community impact of our employees, the project emerged at the Juiz de Fora unit as an initiative to share diverse knowledge. There, through continuous workshops, personal and professional development of the internal and external public is fostered. In 2019, cooking classes (“Growing in the Kitchen”) were taught to 25 young people in the community, in addition to English, finance and IT classes for more than 30 own and outsourced employees.

Echologic Park La Quinua – In a region where the options of collective recreational spaces for children are limited, the initiative transformed a plot of land where waste was dumped into a leisure area – an ecological park, actually. Using materials discarded in the operation of the Pasco Complex, we built, together with the community, structures and toys that benefit more than 200 families from the La Quinua rural community.

Nexa+Community – The initiative is a partnership between Nexa and the Três Marias community, which mobilized the network of partners and local institutions for a major event to provide free services in the areas of Sustainability, Citizenship, Beauty, Health, Leisure, Culture and Communication. Some 8.5 thousand people were directly benefited, through 25 thousand care actions.

Protagonists for a socio-environmental change – The Lima office, in partnership with Recidar, carried out actions of creative formulation and reform of the collective environments of the Institución Educacional de Malta. The initiative aimed to promote the pro-activism and participation of youths in the construction of a more open and receptive educational space. The project included design thinking workshops and a hackathon, with the layout developed collaboratively. More than 60 students and two teachers participated directly in the action, indirectly benefiting over 2 thousand primary and secondary school students.

Light Tables to stimulate children’s learning – Seeking to enhance teaching and learning, the initiative used recycled materials from the Cajamarquilla operation for the manufacture and installation of didactic light tables at the Institución Educacional La Florida. The light tables follow the Reggio Emilia educational approach, which aims to create a friendly, active and inventive school, a place of learning through research, recognition and reflection of children in early childhood. The initiative directly benefited 55 children from the two early childhood education classes.

+20 thousand

hours dedicated

1.2 thousand

employees

34 thousand

beneficiaries

Socio-Environmental Axis

We aim to contribute to improving the availability and quality of water, solid waste management and good environmental health conditions.

More water – Morro Agudo Alive

It focuses on initiatives for the preservation of water resources in the Morro Agudo region by surrounding the areas of springs, footpaths and protection areas. In 2019, the project installed more than 3.5 thousand meters of fencing on more than ten rural properties in the unit’s area of influence at the Córrego do Batuque Basin region, directly impacting 80 residents on the properties benefited by the project. The goal for 2020 is to incorporate new areas of water springs to be recovered, with the integration of the work of fencing them off into the activities of the Environmental Education Program and the sharing of information so that producers make progress in the sustainable management of their properties.

People Caring for Water – Vazante

We plan to increase the scope of the People Caring for Water Project, carried out in partnership with the BNDES, which associates the fencing of springs and footpaths with community and school environmental education in the municipality of Vazante. The focus will be on working on environmental issues related to water resources and water management.

AGP – Basic sanitation (water and sewage)

The project is based on census diagnostics to learn about the water supply and sewage conditions in our units’ areas of influence. From the data and together with the communities, solutions and executive projects will be developed to improve the services offered to the population. The Municipal Basic Sanitation Plans will also be reviewed, contributing to increase access to drinking water and sanitation for the communities surrounding our operations in Brazil and Peru.

In 2019, the diagnosis project surveyed the conditions of water supply and sewage in just over 950 households located in the areas of influence of the Juiz de Fora, Três Marias, Vazante and Morro Agudo units. The project has the support of Instituto Leva Brasil and Reinfra consulting, responsible for monitoring the program in the regions. For 2020, we foresee the development of appropriate solutions to the characteristics of each location, as pointed out in the diagnoses.

Telemedicine

The Telessaúde (Telehealth) project seeks to improve the access of the vulnerable population to public health services. For this, we provide a technological solution composed of equipment for local health establishments, with an ultrasound kit and software that sends the images captured by the device to radiologists who provide an accurate diagnosis within 48 hours, recommending the most appropriate care for the patient. The project addresses medical protocols for the second and third trimesters of pregnancy, as well as abdomen protocols. The use of this technology is currently in the implementation and training phase for health personnel. In addition, aided by teleducation technology, educational campaigns for preventive health are being scheduled.

