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Social and Relationship Capital
Stakeholder engagement
We continuously work toward expanding our relationship with all stakeholders, to maintain the sustainable growth of our business and to maintain an ongoing, open and transparent dialogue with each stakeholder impacted by our business. We consider the most relevant stakeholders that have the greatest effect on our operations and strategy, as well as the greatest influence on our business. These are groups made up of shareholders and investors, communities, employees, and customers. However, we also look at banks, suppliers, industry associations, government authorities, regulatory agencies, third-sector organizations and the press with equal respect and consideration.
We want to be increasingly closer to these groups, by promoting constant dialogue through our participation in forums and sectorial meetings, holding events with our business partners, and promoting meetings with the communities surrounding our operations and their leaders to gather suggestions and complaints, clarify doubts, and provide them with information about our projects under way. We believe that this proximity provides the co-creation of a relevant long-term legacy.
7Brazilian Mining Institute (Ibram); Federation of Industries of the State of Minas Gerais (Fiemg); Federation of Industries of the State of Mato Grosso (Fiemt); Peruvian Mining Society; Union of Extractive Industries of Minas Gerais (Sindiextra); Institute of Non-Ferrous Metals (ICZ); Women in Mining (WIM); Sociedad Nacional de Minería, Petróleo y Energía (SNMPE); Comité Setorial Minero; GRI 102-13

Social Management
MATERIAL TOPIC GRI 103-2, 103-3 SDG 11.6, 13.2

We seek an ever closer, transparent, and constructive relationship with society. We aim to be able to create a positive and well-structured legacy with the communities where we operate, promoting positive transformations for local development, within a harmonious environment and based on respect and empathy.

In 2020, faced with the pandemic, we redirected our efforts, human resources and investments to support municipalities and communities in combating Covid-19. Our capacity to respond to humanitarian emergencies has further strengthened our ties with communities. In supporting municipalities against the coronavirus, we operate on four major fronts: 1) rapid response – donations of healthcare supplies and equipment to reinforce speedy care, as well as socio-economic assistance to families in situations of vulnerability; 2) technical advisory to public policymakers in the crisis contingency plan; 3) training and assisted implementation of health-related protocols for municipal health teams; 4) encouraging community surveillance groups in educational activities and preventive campaigns.

Additionally, we were able to resume some of the planned social projects in our social investment portfolio, with the appropriate adjustments for distancing, and realigned to contribute toward mitigating the effects of the crisis. Priority was given to economic development projects (income generation for small-scale farmers and local entrepreneurs); childhood and youth – especially in education; public management and social participation; and we also maintained several socio-environmental projects.

In addition to the investments earmarked for combating Covid, Nexa’s social investments — whether through its own funds, incentive programs or fundraising efforts — totaled US$ 8.8 million in the year, a 39.3% reduction compared to 2019. During the period, 132 projects were sponsored in 17 locations in Brazil and Peru, benefiting more than 20,000 people. GRI 203-1, GRI 413-1 ODS 4.4, 8.6, 10.2

Social actions took place in parallel with our internal restructuring. This was the first year in which we worked under a General Social Management Department, within the Sustainability Directorate, which required reorganization from the viewpoint of priorities, definition of scope, roles and responsibilities of the teams in Brazil and Peru. This restructuring involved a strategic realignment and a review of social management procedures, preparing Nexa to fulfill its aspiration and social role.

Local Economic Development Axis

This aims to contribute toward sustainable economic development of the territories, through the enhancement of their local resources, qualification of people, and protection of the environment.

Vicuña Chain

The project aims to improve the sustainability and productivity of vicuña-breeding for 500 members of the Ticlacayán community, developing their technical–production capacities, management, promoting transformation and increasing the added value of the products.

Community in Action

The Community in Action Project, which began in 2019, offers individual consultancies and training for 30 formal and informal entrepreneurs from Juiz de Fora and vicinity, aimed at contributing toward the strengthening of socio-emotional skills and entrepreneurial behavior to increase income. With a focus on strengthening local entrepreneurs and identifying new ones, in 2020 it prioritized the monitoring of the evolution of sales, bootcamp, individual consultancies, finances, management, and intense support in digital marketing and sales through social media.

Qualification

With a similar purpose, the QualificAção project took professional training to 40 youths and adults in Aripuanã, combining socio-behavioral and technical training for inclusion in the job market. In 2019, a talent bank was consolidated and the employability network was activated for selection processes. With a focus on increasing employability, modules on emotional intelligence, future work and customer service were taught in 2020, and behavioral profile tests were given. This initiative had the support of volunteers, simulating job interviews and creating a LinkedIn profile.

