REPORT VOTORANTIM METAIS 2013

Transcrição

REPORT
VOTORANTIM METAIS
2013
REPORT
2013
REPORT VOTORANTIM METAIS
LIST OF CONTENTS
05 How to read this Report
06 Management Letter
09 Performance Highlights for 2013
11 Market Context
17 Business Overview
35 Identity
40Votorantim Metais’ Business Model and Performance
66 Risk Management
HOW TO
READ THIS REPORT
The Votorantim Metais Report 2013
contains information on the financial and
non-financial aspects of the business
activities of Votorantim Metais (VM) and also
institutional information on its parent company,
Votorantim Industrial (VID).
This report has been prepared for Votorantim Metais’
employees and other stakeholder groups with which the
company maintains relations such as, investors,
government, economic and market analysts, community
leaders, civil society and trade organizations, regulators, the
media, among other groups.
In this report you will find information on our identity, governance,
business strategies, financial performance and risk management as
well as our practices and initiatives in relation to our social and
environment responsibilities, and our relations with our principal
stakeholder groups.
68 Vision of the Future
The digital version of this report is available at: www.vmetais.com.br
71 Report Production
In order to assist us to continue to improve our reporting and management we
would be pleased to have your feedback. If you would like to contribute, please
respond to our questionnaire at: www.vmetais.com.br
Or contact us by e-mail at: [email protected]
We hope you find the report a good read!
4
5
WE OVERCAME
AN UNFAVORABLE
MARKET BACKDROP
AND INCREASED
EBITDA.
MANAGEMENT LETTER
Once again we experienced a challenging year for the
metals and mining sectors, with low commodity prices,
economic volatility and an oversupply of base metals.
Despite this unfavorable backdrop, our clear focus, strong
determination and higher efficiency, enabled us to
overcome these difficulties and achieve good results, with
EBITDA increasing by 30% for metals and 39% for mining.
These figures were a just return for our considerable
efforts to achieve our strategic objectives, despite the
external difficulties. In 2013 we focused a great deal of
attention on actions and adjustments to improve our
internal processes.
One of the challenges that mobilized all levels of the
company, starting with senior management, was the
implementation and dissemination of the concept of
operational stability, which required a change of culture in
planning, maintenance and production processes. These
initiatives, which are now in the process of being
implemented in all operating units, have already produced
a positive impact on the company’s operating
performance, especially in primary aluminum and in zinc,
both in Brazil and in Milpo, Peru.
6
From a business perspective one of the highlights was the
progress made in the project to increase the
competitiveness and profitability of the aluminum business,
through a portfolio review and the restructuring of the
sales approach. Our Metalex operation also distinguished
itself by improved profitability and the success of its
expansion projects.
In the zinc business, the Juiz de Fora (MG) plant achieved
production levels for polymetallic operations higher than
budget and also demonstrated its capacity to process
industrial scrap waste. In addition to electric arc furnace
(EAF) dust, the unit was also successful in testing the
processing of batteries.
In the nickel business, due to highly unfavorable market
conditions, we decided to temporarily suspend the
production of nickel matte at the Fortaleza de Minas (MG)
unit. These difficult market conditions, which began in
2008, have worsened in recent years. The process of
suspending production was conducted with great care and
responsibility by the company. In order to minimize the
impacts on the local communities we will continue to
support social programs and actions aimed at the
development of public administration in the region.
In Peru, our Cajamarquilla and Milpo operations both had a very
good year. The Cajamarquilla operation, which is completing
10 years under management by Votorantim Metais, maintained a
highly consistent level of production and achieved its targets.
Milpo, which has been carrying out major improvements in its
management processes, increased its efficiency and profitability.
The performance of our US subsidiary, USZINC, was also
worthy of note. It took advantage of market opportunities to
expand its production, gained market share and received a
number of awards.
In the mineral exploration area, projects under development, such
as Aripuanã in Mato Grosso and Alumina Rondon in Pará, have
confirmed their high potential, thus reinforcing our vocation as a
“mining house”. The Alumina Rondon project, in particular, is in
the process of obtaining the required environmental licenses and
is being evaluated by potential investors. The project has been
received positively by the local community and government
agencies and regulators, and the region’s logistical issues are
being addressed.
In addition to our advances in improving processes, operations
and performance, a further highlight in 2013 was the progress
achieved in relation to safety. Overall our safety indicators
improved significantly, however they were tarnished by three fatal
accidents involving third-party staff: one in Juiz de Fora (MG) and
two in Milpo, Peru. We will continue to be alert, by investing in
training and awareness, since nothing is more important to us
than the safety of our workforce.
One of the principles that guide our actions is the desire to make
progress on sustainability issues. Sustainability, as a basic
management tenet, has already been firmly embedded in the
Votorantim Group’s strategy and, for the mining sector it is an
essential precondition to operate. For some years now we have
addressed the key material issues relevant to the future of mining,
such as the reduction of water and energy consumption. All our
units and teams are fully aware of the importance of these issues
and are seeking opportunities to improve.
The competence and creativity of our technology teams have
demonstrated that sustainability and innovation can bring many
benefits to our businesses. For example, they can contribute to
solving or minimizing environmental problems, reallocating
investments, reducing costs and increasing competitiveness. One
of the year’s highlights was the project to install filter presses at
the Palmital tailings dam in the CBA factory in Alumínio, which will
increase the useful life of the current dam and therefore avoid an
investment of R$ 300 million to build a new dam.
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MANAGEMENT LETTER
We are acutely aware that energy, which is currently the largest
single cost item, will be a major restriction for metals and mining
in the future. As such we have researched the use of alternatives
to replace the conventional sources of energy, seeking to diversify
the energy mix and use renewable sources that emit less
greenhouse gases and have a lower cost. Two of our initiatives,
which are now at an advanced stage of development, are as
follows: at our Three Marias (MG) plant, we have a project to
replace existing boilers using fuel oil by boilers using biomass from
forestry waste and energy cane (similar to sugar cane); at the
Niquelândia (GO) plant, we plan to use biomass to partially
replace the petroleum coke used in the steam-generation boilers.
The good news is that, within this overall context, we are now
much better prepared to meet the challenges and are making
solid progress in improving management processes and
operational stability. For us, 2014 will a year to make a further
improvement in our performance, which is an essential factor for
success in any market context. That is what will enable us to
maintain our good results. We will also continue to focus on the
development of new sales approaches and on finding innovative
and bold technological solutions to issues that challenge the
metals and mining sector. Our teams of employees will, most
certainly, be decisive in our achieving further success.
All these results were only made possible because of our
investments in employee training and development. We have
prepared and encouraged them to overcome the day-to-day
challenges by carrying out their activities in accordance with the
organization’s management beliefs, namely: talent development,
meritocracy, excellence, pragmatism, open dialogue, partnership
and a sense of ownership.
PERFORMANCE HIGHLIGHTS FOR 2013
In 2013, we made progress in various aspects of the governance
of the Human and Organizational Development (HOD) and
Communication areas. We initiated a process of organizational
restructuring to make it more in line with business strategy. We
developed a Home Office Policy and established a Valuing
Diversity Committee, which set a short-term priority of hiring and
integrating women and people with disabilities. In relation to
employee development, we created the Supervisor Training
Program and prepared an Individual Development Plan for 85%
of our employees. Other highlights for 2013 were: the definition
of HOD performance indicators, monitored on a monthly basis,
and the creation of a Labor Relations Management Plan for the
plant in Alumínio. Furthermore, we invested in the management
of the company’s reputation, through relations with the media
and external stakeholders.
We anticipate that 2014 will be another challenging year in terms
of commodity prices, due to the weak demand in international
markets, in particular the slow economic recovery of the Euro
zone, especially in Germany and France. Overall, the global
economy is showing signs of recovery: in the US economy there
are indications of an acceleration in the growth rate; and in China
where, although growth has slowed due to an increased focus on
the domestic market, it still remains at a significant level.
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• INCREASED EBITDA BY 30% IN METALS AND 39% IN MINING.
• IMPROVEMENTS IN OPERATIONAL STABILITY, IMPLEMENTED IN ALL OPERATING UNITS, AND THE DEVELOPMENT OF THE
NEW SALES APPROACH, CONTRIBUTED DECISIVELY TO THE IMPROVEMENT OF PERFORMANCE DURING THE YEAR.
• VOTORANTIM METAIS WAS VOTED THE “MOST SUSTAINABLE COMPANY IN THE MINING SECTOR” BY EXAME SUSTAINABILITY
GUIDE 2013. THIS AWARD REPRESENTED THE ACHIEVEMENT, SEVEN YEARS AHEAD OF SCHEDULE, OF OUR GOAL TO BE A
BENCHMARK FOR SUSTAINABILITY IN MINING BY 2020.
• THE NEW SALES APPROACH IN THE ALUMINUM BUSINESS, WITH ITS FOCUS ON PRIORITY SEGMENTS AND CUSTOMER
SATISFACTION, PROVED TO BE THE RIGHT PATH TO ACHIEVING BETTER CUSTOMER SOLUTIONS AND IMPROVED RESULTS. IN 2013,
EARNINGS REACHED R$ 200 MILLION.
• OUR TECHNOLOGY AREA, WORKING TOGETHER WITH THE BUSINESS AREAS, DEVELOPED CREATIVE AND INNOVATIVE
SOLUTIONS TO SOLVE ENVIRONMENTAL AND OPERATIONAL CHALLENGES, AND PLAYED A LEADING ROLE IN FINDING WAYS TO
REUSE INDUSTRIAL WASTE, RATIONALIZE WATER CONSUMPTION AND DEVELOP ALTERNATIVE ENERGY SOURCES.
Tito Martins
CEO Votorantim Metais
• ADVANCES IN THE GOVERNANCE OF THE HUMAN AND ORGANIZATIONAL DEVELOPMENT (HOD) AND
COMMUNICATION AREAS, BY THE REINFORCEMENT OF THE CORPORATE MANAGEMENT BELIEFS AND THE EMPLOYEE
DEVELOPMENT POLICY, AND THE STRENGTHENING OF RELATIONS WITH EXTERNAL STAKEHOLDERS AND IMPROVING THE
COMPANY’S REPUTATION, RESPECTIVELY.
9
MARKET CONTEXT
GLOBAL MARKET
At the global level, the economic situation has shown signs
of improvement. The strengthening of the US economy was
the main driver of accelerating economic growth in late
2013. Its macroeconomic indicators improved, with industrial
growth of 3.7%, the lowest unemployment rate since the
2008 crisis, a recovery in the housing sector and GDP growth
of 1.9%. On the other hand, changes in the outlook for
monetary policy and uncertainty about the reduction of the
level of the monetary stimulus have led to exchange rate
instability and adversely impacted the risk premiums of
emerging market economies.
In China, the level of economic expansion continued to
gradually reduce and, even without the expectation of an
abrupt deceleration, this maintained the downward pressure
on commodity prices. On the structural side, China
introduced economic reforms which have the potential to
improve productivity and re-balance the economy, by giving
more weight to domestic consumption. This helped the
country to prevent a “hard landing” and maintain a robust
7.7% growth rate.
The Euro zone continued its path of slow recovery,
influenced primarily by the French and German economies
(the latter grew by 0.4% in 2013), while continuing to face a
threat of deflation. Moreover, even though domestic
demand contracted (-0.4%) the situation began to stabilize.
Business confidence and financial conditions improved as the
risks of a market rupture decreased, and there was also the
beginning of a reduction of fiscal tightening in some
countries in the region.
According to the World Bank, global growth overall in 2013
was 2.4%; the block of emerging market countries,
specifically, grew by 4.8%. One of the highlights was
Indonesia, where GDP grew by 5.8%.
IN 2013 THE METALS
AND MINING SECTORS
FACED DIFFICULT MARKET
CONDITIONS WORLDWIDE.
11
MARKET CONTEXT
BRAZILIAN MARKET
In Brazil, volatility was a major feature of the economy in 2013.
As a result industrial production and retail sales oscillated
considerably. The country’s GDP grew by 2.3%, well below the
IMF’s projection of 3.5% made at the beginning of the year. The
devaluation of the R$/US$ exchange rate and government
measures to reduce business costs (cuts in electric power prices
and payroll taxes) helped provide a modest improvement
compared to 2012, when GDP registered a growth rate of a
mere 1.0%. However, domestic structural problems, such as
infrastructure bottlenecks, higher inflation compared to other
emerging countries, a current account deficit in excess of 3.5%
of GDP and decreases in both industrial confidence index and the
credibility of fiscal policy, inhibited investments and so prevented
a more vigorous growth rate for the year.