Social Project in Vazante

Childhood and Youth Axis
SDG 16.2

Our mission is to contribute to the social development of children and youths, to make them protagonists and social participants, in addition to being trained and qualified for study and work. Hence, we seek to strengthen the social protection network and social participation process.

Youth Art and Culture – A Banca (The Stand)

Igrejinha, in Juiz de Fora, is a neighborhood marked by the high social vulnerability of teens and youths, who daily experience different types of violence and deficient access to their rights. Transforming this reality requires a joint effort to expand perspectives, value education, self-esteem and the role of young people. This project integrates the social action strategy, fostering empowerment, strengthening identity, self-esteem and future perspectives, with workshops and cultural activities based on urban culture, popular education and music for social integration.

Project beneficiaries and family members already perceive the first effects of the projects, with a change in positioning, higher self-esteem and positive behavioral changes that directly impact the family, the school climate and daily life. In two years of operation, the project has already helped more than 50 young people through ongoing workshops and more than 200 teenagers and young people in collective activities, directly benefiting more than 50% of the public of this age group in the neighborhood, in addition to integrating youths from the locality with other social movements in the municipality.

Life Planning

One of the objectives of the Três Marias Local Development Plan is to expand educational opportunities, perspectives and community participation of teens and youths who attend high school at the Ermírio de Moraes and João Guimarães Rosa state schools. Toward this end, the Life Project integrates the local social action strategy with the curricular module based on the socio-emotional competences proposed by the National Common Curricular Base (BNCC).

The project seeks to make the school environment and learning more attractive through methodologies and cross-cutting themes that dialogue directly with the challenges faced by youths in their daily lives. In 2019, self-assessments, socioemotional skills assessments and training processes were applied to 1st-year educational managers. In the coming years, the project will be extended to the 2nd and 3rd years. The project currently benefits 950 students and 15 teachers.

Culture of Peace

Project developed in Aripuanã aims to promote the lives of children and young people in a comprehensive way, working with the protection of rights, quality in formal education and access to socio-cultural activities. On the quality front in education, actions are carried out to train teachers, support educational and school management, in addition to initiatives to reduce conflicts and improve school climate and performance. In the district of Conselvan, for example, one of the areas of greatest social vulnerability in the municipalities, children and teens live daily with violations of rights and violence. The project aims to promote a culture of peace in schools, helping to deal with conflicts in collective coexistence, improving the environment and school performance by strengthening learning and lowering school dropout rates. In 2019, 72% of teachers from the two local schools were trained, benefiting 676 children and teens and 32 education workers.

Safe and healthy schools

The project aims to improve the teaching and health conditions of students at five schools located in El Povernir and Atacocha. It acts in the development of healthy conditions in the school environment, creating a better-quality learning process. Students at educational institutions where we operate improve their skills based on a quality learning process. In addition, with the support of parents who actively participate in management and basic services, the school environment becomes healthier.

Social Project in Cerro Pasco

Material Topic
Decommissioning
GRI 103-2, 103-3 SDG 11.4

Social Project in Três Marias

Our commitment to the mining and industrial facilities we operate in Brazil and Peru is not limited to the operation time of our mines, extending to an adequate closure of activities, with the aim of creating a legacy for the surrounding community.

We consider this topic to be relevant and part of the business strategy, so much so that it is accompanied by internal policies and involves operational units up to and including the Executive Board. Independent of current legislation, all our operations have future use and decommissioning plans based on the most current technical references and best market practices. They are more complete and committed plans than the current legal requirements.

One of our distinguishing characteristics is planning decommissioning even before the start of operations, as in the most recent case of Aripuanã, where the plan will be completed even before activities startups, scheduled for 2021. We have revised our decommissioning plans in Brazil (2017) and Peru (2018-2019), with estimated expenditures above US$ 92 million by 2022. Thus, we reached our target of having 100% of our decommissioning plans updated. We have also established a governance practice to ensure that all decommissioning steps will proceed as planned.

Decommissioning plans are documents that contain technical guidelines for safe, complete and efficient decommissioning and include information on actions of an economic, environmental and social nature. Formalizing these data in a document creates a sense of urgency in the population, encouraging pro-activism from the community and public authorities that might not have been achieved during the mine’s operational phase.

