Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

South American miner Nexa Resources has lowered its guidance for copper production by 4,000mt to 26,000-29,000mt due to lower output from its Peruvian mining operations last quarter.


The company kept its zinc and lead guidance for the year unchanged at 300,000-335,000mt and 33,000-38,000mt, respectively. It also lowered its mining costs guidance to $0.45/lb from $0.59/lb while sales guidance remains unchanged at 540,000-580,000mt.


Nexa, which recently gave a detailed update on its Aripuanã project in Brazil, said that it would make a further investment in its Magistral project once operations began at the facility.


In January-September, the miner reported a 20.5pc drop in zinc production to 221,000mt from 278,000mt in the same period last year. Zinc output in Q3 2020 fell by 16pc to 82,000mt from 97,000mt in Q3 2019. The firm attributed the fall to the temporary suspension of its Peruvian mines in Q2, following the Peruvian government’s orders to curb the COVID-19 pandemic, and a slow ramp-up thereafter.


Copper production in the nine months ended Sep 30 declined by 30pc to 20,000mt from 28,000mt in the prior-year period, while the red metal’s output in Q3 2020 fell 25pc to 8,000mt from 10,500mt in Q3 2019.


Nexa produced around 26,000mt of lead in the first nine months of the year, down 35pc from 39,000mt in January-September 2019. Lead output in Q3 2020 was down by 16pc, tallying at 11,000mt from 14,000mt during the same quarter last year.


A recovery in demand during the quarter saw the miner’s smelter capacity rates and concentrate production improving in Q3 2020 over the preceding quarter. However, smelter production declined by 1.4pc in the nine-month period to 427,000mt. In Q3 2020 total smelter output tallied at 154,000mt. 


Metal sales fell by 8pc in January-September 2020 to 424,000mt from 460,000mt during the same nine-month timeframe in 2019 but improved slightly by 0.1pc to 158,400mt in Q3 2020 compared with 158,300mt in the same quarter last year.


The company’s adjusted EBITDA for the first nine months of the year declined by 17pc to $236mn compared with $284mn in the same period last year. In Q3 2020, Nexa’s adjusted EBITDA totaled $152mn, up 163.2pc from $57.8mn during the same quarter last year. The company’s total available liquidity at the end of Sep 30 stood at $1.28bn including a revolving credit facility.

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