Nexa Resources S.A.

What they do

Nexa Resources operates integrated mining and smelting segments across Latin America. The Mining segment produces zinc, lead, copper, and silver concentrates from mines in Peru and Brazil. The Smelting segment processes concentrates into refined metal, primarily zinc, with operations in both countries. The company also generates and trades electricity for its own use and commercial sales.

Revenue drivers

• Mining segment – zinc concentrate — Primary revenue source; sells zinc concentrate to third parties and to its own smelting segment. Management identifies two unnamed customers as major revenue contributors.
• Smelting segment – refined zinc — Sells refined zinc metal, including alloys, from smelters in Cajamarquilla (Peru) and Juiz de Fora (Brazil). This segment also produces by-products like lead and silver.
• By-product metals – lead, copper, silver — These metals are sold as concentrates or refined products, contributing incremental revenue. Copper and silver are produced in the Mining segment, lead in both segments.
• Electricity sales and other services — Nexa's energy subsidiaries (e.g., Nexa Energy, Campos Novos Energia) generate and sell power, and the company provides freight and insurance services, adding ancillary revenue.

Recent performance

In fiscal year 2025, Nexa reported consolidated results with revenue from external customers split between its Mining and Smelting segments, with the Smelting segment generating the majority of third-party sales. The company reported net income attributable to Nexa shareholders, with a net loss in 2025 compared to net income in 2024. Adjusted EBITDA was positive, though lower than the prior year, reflecting weaker zinc prices and higher costs. Cash flow from operations was sufficient to fund capital expenditures but declined year-over-year.

Strategy

Nexa focuses on operational efficiency, cost reduction, and maximizing value from its integrated mine-to-smelter chain. Management emphasizes exploration to replace reserves and extend mine lives at its Peruvian and Brazilian operations. The company invests in energy self-sufficiency and long-term energy contracts to mitigate power cost volatility. Capital allocation prioritizes sustaining capital and high-return growth projects, including the Aripuanã mine ramp-up. Nexa maintains a conservative financial policy target with a net debt-to-EBITDA ratio below 1.5x.

Risks

• Zinc price volatility — Zinc is the primary revenue driver; a decline in zinc prices directly reduces revenue and profitability.
• Customer concentration — Revenue from two major customers constituted a significant portion of total sales, increasing exposure to their demand and credit risk.
• Operational risks in mining and smelting — Production interruptions due to geological, metallurgical, or processing issues could hurt output and costs.
• Environmental and social license — Permitting, community relations, and tailings management remain ongoing challenges in both Peru and Brazil.

Outlook

Management expects zinc markets to remain volatile, with global supply constraints supporting prices but demand uncertainty from industrial sectors. The company aims to maintain production guidance within its stated ranges for 2026. Capital spending is expected to moderate, focusing on sustaining projects and completing the Aripuanã ramp-up. Nexa will continue to prioritize cash flow generation and debt reduction.