The government has made some efforts to regain the market’s
confidence. It conducted, with some success, a series of auctions
for concessions for infrastructure projects, the Central Bank has
acted to contain the deterioration in inflati on expectations and
reductions in spending were announced in order to ensure a
primary surplus. Even if the government is successful in reversing
this loss of confidence, it is unlikely that, in 2014, we shall see
any significant changes to the current panorama of low growth,
persistent inflation and financial volatility.
In 2013, retail sales grew by 4.3% overall and by 1.9% for the
construction sector. Other important sector growth rates were:
•
•
•
•
•
•
Agriculture = 7%
Investment = 6.3%
Household consumption = 2.3%
Services = 2%
Government consumption = 1.9%
Industry = 1.3%
The devaluation of the R$/US$ exchange rate of about 15%
contributed positively to the performance of exporting
companies and companies operating in global business
sectors such as steel, metals and mining, pulp, etc.
In the infrastructure sector, we continue to see good market
prospects, in areas such as the modernization of airports and
terminals and ports, and highway and railway concessions.
In November 2013, in order to combat the threat of rising
inflation, the Central Bank initiated a process of increasing the
country’s base interest rate, which strongly influences the
functioning of the economy and the private sector’s
investment strategies.
On the positive side, the unemployment rate calculated by the
Brazilian Institute of Geography and Statistics (IBGE) for 2013
was 5.4%, the lowest annual average since measurements began
in 2003. This level can be explained by a deceleration in the
growth of the proportion of the population which is
economically active (EAP indicator) and an increase in the
number of people who have given up looking for work.
12
13
China is also the major factor behind our reduced revenues in the
aluminum (-15%) and copper (-10%) businesses. The domestic
aluminum industry is currently producing at a level of 1.1 million
metric tons/year of primary aluminum. Due to its lack of economic
competitiveness and the use of a production process which is
environmentally outdated, the industry registered a decrease in
primary aluminum production in 2013 (of about 9% compared to
2012). Additionally, there are signs that, in not too many years, the
country may be completely out of the primary aluminum market,
and dependent on imports from countries that have access to
cheaper energy such as China, the Middle East and Russia.
Domestic manufacturers, customers and government have a
common interest in delaying the realization of such a scenario.
One proposal is to pass legislation to prevent local producers who
have international partners from exporting their production to
clients overseas. Despite a reduction of 9% in the production of
primary aluminum in Brazil and an 11% decrease in imports, the
supply-demand situation in the domestic market was not adversely
affected. The decrease in production resulted in a reduction of
23% in exports.
OUR BUSINESS SECTORS
In 2013, the market for base metals and mining faced another
difficult year worldwide, with commodity prices falling, as in
previous years, but with a higher degree of “stability” compared
to 2012. For Brazilian companies, the situation was not as
serious since the higher R$/US$ exchange rate increased their
prices in Reais.
The nickel market was the most affected from a structural
perspective due to the impact of the launch of a Chinese nickel
pig iron product. This strongly affected the supply and price of
nickel, which fell by as much as 21% in 2013, Nickel pig iron is
a low-quality nickel-iron product developed by Chinese
steelmakers as a cheaper alternative to pure nickel for use in
stainless steel production. The nickel pig iron production
process uses low-grade laterite nickel ores instead of pure
nickel. This alternative was developed as a response to the
high price of pure nickel. The nickel price fell from a level of
US$ 17 thousand per metric ton, at the beginning of 2013, to a
range of US$ 13 to 15 thousand per metric ton during the year.
14
This situation has resulted in the closure of a number
of electrolytic nickel plants around the world due to their
low profitability.
The expectation of a price recovery in 2014 is dependent on
the effects of an Indonesian government decree to prohibit the
export of unwrought nickel, in order to promote the country’s
industrialization and add value to the refined ore. Indonesia is
the world’s largest producer of nickel and sells almost all its
production to neighboring China, where it is processed taking
advantage of lower logistics costs and subsidized energy.
This market situation was the determining factor in the decision
to temporarily suspend the production of nickel matte at our
Fortaleza de Minas (MG) plant, in order to minimize the adverse
impact on the results of the nickel business. On the positive
side, the implementation of projects that transform waste into
products, creating new sources of revenue, have been central
to the performance of the nickel business.
In relation to pricing the aluminum market is experiencing an
atypical situation, with the price of aluminum decreasing by 15%
in 2013. The price of aluminum on the London Metal Exchange
(LME), where non-ferrous metals are traded, oscillated around
US$ 1,600 per metric ton, but the premium over the reference
price was at an all-time high, around US$ 2,000 per metric ton.
As a result large amounts of metal became locked up in
warehouses as collateral for transactions in the futures market,
thus reducing the availability in the physical market.
The increase of 10.4% in the demand from the civil
construction segment was higher than expected for the year.
This growth reflected the completion of the major
infrastructure projects initiated in 2010 and a 4% increase in
retail sales, where the highest growth was in the demand for
finishing materials.
The demand from the transport sector also grew strongly, by
11.5%, supported by the maintenance of reduced tax rates on
automobile production. The 4.8% increase in demand in the
packaging segment was also a pleasant surprise. The growth in
demand for plates and extruded products from the consumer
goods sector was 3.3% overall, and especially strong in the
second semester.
In the zinc market, prices have remained at low levels, and not
only for the base metal but also for by-products such as silver,
lead, copper and sulfuric acid. The slowdown in growth in
China has resulted in excess stocks of sulfuric acid in South
Korea and Japan. This impact is significant, since the
profitability of the zinc business also depends on the financial
performance of these by-products. The signs of a recovery in
this market, observed in early 2013, did not last and even the
favorable movement in the R$/US$ exchange rate was not
enough to compensate other losses.
On the other hand, the market segment for fabricated
aluminum products was in a much more favorable situation. In
Brazil, the average growth for this segment was 6% compared
to 2012, with demand rising to 1.5 million tons. Excluding the
performance of wires and cables, which dropped sharply (by
16.3%) due to its dependence on major government
infrastructure projects, growth was 9%.
15
BUSINESS OVERVIEW
VID’S BUSINESS STRATEGY
Votorantim Metais is a subsidiary of Votorantim Industrial
(VID), an industrial conglomerate with a diverse portfolio that
encompasses many different types of products, services and
opportunities.
adequate level of performance in the long-term, we are
constantly expanding and improving our activities, striving for
consistent results and focusing on adding value to our relations
with the market and our key stakeholders.
Votorantim Industrial (VID) is a privately-held, 100%
Brazilian-owned organization. It is the holding company for the
Votorantim Group’s Industrial Companies and one of the largest
business conglomerates in Brazil.
VID’s long term vision is embodied in its strategic planning
process, and focuses on the following points:
Votorantim’s Industrial Companies operate in many diverse
industries, principally, cement, metals and mining, steel, pulp,
power generation and orange juice. Despite this diversity, they all
have certain common goals such as a focus on cost control,
operational stability and excellence in customer service.
VID’s industrial operations are concentrated in the basic sectors
of the economy. They are capital intensive and require large-scale
production and high operational efficiency. To achieve an
• Knowledge and presence in markets relevant to its
businesses.
• Value creation throughout the production chain.
• Emphasis on competitiveness, with a focus on cost
management.
• Consideration of social, environmental and sustainability
issues.
•New opportunities.
Above all, VID’s central axiom is:
RESPONSIBLE LONG-TERM GROWTH
VOTORANTIM METAIS
WE SEEK TO BE
RECOGNIZED AS A METALS
AND MINING COMPANY
WHICH IS PROFITABLE,
COMPETITIVE AND
MANAGED ACCORDING TO
SUSTAINABLE PRACTICES.
PRODUCTS/
SERVICES
Aluminum,
zinc, nickel,
copper, silver,
metallurgical coal,
cobalt, cadmium,
anhydrous sodium
sulfate, copper
sulfate, zinc oxide,
sulfuric acid,
limestone powder
and mineral
concentrates.
ASPIRATION
MARKET FOCUS
- Zinc: Be among the leading
low-cost integrated producers
with a global presence.
• Consolidate operational stability to
achieve productivity gains and improved
processes.
- Nickel: Increase the
competitiveness of assets and
broaden the base of mineral
reserves.
• Work on the development of our sales
approach to enhance relations with
customers.
- Aluminum: Be a leader in
the primary aluminum market,
downstream and in recycling
in Brazil.
- Mining Evaluate opportunities
and develop or increase
exploration activities.
GEOGRAPHICAL DISTRIBUTION
OF OPERATIONS/
COMMERCIAL ACTIVITY
• Operations and activities
in Brazil.
• Overseas: operations
in Peru, Colombia,
the US and China,
with global reach.
• Strengthen the integration of production
processes.
• Achieve efficiency in offering quality
products at competitive prices.
• Make progress in developing new
mining exploration areas and new
products.
• Promote innovation and the use of
technology.
• Strengthen our operations in Peru.
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Business Overview
HOW VOTORANTIM METAIS OPERATES
Votorantim Metals is the company responsible for the metals and
mining operations of the Votorantim Group. We are one of the five
largest producers of zinc in the world, producing 739 thousand
metric tons per year. We are also the market leader in zinc oxide
and the second largest in zinc powder. In primary aluminum, we are
the market leader in Brazil with an annual production of 475
thousand metric tons (representing a market share of about 30%).
We are also the market leader in Latin America in electrolytic nickel,
with a total capacity of 44 thousand metric tons per year, between
electrolytic nickel and matte nickel.
We operate a fully integrated production process and our business
strategy is based on the following points:
These figures also rank us as the second largest Brazilian-owned
non-ferrous metals company operating in Brazil. Our objective,
however, is not simply to be the biggest. We want to increasingly to
consolidate our position in the market as a metals and mining
company that is profitable, competitive and managed according to
sustainable practices.
• Seek constantly to use new technological developments.
To achieve this, we can count on the credibility of the Votorantim
Group’s name and our 58 years of experience in the metals and
mining sector. Votorantim Metals, in its current business form, was
established in 1996 as a result of a reorganization of the Votorantim
Group’s management structure. It has two major business activities:
polymetallics (with an emphasis on the production of zinc and
nickel) and aluminum.
18
• Ensure the competitiveness of our operations based on
operational stability and the quality of our products and
services, among other strategic points.
• Conduct our activities in a safe and socially and
environmentally responsible manner in the countries where
we operate.
• Identify and invest in new opportunities for mineral
exploration.
• Build alliances that generate shared value, after
consideration of social and environmental issues, for employees,
partners and customers.
• Ensure high performance teams working in a healthy and
challenging work environment.
One of the most important pillars of our operations is our
workforce of more than 12 thousand people. In Brazil, we operate
four manufacturing plants and seven mining and processing units.
Overseas, we have industrial plants in Peru (Cajamarquilla), in the
United States (USZINC), and China; mining in Peru (Milpo);
metallurgical coal in Colombia; sales offices in Austria, China and
the United; and mining offices in Argentina, Canada, Colombia,
Peru and South Africa.
advances in technology and to exercise responsible environmental
stewardship.
Our most important asset is our team of highly trained
professionals, who are dedicated to their work and focused on
results. In order to ensure their protection, we require compliance
with strict rules on safety, health and environment. We also invest
on a continuous basis in the personal and professional
development of our employees.
In Brazil, among our projects under development, Aripuanã is
the one that is at the most advanced stage. This project is a
joint-venture between Votorantim Metals and Karmin Inc. and is
located in the municipality of Aripuanã (MT), about 900 km from
Cuiabá (MT). The project, which is in the pre-feasibility study
phase, is for a plant with an annual production of 55 thousand
metric tons of zinc, 20 thousand metric tons of lead and
4 thousand metric tons of copper, as well as gold and silver
as by-products.
We have a fully integrated production process operating at full
capacity, thus ensuring a supply of quality products at competitive
prices. Over the past two years, we have been working to further
improve our industrial performance by, firstly, implementing
operational stability techniques, aimed at greater efficiency, and,
secondly, seeking increasingly to integrate sustainability concepts
into our business. Currently, the Votorantim Group’s subsidiary,
Votorantim Energia, generates 75% of the electric power
consumed by our production plants. We seek to develop our own
We also take great care to ensure the future of our company.
Therefore, we seek both to extend the life of existing mines and to
develop a portfolio of projects aimed at identifying new mineral
deposits. Our office in South Africa, for example, is constantly
prospecting for opportunities.
