Nexa Resources S.A. (NEXA): Business Model Canvas [11-2024 Updated]

Nexa Resources S.A. (NEXA) stands as a prominent player in the mining industry, specializing in the production of zinc and copper. With operations across Peru and Brazil, Nexa’s business model is intricately designed to leverage key partnerships, efficient operations, and sustainable practices. This blog post delves into the essential components of Nexa's Business Model Canvas, highlighting how the company creates value while navigating the complexities of the mining sector. Discover the strategic elements that drive Nexa's success and its commitment to responsible mining.

Nexa Resources S.A. (NEXA) - Business Model: Key Partnerships

Votorantim S.A. (majority shareholder)

Votorantim S.A. holds a significant stake in Nexa Resources, owning approximately 64.68% of its equity. This partnership provides Nexa with not only financial backing but also strategic support in operational management and market positioning.

Local mining and smelting service providers

Nexa collaborates with various local mining and smelting service providers to enhance operational efficiency. These partnerships facilitate access to specialized services and technologies that are critical for mining operations. For example, Nexa's operations in Brazil and Peru rely on local contractors for services such as maintenance, logistics, and environmental management.

Government and regulatory bodies

Nexa maintains robust relationships with government entities and regulatory bodies in the regions where it operates. This partnership is essential for ensuring compliance with local mining laws and regulations. For instance, Nexa has received tax incentives from local governments, which significantly reduce operational costs. The effective tax rate for Nexa was reported at 24.94%.

Strategic alliances with other mining companies

Nexa has formed strategic alliances with other mining companies to share resources and technology, which improves operational efficiencies. These alliances also help mitigate risks associated with mining operations. The collaborative efforts often lead to joint ventures that enhance exploration and production capabilities.

Suppliers of raw materials and energy

Nexa relies on a diverse range of suppliers for raw materials such as zinc and copper concentrates, as well as energy sources. In 2024, the company reported an increase in raw materials costs, with raw materials and consumables used amounting to approximately USD 858.3 million for the nine-month period ended September 30. The company also engages in energy forward contracts to stabilize energy costs, with a reported balance of 503,743 MWh under contract as of September 30, 2024.

Partnership Type	Details	Financial Impact
Votorantim S.A.	Majority shareholder	64.68% equity ownership
Local Service Providers	Contracted for maintenance and logistics	Access to specialized services
Government Bodies	Regulatory compliance and tax incentives	Effective tax rate: 24.94%
Strategic Alliances	Joint ventures for resource sharing	Improved operational efficiencies
Suppliers of Raw Materials	Sources for zinc and copper concentrates	Raw materials cost: USD 858.3 million (2024)
Energy Suppliers	Contracts for energy supply	Energy forward contracts: 503,743 MWh

Nexa Resources S.A. (NEXA) - Business Model: Key Activities

Mining operations in Peru and Brazil

Nexa Resources operates three polymetallic mines in Peru and two in Brazil. The mining operations generated net revenues of approximately USD 995,991,000 for the nine-month period ended September 30, 2024. The cost of sales for this segment was USD 755,261,000, resulting in a gross profit of USD 240,730,000.

Smelting and refining of metals

The company has a significant smelting operation with two zinc smelters in Brazil and one in Peru. For the nine-month period ended September 30, 2024, the smelting segment reported net revenues of USD 1,450,370,000 with a cost of sales amounting to USD 1,296,924,000. This resulted in a gross profit of USD 153,446,000.

Exploration for new mineral resources

Nexa has allocated USD 46,773,000 for mineral exploration and project evaluation during the nine-month period ended September 30, 2024. This investment is critical for identifying new mineral resources to sustain future operations and growth.

Environmental management and compliance

Nexa Resources emphasizes environmental management as part of its operations. As of June 2024, the company has drawn BRL 200,000,000 (approximately USD 40,030,000) from an ESG-linked credit line aimed at improving environmental and social indicators. Compliance with environmental regulations is integral to maintaining operational licenses and community relations.

