Nexa Resources S.A. Annual Report - How They Did This Year

I’ve updated this guide to help you understand Nexa Resources S.A.’s performance. Their 2026 filings show a company navigating a much more turbulent global landscape than in previous years.

1. What does this company do?

Nexa is a major player in the mining industry and one of the world’s top five zinc producers. They operate five underground mines—three in Peru and two in Brazil—along with three smelting facilities. They produce zinc, copper, lead, silver, and gold. In 2025, they produced roughly 280,000 tonnes of zinc in concentrate and 220,000 tonnes of metallic zinc. Their materials are essential for the automotive, construction, and electronics sectors.

2. Financial Health: Managing the "Wallet"

Nexa’s finances are a balancing act. In 2025, they generated $2.45 billion in revenue while spending $351.9 million to maintain operations and grow production at the Aripuanã mine.

• Debt and Interest: The company carries about $1.5 billion in debt. Roughly 21% of this has "floating" interest rates. If global rates stay high, their interest costs—which hit $112 million in 2025—will continue to pressure their profit. They keep a net debt-to-earnings ratio of 2.1x. If this hits 3.5x, they face a technical default.
• Currency Juggling: They earn in U.S. dollars but pay 65% of their costs in Brazilian and Peruvian currencies. A weaker local currency helps their profit margins, but sudden spikes in exchange rates can inflate their local labor and energy costs.
• Hedging: They use financial contracts to lock in prices for 30% to 40% of their zinc. This protects them from price drops, but it also limited their gains during 2025 price rallies, leading to a $38 million loss on these contracts.

3. The "China Factor" and New Trade Headwinds

• China Dependency: China consumes over half of the world’s zinc and copper. Nexa’s revenue tracks closely with Chinese construction. If Chinese infrastructure investment drops by 1%, Nexa’s zinc premiums typically fall by 1.5%.
• Tariff Shock: New U.S. trade policies are a major challenge. With new tariffs on copper and other goods, Nexa faces a $65 million increase in annual shipping and export costs. They are now shifting sales to Europe and South America to avoid these U.S. fees.

4. Key Risks for Investors

Mining is unpredictable. Beyond price swings, management faces several major concerns:

• Operational Bottlenecks: The Aripuanã mine needs constant electricity. Power grid issues in Brazil caused 14 days of downtime in 2025, cutting output by 4,500 tonnes of zinc.
• Safety and Environment: Mining is dangerous. Accidents in 2024 and 2025 resulted in five deaths. The company also manages 40 waste dams. They set aside $85 million to stabilize older dams. A failure could lead to massive fines and shutdowns.
• Legal and Tax Issues: They are fighting a $17.5 million tax dispute in Peru and face a $42 million environmental liability in Brazil.
• Ownership: Because Nexa is based in Luxembourg, shareholders have fewer legal protections than in the U.S. Also, Votorantim S.A. owns 64.68% of the company. They control the board and decide dividend policy, which has been conservative to pay down debt.

5. Future Outlook

Nexa is focusing on exploring near their existing mines to extend their life by eight years. They have set aside $120 million for this through 2027. Success depends on their ability to market their metals for the "green transition" while paying off $400 million in debt due in 2027.

Investor Takeaway: When deciding whether to invest, keep a close eye on the 2027 debt maturity and the company’s ability to navigate the $400 million repayment. If you are looking for a stable dividend play, remember that the majority shareholder, Votorantim S.A., currently prioritizes debt reduction over payouts.