One of our priorities is to contribute to the social and economic
development of the communities where we operate. We work in
partnership with the Votorantim Institute to develop social
responsibility projects that deliver value to local communities. In
2013, almost 30 thousand people benefited from our 50 social
projects in the areas of education, work, culture and sport.
19
Nickel
In the nickel business, although there was an increase in demand
during the year, especially from the stainless steel industry in China,
it was not enough to sustain market prices. About 72% of the
year’s nickel production was exported to countries in North
America, Europe and Asia. Macroeconomic uncertainties,
combined with an increased supply of nickel pig iron (a lower-cost
substitute product), continued to exert downward pressure on
nickel prices, which fell 13% on the LME. Our decision to
temporarily suspend operations at the Fortaleza de Minas (MG)
plant will negatively impact our production volume in 2014.
In 2013, our annual nickel sales volume grew by 3%, rising
to 34.8 thousand metric tons.
Aluminum
There was a surplus of production in the global aluminum market,
since the expected recovery of demand did not materialize.
Additionally, inventories remained high, resulting in a 9% drop in
the LME price. In Brazil, the production of primary aluminum fell by
9%. The biggest challenge facing the industry is the high cost of
energy. In this respect, we have a competitive advantage since we
obtain a substantial percentage of our electric power requirements
from our company-owned hydroelectric plants at the Juquiá
Complex (SP), which are connected directly to our plant.
Furthermore, to improve our gross margin, we focused our sales
efforts on the Brazilian market, and on the higher value-added
products. Our sales volume in the domestic market grew by 13%,
while exports fell by 71%.
Zinc
Global zinc stocks reduced during the year since production was
not sufficient to meet the strong demand, especially from
automotive sectors in China and the United States. Despite this,
the high level of macroeconomic uncertainty dominated the good
fundamentals and the price on the LME ended the year 2% lower.
In Peru, we operated close to our maximum production capacity
and sales increased by 8%, to 335 thousand metric tons, destined
mainly for export. The combined total of the zinc export sales of
our operations in Peru, the US and Brazil was 462 thousand metric
tons. In Brazil, our zinc production was sold mainly into the
domestic market. Sales rose by 9% as a result of higher production
and demand by the automotive, civil construction and white
goods sectors, which are our main customers.
THE USES OF ZINC IN EVERYDAY LIFE
Besides being widely used in civil construction, zinc is
also present in many products used in industry,
agribusiness and for human health.
In the industrial segment, zinc and its derivative
products are, for example, used in: antennas, metal
posts, cosmetics, buckles, bags, tires, castings, parts
and paints for household appliances, automotive parts,
electrical equipment, deodorants, wood preservatives,
welding, galvanizing of steel parts (to prevent
corrosion), paints, rubber, plastics, metal roof tiles,
illuminated panels, kinescope screens, fluorescent
lamps, batteries, among other applications.
In agriculture, the use of zinc (in fertilizers, for example)
has contributed to improved productivity. The lack of
this mineral causes plants to suffer a type of stress that
affects their growth and makes them vulnerable to
attack by diseases.
In healthcare, zinc is important for the prevention of
diarrhea, pneumonia, malaria and malnutrition. It also
contributes to the prevention of diabetes, the formation
of collagen and anti-aging products. The lack of zinc in
the organism retards the accumulation of bone mass,
increases the risk of osteoporosis and skin lesions, slows
the healing of wounds and stimulates the occurrence of
acne and white spots on nails.
Business Overview
WHERE WE OPERATE
Our Head Office is located in São Paulo. Our units are as follows:
Aluminum
• Alumínio (SP) – metallurgy
• Itamarati de Minas (MG) – mining and processing
• Miraí (MG) – mining and processing
• Poços de Caldas (MG) – mining and processing
• Metalex – metallurgy
Nickel
• São Miguel Paulista (SP) – metallurgy
• Niquelândia (GO) – mining and processing
• Fortaleza de Minas (MG) – mining and processing*
* Activities were temporarily suspended as from 09/25/2013
22
Zinc
• Juiz de Fora (MG) – metallurgy
• Paracatu (MG) – mining and processing
• Três Marias (MG) – metallurgy and zinc oxide
• Vazante (MG) – mining and processing
• Cajamarquilla (Peru) – refining
• Milpo (Peru) – mining
• Salzburg (Austria) – sales office
• USZINC VM Houston (Texas, USA) – commercial office and metallurgy (metallic zinc and zinc powder)
• USZINC VM Coldwater (Michigan, USA) – metallurgy (zinc oxide)
• USZINC VM Clarksville (Tennessee, USA) – metallurgy (zinc oxide)
• USZINC VM Millington (Tennessee, USA) – metallurgy (zinc oxide)
• Changshu (China) – metallurgy (zinc oxide)
• Shanghai (China) – sales office
We also have mining offices in Argentina, Canada, Colombia and South Africa.
23
Business Overview
TEMPORARY SUSPENSION OF NICKEL PRODUCTION
AT THE FORTALEZA DE MINAS (MG) PLANT
In September 2013, we temporarily suspended nickel matte
production activities at the Fortaleza de Minas (MG) plant,
due to the unit’s lack of competitiveness.
The decision was based on economic feasibility studies,
carried out over a long period of time. These studies
indicated, among other things, that the volatility of current
nickel prices and exchange rates in recent years, associated
with an unstable supply of raw materials, from both
internal and external sources, and the current tax policy
have caused the highly unfavorable economic performance
of the unit and made it temporarily unviable.
Since we are committed to transparency and open dialogue
in relations with our various stakeholder groups, we
informed the employees in Fortaleza de Minas about the
temporary suspension of production on the same date that
we began negotiating with the Union of Workers in the
Extractive Industries (Sintex).
We looked for opportunities to transfer employees to other
units of Votorantim Metals and Votorantim Industrial.
Approximately 20% of the total number of employees of
the Fortaleza de Minas plant has been referred for internal
relocation. We are analyzing other outplacement
alternatives for the remaining employees, with the support
of a specialized company.
When the plant was in operation, we invested almost
R$ 5 million in initiatives to promote local development by
fostering regional production chain programs, supporting
public administration, improving education and valuing the
rights of children and adolescents.
From 2008 to 2013, we also invested more than
R$ 2 million in the training and qualification of employees
in initiatives such as training courses, scholarships and the
Young Apprentice Program.
Aware of its important social role, Votorantim Metals will
continue to support these local development initiatives,
notwithstanding the temporary suspension of the plant’s
activities.
The plant will maintain its commitment to the sustainable
development of the region by supporting the following
programs: Eye on the Future program, which supports
public administration; Sustainable Integrated Agroecological Production (PAIS); Votorantim Partnership for
Education; Female Entrepreneurs; and the School for
Parents and Children, in partnership with the Municipal
Council for Children and Adolescents (CMDCA), which
contributes to fostering the local production chain and to
improving education and public administration.
We pursue a goal of “zero waste”. Although considered
unthinkable in the past we have made good progress. The plant
at Morro Agudo (Paracatu, MG) achieved this goal in 2010 and is
now an inspiring example for the other operating units. In our
other units, we are making progress and have developed a
number of projects that will help us move towards our goal.
This progress is concrete and has been recognized by society as
demonstrated by the important honors and awards we
received in 2013. These included the Exame Sustainability
Guide Award, the Hugo Werneck Award and the Minas Gerais
Environmental Management Award.
In 2013, another demonstration of the seriousness with which
we view sustainability, was the renewal of the environmental
licenses for our units in Vazante (MG), Três Marias (MG) and
Morro Agudo (Paracatu, MG). Although the normal renewal is
valid for four years, we were granted an extension for six years
due to our ISO 14000 certification and the fact that the plants
had not received any infringement notices.
We have also developed a strategy to take a step forward in
fixed asset management. In 2013, we made significant
progress with our operational stability project. Since we are
impacted by market prices beyond our control, we must
respond by defining how much volume we will produce and
how much it will cost.
Our strategy involves taking action on several fronts, including:
managing information, by making it standardized, prioritized and
relevant to decision making; and maintenance and operations,
by reinforcing execution discipline and better planning.
This stabilization process required a strong leadership
commitment, supported by a well structured management model,
with governance, processes and indicators, as well as the need for
behavioral changes, to ensure the sustainability of the model.
STRATEGY
We have adopted sustainability as the common thread running
through our business strategy. More and more, and with
increasing success, we study the changing times and future trends,
in the constant search for more responsible metals and mining
practices. This entails looking outside of the company, at society,
and its new needs and demands, both today and in the future.
24
Our operating and business areas increasingly consider
economic, social and environmental aspects in their decisionmaking. Every year we improve our practices and undertake our
mining activities in ways that preserve natural resources and
result in the lowest possible environmental impact. We seek to
leave a positive legacy in the communities where we operate.
The first step was to define metrics to measure stability in a
simple, yet robust, manner. Next, we defined development
paths for each operation and established a goal of full
stabilization at the end of a five-year cycle. We implemented a
governance system to monitor the progress at all levels of the
company, raising awareness and communicating the stability
concept in day-to-day operations.
After only one year, we can already see clear signs of greater
stability, with gains in production and a reduction (per metric
ton of production) in some variable and fixed costs,
demonstrating that the concept has been understood by the
operating units.
In 2014, we will advance on other fronts, to sustain new levels
of stability. One front will be the development and execution of
an industrial automation plan, involving the implementation of
an information systems platform, from operational processes to
the management level.
We have disseminated information on the best practices to
achieve operational stability to all our Brazilian plants and,
overseas, they are also being used in our plants in Peru (Milpo
and Cajamarquilla).
The trends in operational stability are monitored and reported
in the Weekly Operational Stability Report, based on data
which is updated daily.
We want to make the most of our fixed assets, but in a steady
manner, without short-term records and without sharp falls in
production. We know, however, that this is a huge challenge
that requires much effort. We are working to change the
culture of our senior managers and other leaders, by showing
the advantages of predictability and the disadvantages of
abrupt changes in production.
We have set specific goals for each unit, according to its
degree of progress, which are carefully monitored. In general,
the goal is to operate at a level higher than 90% of plant
capacity without any large fluctuations up or down. All units
have made significant progress, especially the Alumínio (SP)
plant, which has substantially improved the production of
primary aluminum.
The next step is to achieve a level of stability that allows us to
adopt the Six Sigma methodology and to automate processes
where possible. At this stage, we will be able to see new
opportunities for improvements in operational processes and
certainly reap further benefits.
25
With this new structure VID has taken another step towards
strengthening the operations of its Industrial Companies, with
the objective of having a more targeted focus of activity and an
improvement in the management of each business. This move
is expected to facilitate more depth in internal discussions and
faster decision-making as well as providing more support for
the Industrial Companies’ Boards in the search for better results.
VID will now be responsible for providing guidance and also
for portfolio management, through the formulation of overall
strategic guidelines and new business development, and will
work closely with the Board of Directors of Votorantim
Participações (VPAR).
This will strengthen the group’s businesses, in that it will
promote the greater independence and accountability of the
Executive Directors and Boards of each Industrial Company.
CORPORATE GOVERNANCE STRUCTURE (VID)
As we are a subsidiary of VID which is part of the Votorantim Group, the corporate governance structure of Votorantim Metais
reflects what has been adopted institutionally, for VID and the Group as a whole.
The evolution of the governance structure
The Votorantim Group is a family-owned organization and has
adopted a corporate governance structure that regulates the
relations among family members, the Board of Directors of
Votorantim Participações (VPAR), Votorantim Industrial and the
Industrial Companies. It also establishes guidelines for defining and
structuring the succession process in order to create a sense of
trust among all the stakeholders.
VID is committed to a policy of continuous improvement and
the use of best practices. It has adopted a governance structure
that aims to build trust and contribute to ensuring that its
results are less volatile, maximize value creation and balance the
interests of all stakeholders.
26
The previous governance structure was necessary to promote
the dissemination of best practices, support the strengthening
of VID’s management system and stimulate the realization of
synergies. The new governance structure will continue to be
based on the principles and processes that the Votorantim
Group considers essential to expressing its corporate identity.
VID’s corporate governance structure rests on the following pillars:
New Governance Structure
• Family ownership and control.
• Executives who are qualified to manage the Industrial
Companies.
• Integrated vision.
• Control environment which is characterized by high
standards of governance.
• Long-term viability of the Industrial Companies.
• Corporate policies and Code of Conduct guidelines.
VID’s new governance structure is composed of: the Board
of Directors of HEJOASSU, the family-controlled holding
company; the Family Council; the Board of Directors of
Votorantim Participações (VPAR); the Boards of Directors
or Supervisory Committees of the Industrial Companies;
and the Votorantim Institute.