In 2019, we triggered the decommissioning plan for Vazante and Três Marias. They already have structures to be decommissioned in the context of progressive closure, such as pits and tailings deposits. We also filled in the details for the Atacocha plan, which will get underway in 2020.

Decommissioning of Vazante SDG 15.2

Although there are advanced studies to augment the service life of the Vazante mine in Minas Gerais, we will follow the decommissioning plan filed with the National Mining Agency (ANM), in which the forecast based on probable and confirmed reserves is for operations to continue until 2027. Investments to fulfill the plan are US$ 19.5 million over the 2019-2023 period.

Decommissioning of Atacocha

In 2019, our focus was to continue the decommissioning of the old Atacocha and Cajamarquilla dams. Studies and detailing of the works were carried out for the physical, hydrological and geochemical stability of the Ticlacayán, Malauchaca, Vaso Cajamarquilla and Chicrín tailings deposits, located near the Atacocha mine in the Pasco Complex in Peru, as was the socio-environmental diagnosis (physical, biotic, socioeconomic environments), identifying the limitations and potential of the areas.

The alternative chosen for future use of the deposits was the installation of greenhouses located along the central highway towards Huariacca for medium-scale flower cultivation for national sale and future export. It will be hydroponic crops for climate protection and pest control, managed by communal companies, benefiting the population near the operation.

The next phase consists of conducting studies for feasibility and the production chain for floriculture, as well as informative lectures and training of farmers to generate new businesses. A pilot project also will be implemented to test the effectiveness of the alternative.

Material Topic
Human Rights
GRI 103-2, 103-3 SDG 5.1, 8.7

Employees from Morro Agudo

We are committed to curbing any and all violations of human rights in the physical, psychological, cultural and social dimensions, which involve violence, abuse or discrimination, especially involving children and teens. Respecting the rights and value of each individual is fundamental to our business and the relationship with our stakeholders.

We encourage everyone to report any situation of violation of human rights by calling 100, the internal contact number. We recommend partner companies to adopt prevention measures and procedures for handling complaints related to human rights violations. At the same time, we ask our partners to make a commitment to comply with our Social Golden Rules, under penalty of punishment. All our employees receive training about our guidelines, based on our Code of Conduct. GRI 412-2 SDG 16.B

Suppliers

Due to the nature of our business, we deal with a large contingent of outsourced employess (in Peru, this category represents up to 70% of the workforce in local operations). For this reason, the evolution of a strategic partnership is fundamental for better safety, cost and performance management.

In Peru, we began the reclassification of service providers to the mines in order to deepen our relationship based on the issues mentioned above and also seeking innovation. We have already achieved positive results in 2019 and we will continue this work throughout 2020. Regarding safety, for example, we strengthened our policies and developed much more aware suppliers, who proactively report possible accident risks. Meanwhile, in Brazil, the focus during the year was on making the outsourced worker employment contract more flexible, to gain productivity.

The outsourced management system is structured in four pillars (processes, tools, structure and people). There are 25 multidisciplinary fronts in Brazil and 36 in Peru, which work on improving procedures, tools, flows, indicators and greater clarity and definition of roles and responsibilities throughout each stage of the service management process. Thus, we guarantee, in addition to complying with legal obligations, the constant improvement in the quality of services and cost optimizations.

When a report is filed about non-compliance with the requirements related to the impacts on human rights, an investigation process is initiated to look into the facts and take the applicable actions. Sanctions range from fines to termination. For the period covered by this report, no cases of violation of these conditions were registered.

IN SEARCH OF INNOVATION

The closest and long-term relationship with our strategic suppliers allows us to develop innovative solutions for our business that do not depend on the registration of ideas and projects on our formal innovation platforms, such as the Mining Lab.

In December 2019, for example, we signed an agreement with a supplier in Peru to help us develop new technology to replace the blasting process in mines, thereby improving worker safety and the environmental impact.

Another project in progress with a large Brazilian supplier consists of increasing our agility and efficiency in transporting ore and tailings. This is what we call Supply Collaboration, a form of relationship that we want to increasingly foster.

SELECTION CRITERIA

Our criteria for selecting suppliers include environmental and socio-economic conditions, which are:

Environmental Aspect

Compliance with environmental legislation in the countries of operation

ISO 14001 standard

Health, workplace safety and environmental programs

Environmental risk prevention programs

Operating/Environmental Operation Licenses

Federal Technical Registration with Ibama

Socio-economic aspect

Compliance with all laws in the countries of operation (labor, tax, anti-corruption, etc.)