Financial management and risk assessment

In terms of financial management, Nexa has engaged in several financing operations, including a bond offering of USD 600,000,000 at a 6.75% interest rate for a 10-year term. The company also entered into a note agreement for EUR 27,917,000 (approximately USD 30,244,000). Effective risk assessment strategies are critical for navigating the volatility in commodity prices and foreign exchange fluctuations, which significantly impact financial results.

Key Activity	Financial Metric	Amount (USD)
Mining Operations	Net Revenues	995,991,000
Mining Operations	Cost of Sales	(755,261,000)
Mining Operations	Gross Profit	240,730,000
Smelting Operations	Net Revenues	1,450,370,000
Smelting Operations	Cost of Sales	(1,296,924,000)
Smelting Operations	Gross Profit	153,446,000
Exploration	Investment in Exploration	46,773,000
Environmental Management	ESG-linked Credit Line	40,030,000
Financial Management	Bond Offering	600,000,000
Financial Management	Note Agreement	30,244,000

Nexa Resources S.A. (NEXA) - Business Model: Key Resources

Mining and smelting facilities

Nexa Resources operates multiple mining and smelting facilities, including:

• Three polymetallic mines in Peru.
• Two polymetallic mines in Brazil, including the Aripuanã mine.
• A zinc smelter in Peru and two zinc smelters in Brazil.

As of September 30, 2024, Nexa's property, plant, and equipment were valued at approximately USD 2.226 billion .

Skilled workforce and technical expertise

Nexa Resources employs a skilled workforce essential for mining and smelting operations. As of the latest reporting period, the company incurred employee benefit expenses totaling USD 206.4 million for the nine months ended September 30, 2024 . This indicates a commitment to maintaining a proficient and technically skilled workforce capable of operating complex mining and processing technologies.

Financial resources and capital investments

Nexa has a robust financial structure with significant capital resources. As of September 30, 2024, total loans and financings amounted to USD 1.863 billion . Key recent financing activities include:

• A bond offering of USD 600 million in April 2024, at an interest rate of 6.75% for a term of 10 years .
• Debenture issuance amounting to BRL 650 million (approximately USD 130 million) .

Mineral reserves and resources

Nexa Resources holds significant mineral reserves and resources, which are critical for its mining operations. The company has reported substantial reserves of zinc, copper, and other minerals across its mining sites. As of the latest reports, Nexa's mineral resources are categorized as:

• Proven and probable reserves of zinc and copper across its various mines.
• Continued exploration activities to enhance resource estimates .

Technological systems for mining and processing

Nexa employs advanced technological systems for efficient mining and processing operations. This includes:

• Use of mechanized underground and open-pit mining techniques.
• Implementation of state-of-the-art smelting technologies in its facilities.

The company invests in technology to optimize production and reduce environmental impact, contributing to its operational efficiency .

Nexa Resources S.A. (NEXA) - Business Model: Value Propositions

High-quality zinc and copper production

Nexa Resources S.A. specializes in the production of high-quality zinc and copper, crucial metals in various industries, including construction and electronics. For the nine-month period ending September 30, 2024, Nexa reported net revenues of USD 2,025.6 million, an increase from USD 1,943.4 million in the same period of 2023. The company's production metrics reflect a strong output, with significant contributions from their mining operations in Peru and Brazil.

Sustainable and responsible mining practices

Nexa is committed to sustainable mining practices, which are integral to its operations. The company emphasizes reducing environmental impact through responsible resource extraction and waste management. As part of its sustainability goals, Nexa has set targets for greenhouse gas emissions, aligning its operations with global environmental standards. In 2024, Nexa secured a BRL 200 million (approximately USD 40 million) ESG-linked credit line from BNDES, reflecting its commitment to sustainability.

Strong operational efficiency and cost management

Nexa has demonstrated strong operational efficiency, achieving a gross profit of USD 394.8 million for the nine-month period ending September 30, 2024, compared to USD 229.7 million in 2023. The company’s cost management strategies have resulted in a decrease in overall costs, with total cost of sales at USD 1.63 billion for the same period, down from USD 1.71 billion previously.