A new governance structure for the organization was
announced in late 2013, with implementation scheduled to
begin in early 2014 (see the section entitled New Governance
Structure below).
The organization’s governance structure was set up initially in
2001, aiming to ensure the growth and long-term viability of
our Industrial Companies, by establishing a balance between
family ownership and control and the group of executives
managing the various businesses The governance structure
is guided by a set of principles, initiatives and management
structures which are designed to promote an integrated vision
of our businesses and speedier decision-making processes.
It also incorporates the best governance practices of publicly
quoted and family-owned companies
and prioritizes a strategic long-term vision of the businesses
and the collective interest, by focusing on performance
and meritocracy.
The constant search for improvement has resulted, in 2013,
in the evolution to VID’s new corporate governance structure,
aimed at ensuring business continuity in the long run, and the
effective development of new growth opportunities.
The new governance structure includes the establishment
of Boards of Directors or Supervisory Committees in all our
Industrial Companies. These Boards and committees are
composed of VPAR Board Members, VID executives and,
in the case of some Boards, independent members.
The best management practices, developed throughout the
organization’s history, will be perpetuated through the
organization’s “Management DNA”. This concept, currently
being prepared and implemented in each Industrial Company,
will ensure that the new decentralized structure will still preserve
the management model and culture of the Votorantim Group.
VID will implement policies and guidelines to support this
process of the institutionalization of the Group’s common DNA.
With respect to sustainability, the organization will not have a
specific corporate committee for the subject, since it is
considered to be a cross-cutting theme for VID and the
Industrial Companies, and is therefore part of the Group’s DNA.
This is in fact already the case. Firstly, all executives (senior and
middle managers) now have sustainability-related goals in their
individual assessment processes and, secondly, a discussion of
sustainability challenges is embedded in the organization’s
strategic planning process. As an indication of the Group’s
commitment to sustainable development, VID has maintained
its nine material issues and respective long-term goals.
In each of VID’s Industrial Companies, committees will be set
up to address sustainability issues and to ensure that these
issues are effectively incorporated into management.
27
Business Overview
VID’s corporate governance structure is composed of:
• Board of Directors of Votorantim Participações (VPAR)
T his is the organization’s highest governance body and
is responsible for defining guidelines and the strategic
direction for the portfolio, including both the industrial and
financial sectors.
T he VPAR Board of Directors is composed of eight members,
seven of whom are shareholders, resident in Brazil, and are
elected by the General Assembly for a term of three years.
Reelection is permitted. These seven members represent the
four family holding companies. Each family holding company
selects and appoints its respective members. The eighth
member of the Board is an executive member.
• Boards or Supervisory Committees
of the Industrial Companies
They are responsible for business strategy, under the
guidance of the VPAR Board of Directors, and the overall
performance of their respective Industrial Companies.
• Family Board
The Family Board represents the family shareholders,
disseminating and preserving their beliefs and values. It is
responsible for informing the objectives and the performance
of the businesses among the family members, developing
the future generations of shareholders, harmonizing the
effectiveness of the succession process, and helping to
develop a sense of belonging and pride.
The Family Board comprises up to three members of each
of the four family holding companies making a total of up
to 12 members. Each family holding company indicates its
respective members. There are no independent or executive
members on the Family Board.
The members do not have substitutes. The absence of, or
impossibility of participation by, any member creates a
vacancy for the election of a new member. The term for each
member is two years and may be renewed.
The structure of the Board consists of: President; VicePresident; and members. The members appoint the President
and Vice-President. The Vice-President substitutes the
President in the case of a temporary impediment or, in case
of a permanent impediment, until the end of his/her term.
In addition a Presidents Committee has been established, composed of the Presidents/CEO’s of the Industrial Companies, which addresses
common issues and the convergence of strategies, thus contributing to continuously improving the Group’s “Management DNA”.
Family
Board
Votorantim
Institute Board
Votorantim Institute
Votorantim Industrial Holding
(VID)¹ General Management
¹
Institutional
Relations and
Sustainability
Mergers and
Acquisitions
• Votorantim Institute
Audit
Committee2
The Institute’s main role is to be a center for the
dissemination of concepts and practices regarding the
relations between Votorantim and society, throughout the
organization. It acts in concert with the Industrial Companies,
stimulating dialogue and the adoption of sustainable
practices, and approves their external social investments,
which contribute to the development of the communities
where they operate.
Finance
Committee2
Compensation
and Personnel
Committee2
Image and
Reputation
Committee2
Legal
Information
Technology
Controlling
and CSC
Human and
Organizational
Development
• Votorantim Institute Board
Treasury and
Investor
Relations
It reports directly to the VPAR Board of Directors and
approves the annual budget and strategic planning of social
investment actions. It has an external member (representative
from the BNDES) and meets quarterly.
Audit
• Standing Committees
The VPAR Board of Directors is advised by four Standing
Committees, namely:
• Audit
• Finance
• Compensation and Personnel
• Image and Reputation
These committees are composed of members of the VPAR
Board of Directors and of members who are not
shareholders. The issues related to sustainable development
are treated by all committees in a cross-cutting manner.
Votorantim
Financial Holding
Votorantim
Cimentos Board
Votorantim
Metais Board
Fibria Board
Citrosuco Board
Votorantim
Siderurgia Supervisory
Committee
Votorantim
Energia Supervisory
Committee
Votorantim
Bank
1- VID executives are members of the Industrial Companies’ Boards and Supervisory Committees. They are responsible for defining the common DNA
to be included in management guidelines and macro-processes.
2- VPAR Board Standing Committees.
New Governance Structure for Votorantim Metals
VID’s new governance structure includes the creation of a Board
of Directors or Supervisory Committee in each Industrial
Company, aimed at conferring greater autonomy. As a
consequence the corporate Human and Organizational
Development (HOD) area coordinated a project, carried out in
28
Planning and
Management
VPAR Board
collaboration with the other functional areas, to develop a
governance and organizational structure for Votorantim Metais,
as from 2014, consistent with its strategic plan. This new
structure is now in the process of being implemented.
29
Business Overview
CERTIFICATIONS OBTAINED
BY VOTORANTIM METAIS
VOLUNTARY COMMITMENTS ASSUMED BY VID
VID is a signatory of, or has voluntarily adhered to, the following commitments:
The highlights for the certifications obtained by
Votorantim Metais units 2013 were as follows:
ISO 14001 – We renewed the ISO 14001 certification of the
plants in Itamarati de Minas (MG) and Miraí (MG). The audit was
conducted in March 2013, in an integrated manner. This
certification is an international regulation establishing
methodologies to assess, monitor and improve an organization’s
Environmental Management System (EMS). It seeks to strike a
balance between processes that enable profitability and those
which reduce environmental impacts. The Itamarati de Minas (MG)
plant has been certified since 2001; the Miraí (MG) plant was
certified in 2010 (two years after coming into operation). The
auditors commended two of our practices as worthy of note: the
innovative practices for the rehabilitation of areas mined by the
company, and the support for regional social and economic
development provided by the “Echoes of the Forest” Program.
GLOBAL VOLUNTARY COMMITMENT
NATIONAL VOLUNTARY COMMITMENTS
- UN Global Compact: VID has been a signatory of the UN
Global Compact, since 2011. This is a United Nations
initiative which aims is to mobilize the business community
to adopt fundamental values and internationally accepted
practices in human rights, labor relations, the environment
and the fight against corruption.
- Open Letter to Brazil on Climate Change: VID is a
signatory to this initiative, established in 2009, in which
the participating companies have taken on a series of
commitments to reduce the impacts of climate change
and also have proposed actions to the federal
government.
More information is available at:
www.unglobalcompact.org/
More information is available at:
www.forumempresarialpeloclima.org.br/default.php
CERTIFICATIONS
STANDARD
DESCRIPTION
CERTIFIED UNITS
ISO 9001
Certification of the Quality
Management System.
Alumínio (SP), Três Marias (MG), Morro Agudo
(Paracatu-MG), Vazante (MG), Juiz de Fora (MG)
and São Miguel Paulista (SP).
ISO 14001
Certification of the Environmental
Management System.
Miraí (MG), Poços de Caldas (MG), Itamarati de
Minas (MG), Alumínio (SP), Três Marias (MG),
Morro Agudo (Paracatu-MG), Vazante (MG),
Juiz de Fora (MG), Niquelândia (GO), São Miguel
Paulista (SP) and Fortaleza de Minas (MG).
OHSAS 18001
Certification of Occupational Health
and Safety Management.
Alumínio (SP), Três Marias (MG), Morro Agudo
(Paracatu-MG), Vazante (MG), Juiz de Fora
(MG) and São Miguel Paulista (SP).
ISO 17025
Certification of the general competency
requirements for laboratory calibration.
Vazante (MG) and Juiz de Fora (MG).
30
- Vision Brazil in 2050: VID participated in the preparation of
the guidelines for the document “Vision 2050 – Brazil”
organized by the Brazilian Business Council for Sustainable
Development (CEBDS), the Brazilian branch of the WBCSD. The
participating companies defined areas of work and the final
results were presented at the Rio+20 Conference in June 2012.
More information at:
http://cebds.org.br/wp-content/uploads/2014/02/VisãoBrasil-2050_en.pdf
31
Business Overview
HONORS AND AWARDS FOR VOTORANTIM METAIS
As a result of the continuous improvement of our management
process, as well as our commitment to sustainable development,
Votorantim Metais has been recognized by the market and by
society in important honors and awards, for example:
Exame Sustainability Guide 2013 – In 2013 we participated
in this evaluation for the second time and were ranked as being
the benchmark company in the mining sector, that is, “the most
sustainable company” according to this guide. This achievement
had a special meaning for us, since it provided clear evidence
that we had reached our goal, which is to be a benchmark
company in sustainability by 2020, seven years earlier than
planned. The guide highlighted our projects and practices aimed
at combating waste, particularly those to reduce and/or reuse
the waste from industrial processes. Some of these practices, in
addition to generating environmental benefits and cost
reductions, have become a source of revenue for the company.
The guide’s report cited the case of the waste from copper
processing at our Niquelândia (GO) plant that was transformed
into a raw material for fertilizers and generated R$ 23 million of
revenues in 2013. It also highlighted the Zero Waste Project,
developed by our plant in Morro Agudo (Paracatu – MG).
Hugo Werneck Award for Sustainability and Love for
Nature – sponsored by Grupo Ecológico. Our case study entitled
“Water Resource Management” was the winner in the category
for “Best Example in Water Usage”. The case study provided
information on: routine actions; investments in technology,
research and risk mitigation; and the impacts of these measures
on the optimization and reduction of water consumption in
production processes. It demonstrated the company’s
commitment to the conservation of water and the environment.
One of the goals of our strategic plan for 2020 is to achieve a rate
of 100% for the recirculation of process water. In 2012, the
average recirculation rate was 50%. One of the tools we used to
achieve this goal is the VM Water Balance Manual, an approach
that allows us to identify, measure, record and report information
on the use of water.
Minas Gerais Environmental Management Award 2013
– Our plant in Três Marias (MG) has been making significant
progress in improving its environmental management system. This
success was recognized by the Brazilian Quality Union which
granted the unit the Minas Gerais Environmental Management
Award. This award bears the stamps of the government of Minas
Gerais and the United Nations and recognizes companies that
demonstrate having a comprehensive and effective environmental
management system that contributes to sustainable development.
The evaluation process is very comprehensive. It lasts from March
to December and includes the preparation and analysis of a report
on the management system. This report is reviewed by a
commission which selects a short list of companies for an on-site
audit. After a three-day audit, the team of nine issued a report,
without identifying the company. Finally, a committee of 22 judges
chose the winners of the award. The award was presented by the
Governor and the Secretary for the Environment of the state of
Minas Gerais. The state retains the right to not present the award
if, in its view, the company is considered unworthy. The award for
the Três Marias (MG) plant was the second in the company’s
curriculum. It received the award for the first time, in 2011,
for the Morro Agudo (Paracatu – MG) plant.
Best Companies to Work For – In 2013, we were included
for the second time in the list of the “150 Best Companies to
Work For.” The survey was published in the Você S/A magazine
and was developed with the support of the Foundation Institute
of Directors.
Protection Award – The Vazante (MG) plant was awarded the
“Living Well Project” award by the “Revista Proteção” magazine.
The award gave recognition to the company’s efforts to improve
the quality of life of its employees, their families and the
community in general.