Public management and social participation Axis

It seeks to encourage social participation, not only strengthening citizenship and the role of civil society but also encouraging the improvement of public management to make it more effective in the development of public policies.

2020 Social Agenda

The aim was to create and strengthen community networks in the regions where the company operates. The initiative aims to apply groups and other forms of collective online communication as a method of expanding social participation and fighting the pandemic in the municipalities of Juiz de Fora, Três Marias, Paracatu, and Vazante, in Minas Gerais, as well as Aripuanã in Mato Grosso, where the mining company is present. Our proposal was to enhance the participation of the existing community groups and committees in discussions and multiplication of collective actions to prevent Covid-19. The program is based on three pillars of action: collective construction, with online meetings, assignment of responsibilities, and support for articulation; communication and awareness-raising through informative materials; community networks and post-pandemic networks, with plans to produce and share content on the importance of collective community work and to stimulate debate on the future of the community after the pandemic, constructing a vision of the future and underscoring the importance of networking in territorial development.

Dialogue! Três Marias

In just three months, the “Dialoga! Três Marias” program — an initiative spearheaded by Nexa in partnership with Instituto Votorantim and the NGO Politize!, gathered more than 200 people from Três Marias, who debated ideas and solutions for building the town’s future after the novel coronavirus pandemic. As a result, the project held 13 online meetings to discuss the future of the municipality, which resulted in the construction of eight sets of public policies in the areas of education, health, economy, culture, tourism, citizen participation, vulnerable populations, and the role of the state.

Volunteering – We Are Everyone

Present in 10 municipalities in Brazil and Peru, the Somos Todos (“We Are Everyone”) program has put in 40,000 hours of volunteer service since 2016, benefiting more than 45,000 people. Our volunteering program continues in a broad-based way and contributes toward creating a legacy jointly with the community and as a means of support for initiatives that comprise the four strategic axes of our social management. It is aimed at promoting social participation and developing local networks and alliances, thereby providing dialogue and greater engagement of communities and businesses for local sustainable development.

In this challenging year, strongly impacted by the pandemic, the company not only changed the focus of its initiatives, but also adopted measures to contribute to the fight against Covid-19. Accordingly, hundreds of masks were produced together with the communities in which Nexa operates, and more than 18 tonnes of food as well as more than 3,000 cleaning/hygiene products were donated, which benefited 701 families in situations of high social vulnerability. The volunteer-work initiatives added up to 10,089 hours of dedication, which mobilized 1,571 employees and their families (10.8% workforce engagement), directly benefiting 17,000 people.
Employee from Atacocha

Social and Environmental Axis

These initiatives aim to contribute toward improving the water quality and availability, solid waste management, and environmental health conditions.

Water management in Chavín and Topará

To meet the water consumption needs for residential and industrial use in the cities of Chavín and Topará (vicinity of Cerro Lindo), a set of activities was deployed to improve efficiency in the management of water resources. These actions include efforts to improve water catchment in high-lying areas, increase water storage capacity, and obtain public support for investments in water infrastructure and access to basic services.

Employee from Vazante

People taking care of water

In partnership with BNDES (Brazilian Development Bank), the project combines the fencing of water spring areas and footpaths in the Santa Catarina River Basin with community and school environmental education, in the municipality of Vazante. The environmental education front (which includes the making a scale model of the river’s drainage basin, with sixth-grade students from state and municipal public schools, and edu-communication with eighth-grade students) was directly impacted by the pandemic. But we continue to forge ahead with the fencing of water springs and raising awareness among rural producers in Vazante, and we have already expanded the program to Morro Agudo (Paracatu). The goal is to make this a program that encompasses Nexa as a whole.

Good Water

In this support project to adjust the sanitation conditions in the municipalities in Brazil and Peru where we operate, a diagnosis of the sanitation conditions (water and sewage) was performed, and a technical registration of households located in the prioritized areas is currently under way. We also plan to develop projects, compile construction manuals and operate sustainable solutions, as a tool to support municipal public management and a means to foster implementation.

Young scientists

A project designed to train young people, children of company employees and of service providers, aged 12 to 16 years old), with a focus on water management. Around 150 people were involved, including young scientists, the Nexa team, universities, partner companies, and the community. The young people participated in the Rio São Francisco monitoring campaign, and presented their final papers at the 1st Young Scientists Convention, open to the community.