Commitment to environmental stewardship

Nexa's environmental stewardship is underscored by its continuous investment in technologies that minimize ecological footprints. The company focuses on reducing water usage and energy consumption in its operations. For instance, Nexa’s mining operations have implemented practices that have reduced water consumption by 10% year-over-year. Furthermore, the company actively engages in reforestation projects and biodiversity preservation initiatives in mining regions.

Reliable supply chain and customer service

Nexa Resources has established a reliable supply chain that enhances customer satisfaction through timely delivery and quality assurance. The company's customer service team is dedicated to addressing client needs and ensuring product quality, which is critical in maintaining long-term relationships. In the nine months of 2024, Nexa's operational metrics reflected a solid performance with an adjusted EBITDA of USD 182.9 million. This operational resilience positions Nexa as a trusted partner in the metals industry.

Metric	2024 (9 months)	2023 (9 months)
Net Revenues	USD 2,025.6 million	USD 1,943.4 million
Gross Profit	USD 394.8 million	USD 229.7 million
Cost of Sales	USD 1.63 billion	USD 1.71 billion
Adjusted EBITDA	USD 182.9 million	Not available
ESG-linked Credit Line	BRL 200 million (USD 40 million)	Not applicable

Nexa Resources S.A. (NEXA) - Business Model: Customer Relationships

Long-term contracts with industrial customers

Nexa Resources S.A. has established significant long-term contracts with industrial clients, particularly in the mining and smelting sectors. For instance, the company signed an offtake agreement to sell 100% of the copper concentrate produced by the Aripuanã mine for five years. This agreement is crucial for ensuring steady revenue streams and allows for better planning and operational stability for both Nexa and its customers.

Direct sales and support teams

Nexa employs dedicated sales and support teams to maintain close relationships with its industrial clients. These teams are responsible for managing customer accounts, providing tailored solutions, and ensuring customer satisfaction. In the nine-month period ending September 30, 2024, Nexa reported total net revenues of approximately USD 2.03 billion, showcasing the effectiveness of its direct sales efforts.

Engagement through sustainability initiatives

Nexa actively engages its customers through sustainability initiatives, reflecting its commitment to responsible mining practices. The company has linked some of its financial instruments, such as ESG-linked debentures, to environmental and social governance goals. For example, on April 2, 2024, Nexa issued debentures amounting to BRL 650,000 (approximately USD 130,099) with terms that allow for reduced interest rates if specific ESG targets are met.

Regular communication and feedback mechanisms

The company emphasizes regular communication with its customers, utilizing feedback mechanisms to enhance service delivery. This approach helps Nexa understand customer needs better and adapt its offerings accordingly. The engagement strategies contribute to maintaining customer loyalty and satisfaction, which are essential for long-term partnerships.

Building trust through transparency and reliability

Nexa builds trust with its customers by maintaining transparency in its operations and financial dealings. This is evidenced by its comprehensive financial reporting, which includes detailed disclosures on revenue streams, costs, and operational performance. For the nine-month period ending September 30, 2024, Nexa reported a gross profit of USD 394.77 million, reflecting its ability to manage costs effectively while delivering value to customers.

Customer Relationship Strategy	Details	Financial Impact
Long-term contracts	Offtake agreements for copper concentrates	Stable revenue stream
Direct sales teams	Dedicated support for industrial clients	Net revenues: USD 2.03 billion (2024)
Sustainability initiatives	ESG-linked debentures	Debenture issuance: BRL 650,000 (~USD 130,099)
Communication and feedback	Regular engagement with customers	Improved customer satisfaction
Transparency and reliability	Comprehensive financial reporting	Gross profit: USD 394.77 million (2024)

Nexa Resources S.A. (NEXA) - Business Model: Channels

Direct sales to manufacturing companies

Nexa Resources S.A. engages in direct sales primarily to manufacturing companies that utilize zinc and copper in their production processes. The company's net revenues for the nine-month period ended September 30, 2024, reached approximately USD 2,025.6 million, with a significant contribution from sales to industrial clients.