Largest Brazilian Mines – The mines at our units in Miraí (MG)
and Buriti, Niquelândia (GO), were highlighted in the ninth edition
of the 200 Largest Brazilian Mines, an award that is sponsored by
the Minérios & Minerales magazine.
• Our bauxite mine at Miraí (MG) was featured in the category for
“Mining Productivity” for producing 2.3 million metric tons per
year of crude ore (base 2012).
• Our Buriti mine, with an annual production of 20 thousand
metric tons of nickel laterite, 1,200 metric tons of cobalt and
1,700 metric tons of copper, was highlighted in the category
for “Investment in Geological Exploration”, for conducting
20 thousand meters of geological drilling annually in order to
improve the subsurface information and expand mineral reserves.
Most Admired Brands – For the third time in four years,
Votorantim Metais was among the 10 most prestigious and most
admired brands in a survey of 72 corporate brands conducted by
the O Estado de Minas newspaper. In the overall ranking, which
included companies with and without their head offices in the
state of Minas Gerais, Votorantim Metais obtained the 23rd
position. The brands were evaluated in six attributes: quality of
products or services, social and environmental responsibility,
admiration and confidence, capacity to innovate, work
environment, history and development.
Biggest and Best 2013 – We were featured in the special issue
of Exame magazine’s “Biggest and Best 2013” for our
sustainability initiatives. The article highlighted our social projects,
carried out in 11 Brazilian municipalities in partnership with the
Votorantim Institute, which aimed to foster the social and
economic development of the regions where we operate.
Award for Excellence in the Brazilian Metals and Mining
Industry – sponsored by the Minérios e Minerales magazine. This
award recognized the best technologies, processes and methods
used in the Brazilian mining industry. We received two awards:
• Firstly, for the implementation of the “Project for reducing
consumption of sulfuric acid in zinc production” at our plant in
Três Marias (MG). The project reduced consumption of this input
by 75%.
• Secondly, for the case study entitled “Emergency – dangerous
cargos” that won the award for the category “Occupational
Safety”. It consisted of a report on the actions taken to reduce
the risks of accidents in the transportation of dangerous goods,
including the assessment of the routes to be used, the transport
companies, the type of cargo, the characteristics of the truck
and the driver. The delivery is only released after approval or the
remediation of any problems identified.
The IBRAM Prize – Our Juiz de Fora (MG) plant, of the nickel
business, was awarded second place in the category for “Health
and Safety Policy for Third-party Staff” for its project “Managing
Contractors”. This award was granted by the Brazilian Mining
Institute (Ibram) and recognizes individuals, companies and
institutions that behave in more environmentally responsible ways
and encourage new actions and attitudes.
Company of the Year – Mining Sector Award – granted to
Votorantim Metais by the Brasil Mineral magazine This award
evaluated factors such as investments, innovation, environmental
policy, human resources policy and community relations.
19º Fiesp Environmental Merit Award – We received an
honorable mention in this award, organized by the Federation of
Industries of São Paulo (Fiesp), for a good environmental practice
in alumina refining, in the Alumina – Trim Liquor project, at
Companhia Brasileira de Alumínio (CBA).
Oscar Urrutia Alvear Prize 2013 – We received this award in
Panama, in the category “Business Excellence”, for the project
“Raising Performance through People” project. This award was
granted by the Interamerican Federation of People Management
Associations (Fidagh). It is awarded every two years and recognizes
and honors both companies and professionals that contribute to
Latin American development in people management.
33
IDENTITY
The Votorantim Group’s corporate identity is made up of a
set of founding principles and guidelines that together
express the organization’s essence. These principles and
guidelines guide its market positioning, business practices
and relations with its stakeholders:
•
•
•
•
•
Vision
Values
Aspirations
Management Beliefs
Sustainability Principles
VALUES
Votorantim’s values are represented by the acronym SEREU:
• Solidity – To seek sustainable growth with value
creation.
• Ethics – To act responsibly and transparently.
• Respect – To respect people and be willing to learn.
• Entrepreneurship – To have the courage to grow,
innovate and invest.
• Union – The whole is stronger than the sum of the parts.
VISION
To ensure the growth and sustainability of the Votorantim
Group as a large family-owned group, which is respected
and admired by the communities where it operates, and is
focused on creating economic, environmental and social
value, based on:
• Ethics and values that guide responsible business
conduct.
• Highly competitive businesses.
• Constant drive to incorporate creative and innovative
solutions in its portfolio.
• People who are motivated to achieve high
performance.
ASPIRATIONS
Votorantim’s aspirations can be summarized in two
objectives:
• To grow in the long term and in a sustainable manner.
• To achieve world class standards in our operations and
management, comparable to those of the best global
companies.
MANAGEMENT BELIEFS
Votorantim’s management beliefs are:
35
SUSTAINABILITY PRINCIPLES
We seek the long-term continuity and continuous expansion of our business, with appropriate and consistent results.
We believe that sustainable development is vital for the organization’s continued growth and is consistent with our
way of being and acting.
Our Sustainability Principles are aligned to the principles of the UN Global Compact and guide our emphasis on
sustainable development.
Votorantim Industrial Sustainability Principles
• Talent Development
We invest time and resources in developing our talented people
because we believe in and trust them.
• Meritocracy
We believe that people are individuals and deserve to be treated
fairly and in accordance with their personal performance.
• Excellence
We believe we can always do more and better, overcoming
challenges with discipline, humility and simplicity.
• Pragmatism
We believe that it is essential to devote time and energy to what is
most relevant, with objectivity and without losing sight of the big
picture and the future trends.
• O
pen Dialogue
We believe that an atmosphere of trust fosters open dialogue
and ensures that all have room to speak and to be heard, and
that a diversity of opinions leads to better solutions.
• Partnerships
We believe our success is a result of collaborative efforts,
strengthened by genuine relationships and partnerships in which
everyone wins.
• Sense of Ownership
We believe in people that take on responsibilities, work with
passion and lead by example, celebrating their achievements and
using mistakes as opportunities for learning.
36
In July 2013, the process for the dissemination of Votorantim’s
management beliefs completed two years. Thus, in order to
evaluate how these beliefs were used in practice, we
conducted a survey in which employees were asked to answer
questions on their perception of the adoption of each of the
beliefs: Talent Development, Meritocracy, Excellence,
Pragmatism, Open Dialogue, Partnership and Sense of
Ownership. The survey data was analyzed and, based on
these results, action plans were prepared for those beliefs that
needed to be strengthened. The results showed that 98% of
employees said they knew about the beliefs; the best results
for the practice of beliefs were for Open Dialogue (63%),
Sense of Ownership (60%) and Excellence (58%).
“HERE, WE ARE CONSTANTLY TRYING
TO IMPROVE. OUR BELIEFS SHOULD BE
A GUIDE FOR OUR DECISION-MAKING.
IN THIS WAY, WE COULD SEE THEM BEING
PUT INTO PRACTICE.”
This was the opinion of an employee at the VM plant in Três
Marias (MG) – this plant had the best result measured by the
Belief Meter (“crençômetro”), the nickname given by the
employees to the survey which assessed the level of
knowledge and practice of the management beliefs.
1.
2.
3.
4.
To be recognized by society as a
socially and environmentally
responsible company.
To have sustainability as a
strategy, guiding governance,
management, education, and
investment decisions, thereby
creating value.
To consistently improve our
economic, social and
environmental performance,
striving to achieve world-class
standards of efficiency and
operational reliability.
To be recognized as a company
that attracts, develops and
retains talent to create value
and build a fair and inclusive
society.
5.
6.
7.
To be committed to the
welfare, and health and
safety of our employees,
customers and partners.
To contribute to
the development
of the communities
where we operate.
To encourage the cooperation
and participation of all
employees and stakeholders in
building partnerships and
working together in order to
generate value for all.
Sustainability is a cross-cutting theme in Votorantim Industrial.
In line with this Votorantim Metais has established a team, in
the Directorate for Management and Sustainability, dedicated
to promoting the inclusion of sustainability principles in
day-to-day business activities.
In order to be transparent in our actions and show society how
sustainability is present in our daily lives, we have reformulated
our sustainability website. We have published information on
our major environmental projects and initiatives. We also give
tips on reducing waste and emissions and on the rational use
of water and energy.
Furthermore, we have thematic teams for energy, water,
emissions and waste that discuss and propose solutions to
improve eco-efficiency.
37
IDENTITY
CODE OF CONDUCT
The Votorantim Group’s Code of Conduct was launched in
2005 to provide the basic guidelines for our day-to-day business
activities. The Code expresses our commitment to ethics in our
relations with customers, employees, shareholders, suppliers,
government, media, communities and society in general. It is a
tool for daily use, to guide actions and decisions. The Code is
mandatory for the organization’s employees and also serves as a
reference for relations with Votorantim’s partners and suppliers.
Votorantim employees in Brazil or overseas, contract staff,
partners, suppliers and other stakeholders have access to the
Code of Conduct, which is available in several languages at:
www.votorantim.com.br/pt-br/ouvidoria/codigoconduta/
Paginas/codigoConduta.aspx
As well as the Code of Conduct we also maintain a
framework of internal policies and standards, such as the
Global Corporate Anti-Corruption Policy that addresses
issues such as bribery and payment facilitation, accounting
rules, establishment of internal controls and management of
third party staff. This policy applies to all our operations and is
consistent with the Foreign Corrupt Practices Act (FCPA-USA)
and the Bribery Act (UK).
VOTORANTIM RECOGNIZED FOR ITS
ANTI-CORRUPTION PROGRAMS
In 2013, Votorantim was recognized by the
non-governmental organization Transparency
International as one of the best performing Brazilian
companies for anti-corruption programs. The study
evaluated the practices of 100 emerging market
companies in 16 countries.
To protect the organization and ensure the legal
compliance of its operations, we can count on:
• Code of Conduct.
• Compliance policies and programs in accordance
with national and international anti-corruption
laws.
• Corporate policies for electoral donations.
• Training courses on compliance policies and issues
for managers and other employees.
Ombudsman
The Votorantim Ombudsman is available to all stakeholders
(in Brazil and overseas) – employees, suppliers, customers,
communities, media and others – for any issue, but especially for
those covered by our Code of Conduct, such as harassment
(moral, sexual) discrimination, suspected fraud, abuse of power,
embezzlement, illegal acts and other forms of non-compliance.
All requests and complaints are treated as confidential
(identification is optional) and with impartiality. The Ombudsman
can be accessed in the following ways:
Complaints are recorded in a stand-alone system. Investigations
are carried out by Corporate Audit, which sends the results to
the Ombudsman, who in turn replies to the complainant.
As a consequence of the new Votorantim Industrial governance
structure, in addition to the Corporate Ombudsman, each
Industrial Company will have its own Ombudsman. This new
model will be implemented gradually.
Complaints will be dealt with in bimonthly meetings between
Internal Audit and the respective Conduct Committees (Votorantim
Industrial or the Industrial Companies, as appropriate).
The Corporate Conduct Committee is composed of
representatives of the Conduct Committees of the Industrial
Companies, Internal Audit, the corporate areas of Legal and
Human and Organizational Development (HOD). It is responsible
for: handling special cases submitted by the Conduct
Committees of the Industrial Companies; establishing criteria for
cases which are not provided for in the Code or in situations of
conflicts of interest; ensuring uniformity in the criteria used; and
for promoting the good functioning of the Ombudsman system
in the organization.
In order to align the guidelines and decisions and formalize the
way of working, an Ombudsman Policy has been developed,
which is valid for the whole organization.
The remediation process follows the principle of consequence
management for recurrent cases and is applied according to the
organization’s Code of Conduct. Consequences include:
guidance, warnings, transfers/reallocations and/or dismissals/
cancellation of contracts.
VID’S INTERNAL AUDIT: THE
GUARDIAN OF CORPORATE CULTURE
The Internal Audit Department is a part of the set of
structures and guidelines that we call corporate “lines
of defense”.
This corporate security framework consists of four
lines of defense:
• 1st line of defense: Internal Controls – models,
processes and procedures implemented across the
whole organization to ensure that organizational
objectives are achieved.
• 2nd and 3rd lines of defense: Analysis and
monitoring of all factors that can affect the
development of the business and the sustainability
of the organization. This is overseen by the Risk
Management and Compliance functions.
• 4th line of defense: Internal Audit assists the VPAR
Board of Directors (as well as the Board of Directors
or Supervisory Committee in each of the Industrial
Companies) to perform the role of supervising and
monitoring business activities.