Does not appear on the “Slave Labor Blacklist” published by the Brazilian Ministry of Labor and Employment

Signing of a document based on the SA 8000 standard, including non-use of forced or child labor, providing a safe and healthy working environment for employees’ freedom to associate and non-discrimination of any kind

Evaluation GRI 103-2, 103-3 SDG 8.8

Since 2018, our main suppliers have undergone a quarterly assessment cycle considering four dimensions: performance, health and safety, environment and legal compliance. In 2019, we included inputs and engineering suppliers in these formal evaluations. The dimensions have indicators and weightings that will make up the supplier’s overall score, with safety now given greater predominance than the other dimensions. The sustainability and compliance requirements are disqualifying factors; therefore, they do not fall within the scope of the assessed dimensions.

In the latest cycle, our suppliers underwent a mandatory assessment based on criteria that included contract value and relative importance to the business. Some 127 suppliers in Peru and 250 in Brazil were evaluated. Suppliers that do not meet a minimum score of 7 in the global assessment and do not follow our recommendations for improvement, are substituted after three consecutive cycles with results below expectations. In partnership with the supplier, the contract manager is responsible for preparing a recovery action plan, taking into account each dimension that the supplier does not score as expected, as well as monitoring the execution and the results of the action plan agreed between the parties. During the year, there were no blocked suppliers or contracts terminated for this reason.

In addition, 66% of our suppliers in Brazil have been subjected to a process that assesses their financial health. Monthly and annual assessments are conducted based on a compliance relationship. Since October 2019, upon being approved, 100% of suppliers have gone through a due diligence process. Apart from other requirements, they are checked on more than 250 worldwide lists to verify if there are any involvements that could represent a risk for Nexa. If any risk is identified, we take the necessary measures.

In 2019, 58% of new suppliers were selected and included in the system based on criteria of labor practices and 20% on environmental criteria, human rights and social impacts. We aim to engage 100% of critical suppliers in programs for the prevention and mitigation of social and environmental risks by 2025, and our intention is to anticipate this objective. GRI 308-1, 414-1

Although we do not have in our records any suppliers with operations considered to be at risk for the occurrence of violations of human rights, some of our contracts and purchase orders refer to the theme through specific clauses, which prohibit the use of child, forced or analogous to slavery, in addition to establishing the obligation to consult and comply with the Code of Conduct. Suppliers must also ensure contractually a safe and healthy work environment, freedom to unionize and non-discrimination by gender, race, social class, nationality, religion, physical or mental disability, sexual choice or any other condition of diversity. GRI 407-1, 408-1, 409-1

Supply Chain GRI 102-9, 103-2, 103-3

At the end of 2019, 4,967 companies were registered in our system (2,966 in Brazil and 2,001 in Peru), a smaller number than in the previous year. Our supplier registry covers the most diverse segments: raw material inputs, waste management, environmental management, energy supply, minerals and chemical products, fuels in general, health services, packaging supply, transportation in general, MRO (Maintenance, Repair and Other), facilities and IT, services and maintenance, among others.

We adjusted our procedures for registering, blocking, unlocking, expanding and approving suppliers with the migration to the Ariba platform, always maintaining the priority for suppliers around our units to foster local economic development. Our units are free to purchase non-critical services locally, speeding up the operation and favoring the creation of long-term local ties. We also encourage strategic suppliers with greater interactions with us to open units close to the areas of operation, a practice that has been emphasized in our new project in Aripuanã. At the end of the year, our purchases totaled US$ 1.9 billion, 3% of which were contracted from companies located in the regions where we operate.

In 2020, we will start up the first Supplier Recognition Program, designed to reward those who have significant and recurring involvement with us, in order to generate value and strengthen the spirit of collaboration and partnership. All companies that supplied goods and/or provided services during the period from January 1-December 31, 2019 and represent the total volume transacted in each category (Logistics, Capex, Services, Supplies and Materials) will automatically participate in the awards.

Expenditures with suppliers GRI 204-1

18 Data for 2017 and 2018 revised due to a review of the criteria that define local suppliers. GRI 102-48