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GRI 102-14

Message from
the CEO

Tito Martins

In this year full of challenges and learning, we were sure that Nexa is following the right path, in line with our strategy”.

The year 2020 presented many challenges caused by COVID-19, requiring Nexa to quickly adapt to this new scenario. Even facing a low predictability of the market, we were able to present sound and sustainable results for the year. Our consolidated net revenue reached around US$ 2 billion, compared to US$ 2.3 billion recorded in 2019, due to the decrease in the average prices of metals on the London Metal Exchange (LME) and of volumes traded. Adjusted EBITDA reached US$ 403 million in 2020, an increase of 15% over the previous year, driven by lower operating costs, reduced expenses with mineral exploration and evaluation of projects, as well as the positive effect of the depreciation of the real against the US dollar.

We were also able to meet production guidance for the year and the metal sales exceeded the projections previously released to the market. In Peru, the mines remained temporarily suspended, for two months, due to the state of national emergency decreed by the national government. However, during the second half of 2020, activities resumed safely, and operations are current working at normal levels. In Brazil, despite the challenges of the pandemic, the mines operated at higher yields, which allowed the company to partially offset the reduced volumes in Peru. In our smelters, we recorded lower production volumes in Cajamarquilla (Peru) due to the restrictions imposed by the pandemic, and in Juiz de Fora (Brazil/MG), due to the adequacy of volumes to market demand. However, the solid performance of the Três Marias (MG) smelter partially offset the production decrease from the other units.

We have overcome the challenges imposed by the pandemic thanks to the major effort and willingness to transform our teams. Our Nexa Way program, which aims to structurally improve our business model and transform our corporate culture, was essential to achieve consistent results in this complex period. With Nexa Way, we added US$ 98 million to EBITDA for this year.

With a unique portfolio of projects, we continue building a path to increase our zinc and copper production in the Americas in the long term. Furthermore, our main project under development in Aripuanã (MT) is advancing well, considering the adjusted schedule, and we should start production in early 2022. A milestone this year was the signing of an agreement with the mining cooperative in the region, mediated by the National Mining Agency (ANM) and in partnership with the Government of the State of Mato Grosso, something unprecedented in the sector. Thus, Nexa granted consent for an area of 516.9 hectares, through a mining permit (PLG), for a period of 2.5 years. The Nexa initiative will allow an illegal activity, which generates high social and environmental degradation, to become a legalized initiative, monitored by the appropriate control bodies, reflecting our commitment to environmental, social and governance (ESG) practices.

During the second half of 2020, exploration activities at the Bonsucesso project were resumed as planned and engineering studies are expected to resume in the first quarter of 2021. Bonsucesso is expected to extend the life of mine of Morro Agudo and use the existing mine facilities of the complex. Magistral engineering studies continue to progress and we expect to advance further detailed engineering and optimization opportunities to mitigate the risk of project execution in 2021. In the fourth quarter, we also restarted exploration activities at the Hilarión project. In addition, the pre-feasibility studies at Shalipayco and Pukaqaqa remain on hold, and Florida Canyon was also placed on hold.

During the pandemic, Nexa allocated approximately US$ 15 million, including donations and operating expenses, to support the municipalities and regions where it is present in Brazil and Peru in the fight against Covid-19. We donated more than 780,000 items to the public health service, including rapid tests, PPE and supplies for the municipalities, in addition to oxygen cylinders, and dozens of hospital equipment for advanced life support, such as respirators, x-rays, among others.

Although provided for in Brazilian law, we decided not to reduce working hours and the fixed remuneration of employees. We maintained jobs and hired 738 people throughout the year, ending the period with 5,349 employees. Our annual climate survey showed that, despite the impacts of the pandemic, our people remain motivated and proud to belong to an increasingly plural and innovative organization.

For socially vulnerable communities, also with the support of Instituto Votorantim, we donated approximately 20,000 food baskets, which benefited more than 14,000 families in Brazil and Peru. Moreover, we provided technical support to municipal health agencies in establishing health protocols, digital health management solutions and telemedicine. The initiatives brought us closer to the communities and further demonstrated our responsibility as co-creators of a legacy in the regions where we operate.

An important commitment we made during the year was with the Women in Mining movement, which seeks to foster gender equality, expanding opportunities for women to participate in mining activities. This initiative represents another step in our goal to build the mining of the future. This means mining that values differences, respects diverse opinions and fosters this plural environment, which encourages inclusion and diversity.

In this year full of challenges and learning, we were sure that Nexa is following the right path, in line with our strategy of growing with responsibility and sustainability, maintaining the excellence of our operations, and helping to build a positive legacy for the communities around our operations. Finally, I would like to thank the Board of Directors for their trust and the dedication of our employees, who are fundamental to overcome this challenging moment.