Internal Audit will play a predominant role in ensuring
that the new Votorantim Industrial corporate governance
structure develops in a mature manner. Because of this
the area was upgraded and restructured in 2013 with
the aim of seeking continuous improvement and making
it attuned to the organization’s new situation.
Under the new governance structure Internal Audit will
have its own area in each Industrial Company, thus
helping to ensure the implementation of common
policies and guidelines and the strengthening of
Votorantim’s corporate identity. In addition each
Industrial Company will have its own Audit Committee.
TELEPHONE
0800-8911729
WWW.VOTORANTIM.COM/PT-BR/OUVIDORIA
38
39
IN 2013, OUR EBITDA
GREW STRONGLY, BY
30% IN METALS AND
39% IN MINING.
VOTORANTIM METAIS’
BUSINESS MODEL AND PERFORMANCE
FINANCIAL PERFORMANCE
Our financial performance highlights were as follows:
Metals
Global zinc stocks reduced since production was not
sufficient to meet the strong demand, especially from
automotive sectors in China and the United States.
Despite this, the high level of macroeconomic
uncertainty dominated the good fundamentals and the
price on the LME ended the year 2% lower. In Peru, we
operated close to our maximum production capacity
and sales increased by 8%, to 335 thousand metric
tons, destined mainly for export. The combined total of
the zinc export sales of our operations in Peru, the US
and Brazil was 462 thousand metric tons. In Brazil, our
zinc production was sold mainly into the domestic
market. Sales rose by 9% as a result of higher
production and demand by the automotive, civil
construction and white goods sectors, which are our
main customers.
40
There was a surplus of production in the global
aluminum market, since the expected recovery of
demand did not materialize. Additionally, inventories
remained high, resulting in a 9% drop in the LME price.
In Brazil, the production of primary aluminum fell by
9%. The biggest challenge facing the industry is the
high cost of energy. In this respect, we have a
competitive advantage since we obtain a substantial
percentage of our electric power requirements from our
company-owned hydroelectric plants at the Juquiá
Complex (SP), which are connected directly to our plant.
Furthermore, to improve our gross margin, we focused
our sales efforts on the Brazilian market, and on higher
value-added products. Our sales volume in the domestic
market grew by 13%, while exports fell by 71%.
In the nickel business there was an increase in demand during
the year, especially from the stainless steel industry in China,
but not enough to sustain market prices. Macroeconomic
uncertainties, combined with an increased supply of nickel pig
iron (a lower-cost substitute product), continued to exert
downward pressure on nickel prices, which fell 13% on the
LME. Our decision to temporarily suspend the activities of
Fortaleza de Minas (MG) will impact the volume of production
in 2014. In 2013, our annual nickel sales volume grew by 3%,
rising to 34.8 thousand metric tons.
The net revenue for 2013 for Votorantim Metais totaled
R$ 8.4 billion, with zinc accounting for R$ 4.0 billion; aluminum,
for R$ 3.1 billion; and nickel, for R$ 1.3 billion. The increased sales
for zinc and aluminum in the Brazilian market contributed
positively to this result, since the effect of the devaluation of the
R$/US$ exchange rate more than offset that of the fall in LME
prices (in US$). On the other hand, the net revenue from nickel
sales fell by 5%, since the significant drop in the LME price
(in US$) was not fully offset by the devaluation of the
R$/US$ exchange rate.
The total cost of goods sold for aluminum fell 2%, due to the
lower sales volume. For zinc, the cost of goods sold rose by
3%, due mainly to the higher sales volume. For nickel, the cost
of goods sold rose by 4% due to the higher sales volume and
an increase in the cost of energy inputs.
Our total EBITDA grew strongly, by 30%, to reach R$ 968
million in 2013, with the EBITDA margin rising to 11%. These
improvements were due to: the greater operational stability of
our plants; a focus on cost control; reduced administrative
costs; the sale of excess energy; and the net effect of the
devaluation of the R$/US$ exchange rate.
Mining
In 2013, the global mining situation was affected by a reduced
growth rate in China, which is the main customer for mineral
commodities, and lower LME prices. Despite this, our Milpo
operations achieved a significant increase in sales volume,
16% higher than the previous year, due to the organic growth
of our mining activities, and increased metal production
volumes due to higher metal ore grades.
We obtained a 23% increase in concentrated ore compared to
the previous year, as a result of expansions at Milpo’s Cerro
Lindo and El Porvenir plants in Peru. We increased the annual
production of lead and zinc concentrates by 49% and 17%,
respectively. Due to the combination of production expansions,
higher metal ore grades and improved operating performance,
we increased EBITDA by 39%, and EBITDA margin by 6%,
compared to 2012.
41
Votorantim Metais’ Business Model and Performance REPORT VOTORANTIM METAIS
PRODUCTS, SERVICES AND CUSTOMERS
We have the following range of products: zinc, nickel,
aluminum, cobalt, cadmium, anhydrous sodium sulfate, copper
sulfate, zinc oxide, sulfuric acid, metallurgical coal, limestone
powder and mineral concentrates.
Our products and services are used in many every day
applications, principally in the civil construction, consumer
goods, packaging and transportation market segments.
Zinc
Special High Grade
(SHG) Zinc
Galvanized and electrolytic galvanizing processes for ingots, jumbos and granules.
Zamac
Die-casting and centrifugal casting.
Special Zinc Alloys
Zn4E, Galfan and ZnNi alloys and the development of custom alloys according to customer needs.
Zinc Powder
Production of alkaline batteries and corrosion protection paints.
Zinc Oxide
Vulcanization of rubber, cosmetics, zinc phosphates, drugs, glazed ceramics, polymers, agribusiness,
animal nutrition, etc.
Agricultural Lime
Powder:
Correction of soil pH and enhancement of the effects of fertilizers.
Concentrates
Manufacture of metallic lead, silver and lead.
Sulfur Dioxide
Bleaching of pulp, sugar and kaolin, preservatives for food products and bisulfite production.
Sulfuric Acid
Manufacture of agricultural fertilizers.
Copper Sulfate
Applications in agriculture, livestock, mining, electroplating and the chemical industry.
Cadmium
Manufacture of Ni-Cd batteries, pigments for paints and metal alloys.
Nickel
Electrolytic Nickel
Electroplating, super-alloys and non-ferrous alloys.
Nickel Coins
Titanium Baskets.
Cobalt
Production of super-alloys, magnetic alloys, cutting tools, chemicals, batteries, fertilizers and animal feed.
Anhydrous Sodium
Sulfate
Chemicals, ceramics, textiles and related industries, soap and detergent, glass and pulp and paper.
Sulfuric Acid
Sugarcane (ethanol), pulp and paper, chemicals and fertilizers in general.
Aluminum
Plates and Coils
Buses, highway equipment, household articles, refrigerators, machinery
and equipment, roofing.
Fine and Medium
Sheets
Food packaging and disposable packaging.
Thick Sheets
Automotive heat exchangers and air conditioners.
Extruded Profiles
Civil construction (walls, doors, windows, seals); infrastructure equipment (molds and scaffolding);
transportation (bus, highway equipment, bicycles, motorcycles, rails); consumer goods (ladders, chairs,
furniture, solar collectors); and a variety of other types of machinery and equipment.
Billets
Intermediate product for extruded profiles.
Rebar
Intermediate product for the production of wires and cables.
Ingots
Intermediate product for various casting products such as automotive wheels, engine and
compressor blocks, as well as a raw material for all other products.
42
We recently restructured the sales area of the aluminum
business, based on an analysis of the internal processes and
market demands. We redefined roles, processes, metrics and
customer service investments. This represented a new approach in
our relations with customers and the market. It began to be
implemented in 2012 and has progressed rapidly in 2013. In the
process, we changed our way of approaching the market by giving
greater emphasis to our customer’s market segments, thus
leveraging our competitive advantages. We restructured our
marketing processes and customer segmentation, and now have a
different approach for each type of customer, allowing us to
capture more value and deliver customer service in a more
personalized way.
For example, one of our initiatives to integrate processes
and increase customer satisfaction was the implementation
of a new functional module, Available to Promise (ATP), in the
SAP System. The main benefits of the ATP module are the
accessibility and completeness of information on deliveries,
inventory, production and shipments, greater process automation,
improvement in business management and planning and a high
level of service to customers.
We organized an event in May 2013 entitled “Transformation and
Commitment.” The President of Votorantim Metals, Tito Martins,
made a presentation to 50 invited guests on our action plans
aimed at reinforcing our commitment to provide a high and
differentiated level of service to our customers.
TITO MARTINS ELECTED CHAIRMAN
OF THE BOARD OF ABAL
The president of Votorantim Metais, Tito Martins, was elected Chairman of the Board
of the Brazilian Aluminum Association (ABAL) in November 2013. He was elected
unanimously for the period 2013/2015.
ABAL is the principal trade organization representing the aluminum industry and its
member companies represent 100% of the primary aluminum producers. It organizes
its activities through working committees and sector groups to address the key
challenges to the sector. It also represents the interests of the industry in relations
with government agencies.
43
EMPLOYEE DEVELOPMENT (HUMAN CAPITAL)
Our Human and Organizational Development area has
been charged with the mission to build a high performance
organization to support the execution of the company’s
business strategy.
To achieve its mission the area established the following
strategic objectives:
• Ensure that the organization has a business model,
organizational structure, guidelines and policies that are
appropriate to realizing the full potential of the business.
• Ensure that at all times we have the ability to attract
and retain talent.
In the area of Employee Development, we created the
Supervisor Training Program and prepared an Individual
Development Plan for 85% of our employees.
Other highlights of 2013 were: the definition of HOD
performance indicators, with monthly monitoring; and the
creation of a Labor Relations Plan. Furthermore, we invested
in the management of the company’s reputation, through
relations with the media and external stakeholders.
For 2014, the challenge will be to give continuity to the initiatives
implemented, based on previously defined strategic objectives,
thereby strengthening our employee management practices.
•Ensure a pipeline of potential future leaders and the ongoing
development of employees.
•Ensure the competitiveness of personnel costs.
DIVERSITY ON THE AGENDA
• Contribute to the formation of the desired organization culture
and positive reputation, creating value in the relations with our
various stakeholder groups.
At Votorantim Metais we understand that the theme of diversity covers a wide
range of topics such as gender, people with disabilities and even skills, among
other issues. In 2013 we set up a Valuing Diversity Committee, to address the
theme. The committee is chaired by the Social Responsibility area and composed
of professionals from the DHO, Health, Sustainability, Legal and Communications
areas. In order to give the subject focus and begin to produce results, the
committee chose women and people with disabilities as the first priorities.
• Ensure that the organization’s beliefs and values are lived in
our daily activities.
• Ensure sustainable relations with our stakeholders groups, thus
adding value to the business.
In 2013, we made progress on several fronts.
We initiated a process of organizational restructuring, which
will be implemented in 2014, aimed at making it more consistent
with our business strategy. We developed a Home Office Policy
and established a Valuing Diversity Committee, which set a
short-term priority of hiring and integrating women and people
with disabilities.
For 2014 we have approved the Valuing Diversity Program consisting
of 23 actions on specific issues such as recruiting, retention, development
and organizational culture. We started the year with a campaign to increase
the number of women in the company.
Also on the subject of women, in 2013 we approved a policy of granting up to
six months maternity leave. The employee must request this within 30 days of
the baby being born. We are studying the possibility to establish six months
leave as standard practice, except in cases where the employee formally objects.
In 2014, we will launch a pilot project to establish a breastfeeding room.
INNOVATION/RESEARCH (INTELLECTUAL CAPITAL)
HEALTH AND SAFETY
The safety of the people working in our units is the top operational
priority. Our goal for 2020 is that all operating units will achieve an
accident frequency rate below 1, with or without lost days, and
have zero fatalities. Although we are making good progress,
recording better and better performances year on year, we must
continue to pursue our goal very firmly.
Another aspect worthy of note was the creation of the process for
the Control of Critical Safety Risks. This is a structured
approach to controlling the safety risks that could result in fatalities
in our operations. Besides avoiding this type of occurrence, the
initiative aims to reduce accident frequency rates and make our
operations a benchmark for occupational safety.
In 2013, our accident frequency rate with or without lost
days (level 2 and above) improved by 40%. We reduced the
rate from 4.76 in 2012 to 2.89 in 2013. Unfortunately, despite
all our efforts, three fatal accidents occurred with third party staff
(two in Milpo, Peru and one in Juiz de Fora (MG). Our challenge is
to eliminate the occurrence of fatal accidents.