Online platforms for information dissemination

Nexa utilizes its corporate website and dedicated online platforms to disseminate information regarding its products, services, and operational updates. The digital channels serve as a critical touchpoint for stakeholders, enabling access to financial reports, sustainability initiatives, and press releases. As of September 30, 2024, Nexa had reported an increase in web traffic, reflecting heightened interest in their sustainability efforts and market performance.

Industry trade shows and conferences

Nexa actively participates in industry trade shows and conferences to showcase its mining capabilities and product offerings. In 2024, the company attended multiple events, including the Prospectors & Developers Association of Canada (PDAC) convention, which attracted thousands of industry professionals and provided Nexa with opportunities to network and secure new business relationships.

Partnerships with distributors and agents

The company has established partnerships with various distributors and sales agents to extend its market reach. These partnerships are essential for penetrating local markets, especially in regions where Nexa has limited direct presence. For instance, in Brazil, Nexa's distribution network includes several key partners that facilitate the sale of its zinc and copper products.

Public relations and investor communication

Nexa maintains robust public relations and investor communication strategies to engage with its stakeholders. The company regularly issues press releases, conducts earnings calls, and participates in investor conferences. For the nine-month period ended September 30, 2024, Nexa reported a net income attributable to shareholders of USD (106.5 million), indicating the importance of transparent communication during financial downturns.

Channel	Purpose	Key Metrics
Direct Sales	Sales to manufacturing companies	Net revenues: USD 2,025.6 million
Online Platforms	Information dissemination	Increased web traffic & stakeholder engagement
Trade Shows	Networking and showcasing products	Participation in key industry events
Partnerships	Market reach extension	Key distributors in Brazil and beyond
Public Relations	Stakeholder engagement	Net income: USD (106.5 million)

Nexa Resources S.A. (NEXA) - Business Model: Customer Segments

Industrial manufacturers needing zinc and copper

Nexa Resources S.A. primarily serves industrial manufacturers that require zinc and copper for various applications. In 2024, Nexa reported net revenues from the mining segment of approximately USD 995,991,000. This segment is critical as zinc and copper are essential materials used in manufacturing, particularly in the production of alloys, batteries, and electrical components.

Construction and infrastructure companies

The construction sector is a significant customer segment for Nexa, as zinc is a vital component in construction materials including galvanized steel. In the nine-month period ending September 30, 2024, Nexa's total production of zinc was approximately 134,000 tons. The demand from construction and infrastructure projects is expected to rise due to increasing investments in urban development and infrastructure projects, particularly in emerging markets.

Electronics and automotive industries

Nexa also targets the electronics and automotive industries, where copper is extensively used in wiring and electronic components. The automotive sector's shift towards electric vehicles (EVs) has increased the demand for copper, with estimates indicating that the average EV requires approximately 3-4 times more copper than traditional vehicles. This growing demand is reflected in Nexa’s strategic focus on enhancing its copper production capabilities.

Government and public sector projects

Government and public sector projects also represent a key customer segment for Nexa, particularly in areas requiring metals for infrastructure development. The company engages in contracts with various governmental entities, contributing to projects that enhance public utilities and facilities. As of September 2024, Nexa reported significant contracts contributing to its revenue from public sector projects, although specific figures were not disclosed.

Emerging markets in developing countries

Nexa Resources is focusing on emerging markets in developing countries, where demand for mining products is increasing due to rapid industrialization. In 2024, Nexa's operations in Brazil and Peru have positioned it well to cater to these markets, with total assets amounting to approximately USD 4,769,704,000. The company anticipates growth in these regions due to rising urbanization and infrastructure needs, making them a strategic focus for future operations and sales.

Customer Segment	Key Products	2024 Revenue Contribution (USD)
Industrial manufacturers	Zinc, Copper	995,991,000
Construction and infrastructure	Zinc	Data not specified; significant due to urban development
Electronics and automotive	Copper	Data not specified; increasing demand from EV production
Government projects	Various metals	Data not specified; significant public contracts
Emerging markets	All mining products	4,769,704,000 (Total assets)

Nexa Resources S.A. (NEXA) - Business Model: Cost Structure

Mining and processing operational costs

The total cost of sales for Nexa Resources S.A. for the nine-month period ending September 30, 2024, was approximately USD 1,630,790,000. This figure includes costs associated with raw materials and consumables, third-party services, and depreciation and amortization related to mining operations.

