Nexa receives funding from the Brazilian government for decarbonization of the economy

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 across its value chain, a spokesperson told Fastmarkets on Friday, April 19 .

“In addition, we started to see similar positioning among some customers in the Brazilian market,” the spokesperson said. “We are consolidating our data to better understand the impact and value of these initiatives to the market.”

Agreement linked to improvement of environmental indicators

The agreement, BNDES’ first credit initiative linked to environmental, social and governance (ESG) criteria in the mining sector, 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’, which recognizes efforts to reduce greenhouse gas emissions. In addition, the company has committed to developing a comprehensive socio-environmental responsibility policy with an emphasis on education and diversity, and to obtaining social responsibility certification for its operating unit in Três Marias, Minas Gerais state.

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

This financing 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 the reduction of carbon emissions.

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 the Brazilian industry is imperative for BNDES to achieve its goal: improving the lives of future generations. promoting economic, social and environmental development.

“This is a priority agenda for the mining industry, which faces the challenge of meeting the growing demand for strategic minerals for the energy transition, decarbonization and food security, and social development of communities in a safe, environmentally sustainable way in which they live. it works,” Gordon said through a spokesperson, adding that there are programs specifically designed for this purpose, such as BNDES Crédito ASG and the Novo Fundo Clima, whose resources have been increased this year to 10.4 billion Brazilian Reais and new have been given conditions for green financing. project.

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

Nexa set its 2024 companywide zinc production outlook at 323,000-381,000 tonnes, up from 333,000 tonnes in 2023. 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 will be fully ramped up in 2024

In February 2024, Nexa Resources confirmed that the Aripuanã zinc-lead-copper mine will be ramped up in mid-2024, assuming a 6% increase in zinc production this year compared to 2023.

On the other hand, Nexa announced in March the suspension of its zinc-lead mining operations in the Morro Agudo complex in the southeastern Brazilian state of Minas Gerais. In 2023, the Morro Agudo mine produced 23,000 tons of zinc and 8,300 tons of lead. The complex produces approximately 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 active in the mining and metallurgy segments for more than 65 years, with operations in Brazil and Peru and offices in Luxembourg and the United States. The company currently has eight operations across 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 rated zinc special high grade (SHG) minus 99.995% ingot premium, ddp Midwest US on Tuesday, April 16 at 16-19 cents per lb, down 2.13% from 16.75-19 cents per lb on 9 April. Fastmarkets zinc analyst James Moore noted that adjustments to the supply outlook have reduced the expected 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 based on production cuts and extensive maintenance by smelters in China. But disruptions have also been noted at smelters elsewhere. South Korea’s Young Poong Seokpo smelter is operating at reduced capacity. In Europe, we have postponed the expected restart of Nyrstar’s Budel smelter from mid-April to the end of April, taking into account reduced production from Boliden due to strikes in Finland and some of Odda’s expansion,” said Moore.

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