Support in the project to adapt the sanitation conditions in the municipalities of Brazil and Peru where we operate
Childhood and Youth Axis
Our mission is to contribute to the social development of children and youths, to turn them into lead players and make them socially participative, in addition to being trained and qualified for study and work. To do so, we seek to strengthen the protection network and social participation.
Social Project in Cerro Pasco

Educational Networks

The project seeks to provide educators with a broader view and training. Early in the project, we selected a group of specialists in each location, drawing a baseline and contacting the schools. Due to the pandemic, we developed a proposal to adapt the initial scope, considering the educational needs of school managers and teachers vis-à-vis the new reality. We developed activities through online platforms and offered an emotional support program for teachers. In all, 241 virtual sessions were held, attended by 109 parents and educators, and we identified 26 proposals for good practices.

Youth Art and Culture – A Banca (The Newsstand)

The Youth Art and Culture Project is a social and economic cultural inclusion program aimed at young people in the Igrejinha neighborhood of Juiz de Fora (MG), with the strategy of using art and urban culture for social integration, empowerment, stronger self-esteem and identity, youth entrepreneurship, and access to the city to exercise citizenship and rights. In 2020, young people aged 10 to 18 participated in eight online workshops/meetings and three thematic webinars to discuss solutions to combat Covid-19. Since 2018, the project has served more than 300 children and adolescents who took part in the ongoing workshops and collective activities, impacting around 50% of the stakeholders in this age group in this neighborhood that is marked by high social vulnerability.

Decommissioning
MATERIAL TOPIC GRI 103-2, 103-3 SDG 11.4

Our commitment to the mining and industrial facilities that we operate in Brazil and Peru is not limited to the operating time of our mines, but rather extends to an appropriate closing of activities, aimed at creating a legacy for the surrounding community.

We consider this topic to be relevant and part of our business strategy, so much so that it is accompanied by internal policies and involves everyone from the operational units to the Management Team. All of our operations have plans for future use and decommissioning based on the most current technical references and best market practices. These plans are even more thorough and committed than the current legal requirements.

One of our major differentiators is in the planning of closure/decommissioning even before the start of operations, as in the most recent case of Aripuanã, which will have the plan completed even before the start of activities, scheduled for 2021. We revised our decommissioning plans in Brazil (2017) and Peru (2018–2019), with disbursements expected to exceed US$ 92 million by 2022. Thus, we achieved our goal of having 100% of our plans updated. We have also established governance to ensure that all stages of the plan will move forward as planned.

Decommissioning plans are documents that contain technical guidelines for safe, complete and efficient deactivation, and include information on economic, environmental and social actions. Gathering these data in a formal document creates a sense of urgency among the population, which encourages the role of the community and public authorities that may not have been achieved during the mine’s operation phase.

Commercial

The consolidated commercial strategy (introduced in 2019) of maintaining Nexa’s Leadership in Latin America and becoming a well-known and globally present brand through direct sales, partners and distributors, proved to be mature and resilient in the face of the challenges brought on by the global novel coronavirus pandemic. Decreasing our exposure to the volatility of global markets helped to maintain a more continuous demand, by trading with partners according to the level of economic activity in the countries in virtue of Covid-19. To this end, the sales planning team revisited product relocation strategies, considering locality and customer demand.

The initiatives that we have been developing to expand relationships with our customers, offering other product formats, have resulted in new orders from Asia and have helped keep sales stable. Currently, we offer a product portfolio that goes beyond the 25-kg ingots (the standard for this commodity priced on the London Metal Exchange – LME), and we add services that develop and retain the market. Moreover, we customize chemical/physical specifications and identification marks for some of our customers. GRI 102-6

Our portfolio includes alloys for the Continuous Galvanizing Grade (CGG) and General Galvanizing (GG) segments, with varying levels of aluminum plus other elements such as magnesium, antimony, bismuth and nickel, in addition to the various Zamac foundry alloys. We also market high-quality zinc oxide in several chemical compositions, serving the pneumatic, agribusiness, and chemical markets, among others. Nexa is a pioneer in the Brazilian market by earning the oxide quality seal, certified by the International Zinc Association (IZA). In 2020, we also developed active zinc oxide, which is already being marketed and will expand our participation in the Brazilian domestic market.

