Nexa, one of the world’s largest zinc producers, achieved US$ 3 billion of consolidated net revenue in 2022, an increase of 16% over the previous year.
Adjusted EBITDA reached a record amount of US$ 760 million in the year, accounting for an increase of 2% over 2021.
In 2022, Nexa updated and expanded its long-term ESG targets, reaffirming its commitments and ongoing efforts to reduce the carbon footprint, aiming to support the important mission of mitigating global climate challenges.
Nexa ended 2022 with a balanced operating performance, despite the challenging global scenario, with the war between Russia and Ukraine, the volatility of commodity prices and the inflationary pressures that marked the period. The company ended the year with consolidated net revenue of US$ 3 billion, accounting for an increase of 16% compared to 2021, mainly driven by higher zinc prices on the LME (London Metal Exchange). In 4Q22, adjusted net income was US$3 million, and adjusted net income totaled US$187 million in 2022, compared to US$ 195 million obtained in 2021.
“In 2022, we operated with strong financial and operating discipline, despite a very challenging environment. Aripuanã ramp-up continues to progress, and we are pleased to have sold commercial grade concentrates and to inform that Aripuanã has achieved its first revenue in the fourth quarter”, says Ignacio Rosado, CEO of Nexa.
According to Rosado, “we seek to maintain our investments in extending the useful life of our mines, in addition to regular assessments of our projects portfolio. We are committed to disciplined capital allocation and cash flow generation in the short and long term. We are prepared to capitalize on new opportunities in our operations, always striving to add value for all our stakeholders and the communities where we operate”, he concludes.
In 2022, the total production of zinc was 296,000 tons, which represents a decrease of 7.5% compared to the year 2021. On the other hand, total copper production reached 33,200 tons, 12% higher than in 2021; lead production totaled 57,400 tons, 25% higher than the previous year; and silver production reached the 10 million ounces mark, 13% higher than in 2021. Gold production reached 27.2 thousand ounces, compared to 25.5 thousand ounces produced last year, which accounts for an increase of 7%.
Based on this scenario, the company achieved a record adjusted EBITDA of US$ 760 million in the year 2022, compared to US$ 744 million in the previous year. In turn, sales of metallic zinc and zinc oxide totaled 616,000 tons, driven by the sound performance of the company’s smelters and the recovery of the domestic markets, especially in the agribusiness and pneumatic sectors.
In the fourth quarter of 2022, the company’s production performance declined, due to the grade of metal concentration at the Cerro Lindo and El Porvenir mines in Peru. Zinc production totaled 75,000 tons, down 8% compared to the fourth quarter of 2021. Copper production in the period reached 9,300 tons, an increase of 32% compared to the same period of 2021, and 15,700 tons of lead, an increase of 23% compared to the fourth quarter of 2021. Therefore, sales of metals totaled 167,000 tons, a 6% increase compared to the fourth quarter of 2021.
During the year 2022, Nexa updated its ESG program, announcing its new long-term environmental, social and governance commitments, including the carbon footprint. The company plans to achieve “net zero” greenhouse gas (“GHG”) emissions by 2050. Nexa also became the first international-based sponsor partner of the Artemis Project, a social enterprise founded by female entrepreneurs focused on disruptive change in global economic, environmental and social development in mining.
Nexa approves the distribution of US$ 25 million in dividends
The board of directors of the Company approved a distribution of approximatively US$ 25million share premium (“special cash dividend”). This represents approximately a special cash dividend of US$0.188766 per common share, considering 132,438,611 shares outstanding as of December 31, 2022, to shareholders of the Company of record at the close of business on March 10, 2023. The payment is scheduled for March 24, 2023. Nexa may approve an additional dividend payment during the second half of 2023, subject to market conditions and Company’s performance.
Advancement of the Aripuanã mine
Mine operations, which started in July 2022, continue and are currently focused on constantly increasing the plant’s production rate, improving asset reliability and concentration grades. In December 2022, shipments of concentrates within market specifications began, with an increase in sales expected for 1Q23. At the end of 2022, approximately 600,000 tons of ore were available in inventories, which is enough to cover 4.5 months of plant production over the operating evolution period.
In 4Q22, US$ 3 million was invested (CAPEX), totaling US$ 66 million in the year, including the negative currency impact of US$ 5.5 million in 2022. The project’s cumulative CAPEX since the start of construction is US$ 632 million. The current headcount in operations is 577 employees who work for the mine, plant, maintenance, process, environment, health & safety and administrative activities. Of these employees, 27% are women.
In Aripuanã, the company has a qualification program for future professionals operating mines and plants. Nexa hired 66% (142 people) who participated in the qualification program, of which 66% (94) are men and 34% (48) are women.
CAPEX investments are expected to reach US$ 310 million in 2023
Nexa made investments of US$ 116 million in 4Q22, totaling US$ 381 million in 2022. Of this annual amount, US$ 88 million was allocated to expansion projects, mainly driven by Aripuanã for a total amount of US$ 66 million, slightly above the annual guidance, due to the negative exchange rate impact and additional contractual expenses. Sustaining investments totaled US$ 240 million, including US$ 46 million from Aripuanã. Moreover, US$ 40 million was invested in health, safety and environment; US$ 11 million in modernization, information technology and others. Finally, US$ 2 million was allocated to the capitalization of interest net of advances payments for imported materials and tax credits.
In 2023, CAPEX investments are estimated at US$ 310 million. Sustaining investments are expected to reach US$ 268 million, of which US$ 66 million in smelters and US$ 200 million in mining, including US$ 53 million in Aripuanã. Investments in health, safety and the environment will total US$ 26 million in 2023, in addition to US$ 10 million in modernization, information technology and others. Moreover, investments of US$ 7 million are expected in the expansion of projects.
In addition to CAPEX, Nexa plans to invest a total of US$ 110 million in mineral exploration and project evaluation in 2023. Furthermore, US$ 10 million will be invested to improve current operations and US$ 15 million to continue contributing to the social and economic development of communities in the territories where we operate.
The outlook for this year and through early 2024 is based on projections and estimates that are subject to ongoing evaluation of several factors, including, without limitation, metal prices; operating performance; maintenance and input costs; and foreign exchange rates.
The expected zinc production for the year 2023 is 307 to 351 thousand tons; copper production is expected to reach 31 to 36 thousand tons and lead production is expected to reach 56 to 71 thousand tons. Finally, silver production is expected to reach between 9 and 11 million ounces.
Nexa will continue to monitor risks associated with global supply chain disruptions, which may be exacerbated by the Russia-Ukraine war; unusual weather conditions, restrictions related to the COVID-19 pandemic, global recession and potential impact on zinc demand; cost inflationary pressure, metal prices, community protests, political situation and changes in the regulatory framework that may affect operations, among others.