Another highlight was the positive results of the Safe Behavior
Program. By careful analysis of the operational activities it seeks
to strengthen safety practices and reduce the occurrence of
behavior that could lead to accidents.
During the year, we organized a number of workshops on safety
with employees in positions of leadership. The aims were to carry
out a critical analysis, prepare and monitor action plans to identify
opportunities for improvement, with a focus on reducing
accidents. These workshops were fundamental to our achieving
an improvement in the accident frequency rates.
In Brazil, the Vazante (MG) plant, with a rate of 0.83, São Miguel
Paulista (SP), with a rate of 0.68, Niquelândia (GO), with a rate of
0.96 and Minerações da CBA (MG), with a rate of 1.04, achieved
above average performance. Our plant in Cajamarquilla, Peru has
been consistently lowering its accident frequency rate (to 0.99),
and received an award from the Peruvian Ministry of Labor for its
good practices in health and safety management.
46
Our figures on safety performance include third-party staff, but do
not consider accidents while traveling. Currently, for third parties,
we have a manual on Health and Safety and the Environment and
only authorize the entry of trucks into our operating units after a
safety inspection (brake lights, direction indicators, sidelights, etc.).
On the topic of health, we made a survey of occupational health
in 2013. The survey covered all of our units including and our
health programs. Based on the results of this survey we developed
plans for medium and long term actions, aiming to improve
occupational health management. We have prepared a manual of
the best market practices in terms of occupational health, which
we will revise and implement in all units, in Brazil and abroad, and
will also establishing a governance system for them.
In 2013, we began to monitor employees’ health-related
indicators such as medical absenteeism (above and below
15 days), causes of absenteeism and body mass index. We
inaugurated the healthcare program, in partnership with the
health plan operators, to monitor chronic diseases and, when
necessary, help employees who had difficulties in controlling their
health problems. We believe that this healthcare initiative is
beneficial both for the employee, caring care for his/her health,
and the company, reducing absenteeism and improving its
control over chronic diseases and their possible consequences.
We have established agreements with fitness centers and
physical education professionals, who offer discounts to those
employees interested in working out.
In 2014, we will continue to give priority to the health and
welfare of our employees. We intend to review the menus at the
restaurants in our units to ensure they offer healthier food
choices. Furthermore, in 2013, in our headquarters in São Paulo,
we replaced the snacks and soda vending machines with a trolley
containing light sandwiches, juices and cereal bars.
Our plant in Vazante (MG) was awarded the Brazil Protection
Prize 2013 for Occupational Health and Safety for its Living
Well Program, an initiative focused on employee quality of
life. More information on this award can be found in the
section in this report on “Honors and Awards for Votorantim
Metais”, in the chapter “Business Overview”.
We have three lines of research and development projects in
relation to processes aimed at:
• Increasing energy efficiency and reducing greenhouse gas
emissions.
• Increasing water efficiency.
• Reducing waste generation.
In relation to increasing energy efficiency and reducing
greenhouse gas emissions we are exploring four areas of
innovation:
• Substitution of liquid and solid fossil fuels, such as oil and
coke, at our plants in Niquelândia (GO), Três Marias (MG),
Juiz de Fora (MG) and Alumínio (SP).
• Recovery of energy from hot process water and slag, at the
plants in Niquelândia (GO), Juiz de Fora (MG) and
Aluminum (SP).
• Reduction of the specific consumption of all types of
energy and in all Votorantim Metais’ units.
• Self-generation of electric power from renewable sources
at our plants, particularly solar-powered energy.
All together, we have 15 research projects, which are applicable
to all Votorantim Metais’ units, such as: use of fuel oil from
renewable sources in our three businesses; use of bio-gas in
Niquelândia (GO), Três Marias (MG) and CBA (SP); heat recovery
in general (from gases, solids and liquids) aimed at reducing
steam consumption in all plants; process automation with a
focus on reducing energy consumption; use of biomass in our
metallurgical processes; etc.
47
expensive) and dispose of a hazardous waste. The Companhia
Brasileira de Alumínio (CBA) generates 1,500 metric tons per
month of this waste, which has a high storage cost.
Another good example is the case of tailings dam
(in Barragem de Palmital), which stores waste from the
aluminum production. We aim to increase the life of the dam,
avoiding a cost of R$ 300 million for the construction of a new
dam. Since the problem of this waste is the large volume of liquid
we studied the possibility of using giant-sized filter-presses, to
separate the solid portion from the liquid. The dry residue is much
easier to store and handle and occupies less space. Pilot tests
indicate that it is possible to reduce the waste to 80% solids.
Consequently, new estimates indicate that not only is it possible to
double the dam’s useful life by 2030, but it might be feasible to
extend it until 2045. We will carry out further tests in 2014, using
larger filters. We estimate that we could start operating effectively
with the new configuration, as from 2016.
We have patents in the areas of mineral processing and in the
metallurgical processes for zinc, nickel and aluminum. One
patent is related to the integrated treatment of zinc sulfide and
oxide concentrates. Our plant in Três Marias (MG) is the only
one in the world with this production process. In 2013, we
registered a green patent for the use of the waste originating
from the aluminum furnaces.
We also seek to develop technologies to improve the viability of new
mineral deposits and extend the life of existing ones, in view of
future trends, and to discover methods for the recovery of
lower-grade ores, including from dam tailings, in order to prolong
the useful life of our mines and thus improve business performance.
Our strategic innovation governance is divided into four pillars,
with people, our employees, being the most responsible for the
generation and implementation of all innovations.
CORPORATE GOVERNANCE/TECHNOLOGY AREA
With regard to improving water efficiency, we are
researching two areas of innovation:
• Recirculation of industrial water and general reduction of
water consumption at industrial plants. In this area, we
have 18 research projects, including: filtration of water
ions in waste water at Três Marias (MG), Niquelândia (GO)
and São Miguel Paulista (São Paulo – SP);
• Decanting and cycloning of final sludge from nickel, zinc
and aluminum production processes in order to recover
the water, before the final disposal of waste, and send it
directly to filtration. Among other types of technology,
we have chemical and physico-chemical treatments such
as water softening and the chemical precipitation of
unwanted elements, such as magnesium, in the
industrial waste water of all our plants.
The innovation process at Votorantim Metais is based on a
tripartite model, with the participation of the company,
universities and/or technology centers and government, as well
as partner companies. In relation to energy efficiency, we have
established a partnership with the Institute for Technological
Research (IPT). The IPT assists us in the technical discussions on
conducting reliable measurements for testing fuels at our pilot
48
plant. In the case of water efficiency, we have a partnership
with the Federal University of Minas Gerais (UFMG), which
assists us in the theoretical background and the planning of
testing, in laboratory practices and in the pilot study, which are
then carried out in Votorantim Metais’ plants.
We believe that technology to be a key differentiating
factor in developing incremental improvements in products
and processes. With these research and development
initiatives and technology projects, we aim to generate
revenues and/or reduce costs, and at the same time
contribute to the sustainability of the business. We have a
goal to achieve zero solid waste, and 100% recycling of
waste water by 2020. The waste from one process can be
used as an input to another.
Innovation
Strategy
Performance
(economic,
environmental,
social)
People
Innovation
Processes
Industry and
Government
Intelligence
In relation to reducing waste, a good example of one of our
initiatives is the case of the waste from aluminum furnaces; it is a
toxic, class 1 hazardous material, which must be disposed of in a
secure landfill. In an attempt to find a solution we are testing the
use of this waste as one of the energy inputs in our Niquelândia
(GO) plant. Since the nickel production process consumes high
volumes of fuel oil, the use of this waste as an alternative energy
input would reduce the consumption of fuel oil (fossil fuel and
49
These four pillars are an integral part of our open innovation strategy, where we sell both our own ideas and innovations from
other institutions, seeking to bring sustainable products to the market that can add value for both the shareholder and society.
research
development
licensing of patents
sales and marketing
internalization of
prototypes for
scale-up
Innovation/Research Financing
Despite the short-term difficulties in the mining industry, we
are optimistic about the continuity of our research and
development projects. In December 2013, we signed a loan
agreement in the amount of R$ 140 million with FINEP
Inovação e Pesquisa to finance internal costs, mining
exploration projects and the Alumina Rondon project.
Another way to finance our investments in research
and development and innovation is to obtain grants
(non-refundable) such as those provided by Embrapii
(Brazilian Company for Industrial Research and Innovation).
Embrapii is a pilot project created in December 2011 to
stimulate innovation in Brazil.
internalization of
technology ideas
internalization of
patents/know-how
for development
spin-offs
Time
We have already signed agreements for eight new projects and
have others awaiting approval. One grant was for the
development an innovative system of fuel combustion, aimed at
reducing the consumption of fossil fuels. The projects are
developed in partnership with Senai-Cimatec, which provides
intellectual capital, laboratories, equipment and facilities.
The total investment in these projects is R$ 20.9 million. This
positions us as one of the principal industrial companies to use
this incentive system for innovation since its launch in 2011.
Including the first project, Votorantim Metais is investing
R$ 23.4 million under this partnership. Senai-Cimatec is one of
the three national science and technology institutions accredited
by the Brazilian Association for Industrial Research and
Innovation (Embrapii). It is a civil society organization that is
sponsored jointly by the National Confederation of Industry (CNI),
the Ministry of Science and Technology (MCTI), and the Financier
of Studies and Projects (FINEP).
The financing of these investments will be divided equally
between Votorantim Metais, Senai-Cimatec and Embrapii.
Following the liberation of funds by FINEP, Votorantim Metais
will invest an amount equal to one third of the budget of each
project developed within the scope of the partnership.
Votorantim Metais is currently the company with the largest
number of projects approved by Senai-Cimatec. In terms of
amounts, the projects developed by the company accounted
for 32% of Senai-Cimatec’s total budget.
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METAL RECYCLING PLANT
In the Zona da Mata region of the state of Minas Gerais,
we are conducting a pioneering project: the first
Polymetallic plant in Brazil. With a budget of R$ 521
million, the objective of the Polymetallic project is to
transform the zinc manufacturing plant in Juiz de Fora
(MG), which currently uses 100% of imported raw
materials, into a recycling company for the zinc production
chain, by the recovery of alternative materials.
In addition to the current products such as zinc, zinc alloys,
copper sulfate, sulfuric acid and silver concentrate, our
unit of Juiz de Fora (MG) will be able to produce lead
sulfate, Waelz slag (with applications in cement and
highway surfaces) and a mixed salt product (sodium and
potassium chloride).
Investments in equipment with a strong environmental
appeal, as the Waelz furnace, enable us to process
materials with low zinc content, which are not being used
today. Among these is the waste generated in the Juiz de
Fora plant and in our zinc mines in Brazil, as well as EAF
dust, which is a toxic class I residue produced by the steel
industry and which is currently disposed of in controlled
landfills. In this way, the company ensures an appropriate
final disposal of these materials and also reduces the need
for imported zinc concentrates.
Considering the capability of the Waelz furnace to process
other materials containing zinc, we are equipped to treat
approximately 85% of EAF dust generated by the steel
industry in Brazil, which corresponds to all the EAF dust
generated in Minas Gerais.
Another environmental gain from this project comes from
the modification of the hydro-metallurgical process at the
Juiz de Fora plant, which will no longer generate jarosite, a
type of sulfate which represents 80% of the waste
currently generated and which is stored in a purpose-built
dam. The choice of the technology used in the
Polymetallic project was based on an extensive survey of
the most modern processes available in the world today.
51
Votorantim Metais’ Business Model and Performance SUPPLIER MANAGEMENT
We had about 7,400 registered, approved suppliers active in
2013. We aim to increase the hiring of suppliers in the regions
near our units as a way of encouraging economic development
and the generation of local employment.
We believe this is a way to create shared value and to make
a permanent contribution to the economy and the society
surrounding our operations, the majority of which are located
in remote areas, a long way from major cities. It is a way to
promote development and, from the very beginning, we take
action to reduce the local community’s dependence on
mining activity.
Our efforts to develop the local supply chain, especially service
providers, will contribute to the success of our projects and
constitutes part of our risk management. We give priority to the
local labor workforce and invest in developing its technical skills,
thereby fostering a greater commitment to the project. It is a
way to eliminate the risks that are inherent in the use of migrant
labor, such as high turnover and its consequences, which can
impact time schedules and safety.
Thus, in addition to considering technical and commercial
factors, we are including this factor in our selection of suppliers,
at all stages of the value chain. To be approved as a supplier,
companies must meet requirements of management, safety and
labor relations. As such they will be well prepared to be a
supplier to any company with the size and high level of
expectations as Votorantim Metais.