Sales of co-products also played a major role in 2020. We set a new record in sales of Zincal 200, an agricultural limestone from the Morro Agudo unit, and in sales of Waelz Aggregate from the Juiz de Fora unit. Plus, we were able to increase the market for secondary products, such as brass oxide, batteries, among others. These actions are extremely relevant for the company, because in addition to bringing profitability to our operation, they are aligned with the Company’s sustainability strategy and ESG aspects.

Social Project in Três Marias

Encouraging galvanization

The online environment, widely used because of the pandemic, favored several initiatives to foster the use of zinc, especially in galvanizing, a market that includes sheets for automobile production and wide-ranging use in infrastructure, such as metal structures in the construction industry, transmission line towers, and cell phone towers, among others. For example, we adopted the galvanized metal structure in the construction of Aripuanã, which will represent lower maintenance costs over time.

In this context and with the support of the Non-Ferrous Metals Institute (ICZ) and the International Zinc Association (IZA), we held a university challenge, called the “Galvanization Battle”, focusing on innovation and sustainability. The contest sought new ideas and projects, supported by 18 Brazilian universities, capable of identifying or indicating what can or should be galvanized in society. The winning project was submitted by students at the Lorena School of Engineering (University of São Paulo) with the theme “Galvanization of agricultural tools”, which aims to reinforce and preserve tools — mainly cutting tools — in rural settings, which suffer from problems of corrosion due to their constant use.

Logistics and Procurement
GRI 102-9, 103-2, 103-3

The logistics team made major advances in safety, competitiveness, and differentiated service to customers. In this regard, we develop processes based on technology and cost reduction.

Safety protocols relating to Covid-19 were implemented at the access controls of the units, in addition to weekly examinations for drivers, temperature screening and routine committees to evaluate the best solutions. Additionally, we reduced the number of environmental, personal and property accidents in the logistics area by 21%.

The integration of the systems allowed the sales, planning and logistics teams to share a single database, making these themes more visible to the teams, for streamlined and secure decision making. Furthermore, the use of automated processes increased the reliability of information, improving customers’ perception of quality, which was noticed through the reduced number of complaints. We also started to use electronic documents, without the need for hard copies, thus reducing costs and response time. We increased the number of partnerships with shipping companies by 40%, thus flexibilizing our ability to meet customer demands. Adopting a new digital platform for hiring shipping services has ensured the necessary transportation resources for record-breaking limestone shipments.

Authorized Economic Operator (AEO) certification has allowed Nexa to keep up its competitiveness on the foreign market, while an internal Nexa project expanded the capture of gains in the synergy of shipping and supply flows, as well as a reduction in fuel consumption.

Suppliers GRI 102-9

Through the Supplier Management Program, we establish ongoing dialogue with suppliers, who support us in this mission and strive for the fulfillment of our values. Regardless of the product offered or the service provided, all our suppliers must be committed to seeking the best socio-environmental practices, using natural resources responsibly and respecting the rights of all employees.

At the year’s end, our registered supplier base had 8,041 companies (4,561 in Brazil and 3,480 in Peru), from a wide range of segments: inputs, raw materials, waste management, environmental management, energy supply, minerals and chemicals, fuels in general, health services, packaging supply, transportation in general, MRO (Maintenance, Repair and Other), facilities and IT, services, and maintenance, among others. At the year’s end, our purchases totaled US$ 1 billion, 2.7% of which were contracted from companies located in the regions where we operate.

Faced with this new scenario, we had to expand our supplier base, optimize management, and seek innovations and new forms of relationship as well as alternative products to replace those that became unavailable due to the pandemic. In the case of zinc concentrate (a key input for our operation), it was necessary to engage alternative suppliers, bringing in material from Africa, Spain, and Portugal. In addition to developing and training new suppliers, we also share our new health protocols and monitor compliance. For those who needed to be at the units in person, we provided rapid testing to avoid contagion at our facilities. These actions made it possible for us to avoid disruption in supply during this crisis. GRI 102-10

Selection and hiring

Suppliers undergo an approval and due diligence process to verify whether they meet the pre-established supply criteria, to generate greater security and confidence in the buyer–supplier relationship. There are two steps to identifying health risks: Standard Due Diligence, which is the standard process for screening purposes for registering or remaining in the Nexa vendor database, and Advanced Due Diligence, a process applicable to suppliers identified as high risk or extremely high risk, according to the criteria established by the Management Standard. Once the level of risk is confirmed, suppliers in these categories can only be engaged on an exception basis, through justification and approval by the person in charge of the area and continuous monitoring throughout the contract.