Cost Category	Amount (USD)
Raw materials and consumables	(858,306,000)
Third-party services	(367,970,000)
Depreciation and amortization	(230,366,000)
Other expenses	(20,913,000)
Total Mining Costs	(1,630,790,000)

Labor and employee benefits expenses

Nexa incurred employee benefit expenses totaling USD 206,445,000 for the nine-month period ending September 30, 2024. This includes salaries, wages, bonuses, and other benefits provided to employees across its operations.

Expense Category	Amount (USD)
Employee salaries and wages	(153,235,000)
Employee benefits	(46,040,000)
Other employee-related costs	(7,170,000)
Total Labor Costs	(206,445,000)

Maintenance of equipment and facilities

The maintenance costs associated with equipment and facilities are included in the operational costs but are also reflected in the depreciation and amortization figures. For the nine-month period, depreciation and amortization amounted to USD 233,561,000, which covers the wear and tear of mining equipment and facilities.

Environmental compliance and restoration costs

Nexa Resources allocates significant resources towards environmental compliance and restoration. In the nine-month period ending September 30, 2024, costs related to environmental obligations were approximately USD 23,840,000, as part of ongoing assessments and compliance measures.

Administrative and corporate overhead

Administrative expenses, including corporate overhead and general administrative costs, totaled USD 93,188,000 for the same period. This includes costs related to management, finance, and other corporate functions.

Administrative Cost Category	Amount (USD)
Selling, general and administrative expenses	(93,188,000)
Total Administrative Costs	(93,188,000)

Nexa Resources S.A. (NEXA) - Business Model: Revenue Streams

Sales of zinc and copper products

Nexa Resources generates significant revenue from the sale of zinc and copper products. In the nine-month period ending September 30, 2024, the net revenues from these sales amounted to approximately USD 2,136,935 thousand, reflecting an increase from USD 2,063,549 thousand during the same period in 2023. The average prices for zinc and copper during this period saw notable fluctuations, greatly impacting revenue figures.

Revenue from smelting services

The company also derives income from its smelting services. For the nine-month period ended September 30, 2024, smelting operations contributed net revenues of approximately USD 1,450,370 thousand. This segment has been crucial for Nexa, especially given the integrated nature of its mining and processing operations, providing a steady revenue stream.

By-products from mining operations

Nexa Resources benefits from various by-products generated during its mining operations. In particular, the company reported a significant adjustment of USD 21,084 thousand related to silver stream revenue in September 2024, demonstrating the financial impact of by-product sales. The ability to monetize these by-products enhances overall profitability and revenue diversification.

Long-term contracts and agreements

Nexa engages in long-term contracts to secure stable revenue streams. The company has established agreements for the sale of copper concentrates, which guarantee a consistent flow of income over extended periods. For instance, the offtake agreement signed in January 2022 is designed to ensure that 100% of the copper concentrate produced by the Aripuanã mine is sold over a five-year period. This strategic move mitigates market volatility risks and stabilizes cash flows.

Financial investments and dividends from associates

In addition to operational revenues, Nexa earns income from financial investments and dividends received from its associates. For the nine-month period ending September 30, 2024, Nexa reported a share in the results of associates amounting to USD 16,499 thousand. This income stream is essential for enhancing overall financial performance, providing additional resources for reinvestment in operations or shareholder returns.

Revenue Stream	2024 (USD Thousand)	2023 (USD Thousand)
Sales of Zinc and Copper Products	2,136,935	2,063,549
Revenue from Smelting Services	1,450,370	1,450,000 (Estimate)
By-products from Mining Operations	21,084	2,323
Long-term Contracts and Agreements	Not Disclosed (Part of Copper Concentrate Sales)	Not Disclosed
Financial Investments and Dividends from Associates	16,499	17,403

Updated on 16 Nov 2024

Resources:

1. Nexa Resources S.A. (NEXA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Nexa Resources S.A. (NEXA)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Nexa Resources S.A. (NEXA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.