Nexa receives funding from Brazil government for decarbonization goals

This move aligns with global demands for sustainability in the mining sector and sets Nexa on a path toward achieving net zero emissions by 2050

Zinc producer Nexa Resources will receive 200 million Brazilian Reais ($38.47 million) from the Brazilian Development Bank (BNDES) to implement decarbonization practices, in response to global consumer interest in sustainability.

The Luxembourg-based company, which has operations in Brazil and Peru, has seen significant interest from the international market, especially in Europe and Asia, in reducing carbon emissions in the value chain, a spokesperson told Fastmarkets on Friday April 19. 

“Furthermore, we began to see similar positioning from some customers in the Brazilian market,” the spokesperson said. “We are in the process of consolidating our data to better understand the impact and value of these initiatives for the market.” 

Agreement linked to improvement of environmental indicators

The agreement, which is the first credit initiative from BNDES tied to environmental, social and governance (ESG) criteria in the mining industry, is directly linked to the continuous improvement of the company’s environmental and social indicators, according to the announcement on Thursday April 18.

Nexa is focused on achieving the gold seal of the “Brazilian GHG Protocol Program,” recognizing efforts to mitigate greenhouse gas emissions. Additionally, the company has committed to developing a comprehensive socio-environmental responsibility policy with a focus on education and diversity, and to obtaining a social responsibility certification for its operational unit in Três Marias, in the state of Minas Gerais. 

Nexa aims to achieve net zero by 2050, with interim targets of a 20% reduction in its direct emissions (Scope 1) by 2030 (approximately 52,000 tonnes of carbon dioxide equivalent (CO2e)) and emission neutrality by 2040. This effort is in line with global decarbonization and energy transition objectives, also aligning with Brazil’s New Industrial Policy and the National Climate Change Policy (PNMC). 

This funding marks the second time Nexa has secured ESG-linked financing. In October 2023, the company announced its first financing of this type, a $320 million revolving credit facility (RCF) tied to CO2e emissions reduction.  

The director of productive development, innovation and foreign trade at BNDES, José Luis Gordon, told Fastmarkets on Friday April 19 that encouraging the adoption of best ESG practices by Brazilian industry is imperative for BNDES to fulfill its purpose of improving the lives of future generations, promoting economic, social and environmental development. 

“This is a priority agenda for the mining industry, which has the challenge of dealing with the growing demand for strategic minerals for energy transition, decarbonization and food security, in a safe, environmentally sustainable way, promoting the social development of the communities in which it operates,” Gordon said via a spokesperson, adding that there are programs specifically designed for this purpose, such as BNDES Crédito ASG and the Novo Fundo Clima, which this year had its resources increased to 10.4 billion Brazilian Reais and received new conditions for green project. 

BNDES is the Brazilian government’s main long-term financing and investment instrument to promote Brazilian social and economic development. 

Nexa set its company-wide 2024 zinc production outlook at 323,000-381,000 tonnes, compared with 333,000 tonnes in 2023. The full-year 2025 guidance was 326,000-381,000 tonnes, growing to an expected 330,000-378,000 tonnes in 2026.

Nexa’s zinc-lead-copper mine to finish ramping up in 2024

On February 2024, Nexa Resources confirmed expectations that its Aripuanã zinc-lead-copper mine will conclude ramping up by mid-year 2024, anticipating 6% higher zinc production this year over 2023. 

On the other hand, in March, Nexa announced the suspension of its zinc-lead mining operations at the Morro Agudo Complex in the southeast Brazilian state of Minas Gerais. In 2023, the Morro Agudo mine produced 23,000 tonnes of zinc and 8,300 tonnes of lead. The complex produces around 1,650 tonnes of zinc and 390 tonnes of lead per month, accounting for 5% and 6% of Nexa’s zinc and lead production respectively.

Nexa Resources has been in operation for over 65 years in the mining and metallurgy segments, with locations in Brazil and Peru and offices in Luxembourg and the United States. The company currently has eight operations distributed between Brazil and Peru – three refineries and six mines – including the largest underground zinc mine in Peru (Cerro Lindo) and the largest zinc refinery in the Americas (Cajamarquilla), accounting for 4% of global zinc production, according to its website. 

Fastmarkets assessed the zinc special high grade (SHG) min 99.995% ingot premium, ddp Midwest US at 16-19 cents per lb on Tuesday April 16, down by 2.13% from 16.75-19 cents per lb on April 9. Fastmarkets zinc analyst James Moore noted that adjustments to the supply outlook have narrowed the anticipated surplus in the refined market this year to around 100,000 tonnes. 

“We have lowered our outlook for metal production in the current quarter. This is largely premised on production cuts and extended maintenance by smelters in China. But disruptions have been noted at smelters elsewhere. South Korea’s Young Poong Seokpo smelter is running at reduced capacity. In Europe, we have pushed back the anticipated restart of Nyrstar’s Budel smelter from mid-April to end-April, while factoring reduced output from Boliden due to strikes in Finland and part of Odda’s expansion,” Moore said.

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