In 2020, we reviewed the supplier management process, based on which we relayed the documents requested for registration and approval according to the intended supply, and reinforced compliance with Nexa’s Code of Conduct and Sustainable Supply Policy. We stepped up the due diligence process, providing greater transparency, standardization and compliance with our policies and requirements as well as providing training on the subject. We also applied a sustainability survey to map out our suppliers’ profiles concerning requirements relating to: combating corruption, transparency in relations and information, relations with competitors, inclusive management, relations with suppliers and the community, general environmental, environmental certifications, and specific issues such as waste disposal. GRI 102-10

With the aim to extend the concept of plurality to our supply chain, we conducted a survey to diagnose the maturity of this topic among our 162 largest suppliers in Brazil and Peru. We found that 62% have less than 20% women in their workforce, only 34% have LGBTQIA+ inclusion policies, and 45% meet the minimum quota of PWDs by law. Based on such data, we will develop actions to increase our suppliers’ level of engagement regarding these matters.

Supplier Expenses GRI 204-1
Employees from Juiz de Fora

Service providers

Due to the nature of our business, we deal with a large contingent of service providers, particularly in Peru, where this category accounts for up to 76% of the local workforce. This means that the challenge faced with the pandemic was even greater in that country. Therefore, it was essential to swiftly implement all the necessary protocols to return to job activities in a safe manner, in partnership with the service providers.

In addition to efforts related to combating Covid-19, in Peru we continued to reclassify service providers from the mines, aimed at deepening our relationship and seeking innovation. We also strengthened our policies and developed more conscious suppliers, who proactively report possible risks of accident.

Our third-party management system is supported on four pillars: processes, tools, structure, and people. In our Third-Party Management Program, we have 25 multidisciplinary fronts in Brazil and 36 in Peru, all of which work on improving procedures, tools, flows, and indicators, as well as providing clearly defined roles and responsibilities throughout each stage of the services management process. Thus, we ensure compliance with legal obligations, ongoing improvement in the quality of services, and optimization of costs.

In case of complaints of non-compliance with the requirements relating to the impacts on human rights, an investigation process is initiated to ascertain the facts and take the applicable measures. Sanctions range from fines to contractual termination. In the period covered by this report, no case of violation of these conditions was recorded.

Evaluation and continuous monitoring
GRI 103-2, 103-3 SDG 8.8

Since 2018, our main suppliers have undergone periodic evaluations, within our Supplier Assessment Program (IAF), in which four dimensions are verified: performance, health & safety, environment, and legislation. Sustainability and compliance requirements that disqualify suppliers, and therefore do not fall within the scope of the assessed dimensions.

Supplier assessment is now performed every four months (previously it was performed on a quarterly basis), which made it possible to include more fronts: Services, Capex, Engineering, Logistics and Supplies.

In the last cycle, 144 suppliers in Peru and 360 suppliers in Brazil were assessed. Suppliers who do not reach the minimum score of 7.8 in the overall assessment and do not follow our recommendations for improvement are replaced after three consecutive cycles with results below expectations. The contract manager is responsible for preparing a recovery action plan, considering each dimension in which the supplier underperforms, in partnership with the respective supplier, and monitors the execution and the result of the action plan agreed between the parties.

In 2020, 54% of new suppliers were selected and included in the system based on criteria of labor practices, human rights, and social impacts, plus 13% on environment-related criteria. Our target is to engage 100% of critical suppliers in programs for the prevention and mitigation of socio-environmental risks by 2025, and we fully intend to achieve this goal. GRI 308-1, 414-1

During the contract period, suppliers also began being monitored according to the criteria available in a Nexa risk matrix, which corresponds to tracking their assessments throughout the cycles or a scorecard for material suppliers, risk presented on approval, financial risk, and accidents reported.

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, part of our contracts and purchase orders refer to the topic through specific clauses that prohibit the use of child labor or forced/compulsory labor, in addition to establishing the obligation to consult and comply with the Code of Conduct. Suppliers must also ensure a safe and healthy work environment, freedom of union association, and non-discrimination due to gender, race, social class, nationality, religion, physical or mental disability, sexual option, or any other condition of diversity, in accordance with our sustainable supply policy. GRI 407-1, 408-1, 409-1

54% of new suppliers were selected and included in the system based on criteria of labor practices, human rights, and social impacts