Our concern for the development of suppliers begins in
the project design phase and is an integral part of obtaining
the social license to operate. While the areas responsible prepare
the project and study its technical and economic viability, we
also start to assess the local labor workforce and the approach
for its training.
52
SUPPLY CHAIN SUPPORT IN GOIÁS
Under the leadership of the Federation of Industries
of the State of Goiás/Euvaldo Lodi Institute (FIEG/
IEL), we joined up with two other mining companies,
Anglo American and AngloGold Ashanti, to create
a Supplier Development Program, under the
terms of an agreement signed in December 2013.
The objective was to train suppliers based in the
municipalities of Barro Alto, Crixás, Goianésia,
Niquelândia, and Uruaçu, where the plants of the
three companies are located. With the training
of these suppliers, the intention was to further
strengthen business activity near the plants, which is
important for the sustainable development of these
municipalities.
LOCAL COMMUNITY DEVELOPMENT
The Supplier Development Program aims to
encourage competitiveness, improve management,
increase the market potential and foster a socially
and environmentally responsible attitude in the
supply chain. Furthermore it seeks to promote
professional training and strengthen the local
business associations.
In 2013, in partnership with the Votorantim Institute, we
invested directly or indirectly more than R$ 9.8 million in about
50 projects to develop the communities where we operate,
focusing on work, education, culture, sports and local
development. The projects are located in 25 municipalities in
São Paulo, Minas Gerais, Goiás and Cajamarquilla (Peru).
The training program is coordinated by the Institute
Euvaldo Lodi and includes topics such as financial
management, human resources, quality, marketing
and planning. The agreement included the
organization of three business events. The first event
was held in December 2013 in Niquelândia (GO) with
the participation of 24 local businesses.
They are important initiatives, especially in remote locations,
which require infrastructure and labor. It is not a question of
taking the role of the government, but of acting to create the
necessary conditions to enable the success of our enterprises.
We also want to leave a positive legacy for these communities,
in various interdependent sectors, such as education,
entrepreneurship, income generation and community services.
One of the points to highlight in the year was our efforts
to improve the management of social projects. All projects
undergo a quarterly evaluation by a company contracted
by Votorantim Metais to analyze factors such as resource
management, time schedule and achievement of goals.
A report is prepared and distributed to management.
Another new development in our social responsibility strategic
plan is that the operating units, due to their proximity to the
communities, will define which projects will have our financial
support. To facilitate this, we classify projects according to its
goal or the legacy we want to leave in the community. In
locations that do not depend on the presence of Votorantim
Metais, projects are focused on community relations.
On the other hand in municipalities that have a deficient
development structure, and are heavily dependent
economically on our activities, we seek to stimulate local
development, in coordination with other sectors. For these
situations, we developed the Support for Public Management
Project – implemented in Vazante (MG), Três Marias (MG) and
Fortaleza de Minas (MG), in partnership with BNDES – and the
NGO Qualification Project, implemented in Fortaleza de Minas
(MG). In addition, we conducted projects aimed at generating
income, employment and entrepreneurship that foster local
economic dynamism.
53
The main projects in 2013 were:
Tela Viva (Itamarati de Minas (MG))
This is a cultural project, implemented in 10 municipalities, that
aims to stimulate market access and generate public interest
for the Brazilian audiovisual industry, through its mobile
cinema, which travels around city suburbs and rural districts.
Since 2009, nearly 250 cinema sessions were held in the Zona
da Mata region of the state of Minas Gerais. In 2013, the
project continued with public cinema sessions and supported
film production in these communities. In partnership with local
governments, it provided transportation to take students and
teachers to cinemas and theaters in the region. The project cost
R$ 250 thousand, funded by the Rouanet Law tax incentives,
and 12 thousand people participated.
Work Education Program (São Miguel Paulista – SP)
This program fosters social inclusion, human rights and
citizenship and looks for employment opportunities for young
people from low-income families in the communities of Jardim
Pantanal and Itaim Paulista (São Paulo – SP). The program,
which is offered in partnership with the National Service of
Commercial Learning (SENAC), gives young people the
opportunity to experience working in large companies and
helps them to gain access to the formal labor market. From
2010 to 2012, 240 young people completed this program.
In 2013, over 120 young people were trained and the
investment in the year was R$ 269,350.
Echoes of the Forest Program (Miraí – MG)
Future in Our Hands (São Paulo – SP)
This program, which started in 2010, aims to establish the
basic conditions for sustainable regional development, with the
participation of government, business and civil society. In one
of its initiatives, the Training Public Managers Project, 94
people, including 80 government representatives and 14
representatives of social organizations and community leaders
participated in training courses. In another initiative, the Forum
Project, we organized meetings in nine different locations to
prepare a regional development plan. The initiative on Training
for Rural and Ecological Community Tourism provided training
for 109 participants in 11 workshops, and produced three
development plans for rural tourism. At the end of 2013 the
program began strengthening the Development Agency for the
Zona da Mata region (ADEMATA), aiming to consolidate the
sustainability of the process carried out in the region. In 2013,
R$ 100 thousand was invested in this program.
Eye on the Future Program (Fortaleza de Minas – MG)
Since 2012, this program has been working to strengthen the
smallholder farmers that participate in the PAIS project
(Sustainable Integrated Agro-ecological Production), focusing
on developing innovative technologies and improving sales by
the identification of new markets. The 60 participating farmers
sell their produce to the Full Table Program, the Zé Maia
Supermarket and two state schools. In 2013, R$ 216,960
was invested in this program.
54
This program aims to train young people to work in
metalworking and the installation and maintenance of
aluminum frames as well as help them gain access in the labor
market. It provides coaching and training for the labor market,
formed by a network of partners in various business sectors.
Since 2006, the project has trained more than 400 young
people and helped 60% of them obtain employment. In 2013,
the investment was R$ 274,168, and benefited more than
80 people. The average monthly income achieved after training
under the program was R$ 800.
Quality of Life and Sustainability for Pig Breeders
Program (Cajamarquilla – Peru)
This program, which has been in operation since 2012,
provides training in pig breeding for 35 families living in the
Cajamarquilla region. The objective is to improve the quality
of life of these families by setting up a supply chain and
improving hygiene, sanitation and safety. Investment in 2013
was R$ 91,200. The expected monthly revenue of the families
is equivalent to R$ 780.
Educating for the Future Program
(Cajamarquilla – Peru)
This program aims to improve the quality of the numerical and
verbal reasoning skills of adolescents and young adults in
Cajamarquilla. It consists of training and coaching for teachers
and students in selected public high schools in the region. The
program was set up in 2013 and has since then has benefited
461 people, with a total investment of R$ 373,147.
Três Marias Printing Project (Três Marias – MG)
This project, which began in 2013 and was inaugurated in April
2014, was to support the establishment of a cooperative of
seamstresses, called Coopermoda, to sell clothing and uniforms
to businesses and schools in the region of Três Marias (MG).
Votorantim Metais executed a project, with the support of the
Votorantim Institute’s Networks Program and the BNDES, to
assist the cooperative in building its own facilities, acquiring
machinery and providing training for the cooperative’s members
on subjects such as sales, orders, inventory, customer service and
pricing. One of the group’s goals, for the future, is to produce
uniforms for the Votorantim Metais’ plant in the town.
Flavors Farm Project (Niquelândia – GO)
This is another local development project supported by the
Votorantim Institute’s Networks Program. It aims to expand the
production of bread, cakes and cheese bread that are prepared
by a cooperative of women in Niquelândia and sold to local
schools. We supported the cooperative in the acquisition of
machinery and provided training. The cooperative’s new
facilities were opened in 2013, which will allow it to serve new
markets. Up to the present it has operated on a work-to-order
system with the products being delivered to schools for
immediate consumption. With the new facilities it will be able
to freeze its products and so diversify how it supplies the
market, allowing it to serve supermarkets, hotels and other
commercial establishments.
Volunteer Program
In 2013, we strengthened the corporate volunteer program.
This year, in addition to participating in the activities organized
under VID’s corporate program, initiated in 2008, we adopted
the same format of undertaking initiatives on a monthly basis,
from March to November, in our plants in Cajamarquilla (Peru),
Juiz de Fora (MG), and São Miguel Paulista (São Paulo – SP).
These initiatives were carried out in partnership with civil
society organizations and schools, such as the partnerships
with the NGO TETO (Roof), which helps build emergency
housing for families in highly vulnerable situations and the NGO
Grupo Terra (Earth Group), which provides recreation and
entertainment for the visually impaired. In the Cajamarquilla,
Juiz de Fora and São Miguel Paulista plants, our actions were
focused on education, and targeted at meeting the needs of
local public schools and supporting youth entrepreneurship. In
2013, about R$ 70 thousand was invested in these initiatives,
which benefited 3,727 people.
We also organized a “V DAY”, in celebration of National
Volunteer Day on the August 28th. On V DAY, all our units
undertook social actions together with civil society
organizations. In 2013, 315 volunteers participated in these
initiatives and 1,384 people were benefited. Volunteering is a
way for the company to encourage employees to carry out acts
of citizenship and promote social transformation in the
locations where it operates.
Maintaining good relations with the surrounding communities
is a very important priority for Votorantim Metais. In order to
establish a formal direct channel with the neighboring
communities we have developed a system and methodology
for dealing with social incidents and handling complaints. The
system provides information on the receipt, recording,
processing, time periods of complaints and the feedback given
to the complainant.
In 2013, the system was tested in a pilot study carried out at
our plant in Três Marias (MG).
FRESH VEGETABLES
FREE OF PESTICIDES
Smallholder farmers Jonathan Viana and his wife
Eneida are happy and proud. Together with another
10 smallholder farmers from rural areas in Fortaleza
de Minas (MG), they are now suppliers of the Walmart
supermarket in Passos (MG). They are supplying
vegetables, such as carrots, beetroots, eggplants,
peppers, zucchini, cabbages and cauliflowers, and all
their products are free from pesticides.
In December 2013, the Agro-ecological Producers’
Association of Fortaleza de Minas (Apafort), in which
Jonathan and Eneida have participated from the
beginning of the project, made its first trial sale of fruit
and vegetables to Walmart. “After just the weekend,
nearly all the products had been sold. We are sure that
those who bought them will like them” they declared.
To meet Walmart’s requirements and close the
contract, Apafort had to develop a nutrition label,
bar code, packaging, and a standardized visual
identification of the space where its products would be
displayed. A standard display layout was also developed
in accordance with the legislation and the market
practices for horticultural products.
Apafort receive consulting support from the Fortaleza
de Minas Agency for Socioeconomic Development
(Adesfort), which in turn is sponsored by Votorantim
Metais and the Votorantim Institute. This support for
Adesfort is just one of our actions for economic and
social development in Fortaleza de Minas (MG).
We carry out other initiatives in partnership
with the Fortaleza de Minas municipal government,
the Municipal Council for the Rights of Children
and Adolescents (CMDCA), the Fortaleza de Minas
Artisans Association (ASSOCIART), the Institute
BioSistêmico (IBS) and the Passos Higher Education
Foundation (HSPA).
COMMITMENT TO THE COMMUNITY
We believe that our commitment to the community begins
even before the start-up of our operations. Therefore, in
parallel with the technical studies for the Alumina Rondon
Project, which will build an alumina plant on a greenfield
site in Rondon do Pará (PA), we began to work on a Public
Administration Support project.
In partnership with the Votorantim Institute and the BNDES,
we provided specialized technical assistance and training to
municipal governments for the preparation of projects and
plans aimed at the modernization of public administration
and the improvement of the municipal infrastructure.
In Rondon do Pará, we plan to carry out the following
initiatives: a survey of the situation of the basic sectors;
provide training for public administrators and civil service
staff to prepare plans for their areas; the joint development
of projects to raise funding; and, finally, providing assistance
to obtain funding, both interest-paying and interest-free,
from state and federal government sources.
In 2013, the program invested R$ 764 thousand and a
further R$ 986 thousand has been committed for the next
few years. In addition, we initiated two training courses, one
in partnership with SENAI, for 140 students, and the other in
partnership with the Federal Institute of Pará (IFPA), for 300
students. These 440 students completed their courses in the
first quarter of 2014.
We believe that by 2015 it is feasible to provide training
for approximately an additional 8 thousand students, in the
municipalities of Rondon, Abel Figueiredo and Dom Eliseu,
in Pará
The Rondon Alumina Project is an integrated facility
composed of a bauxite mine and an alumina refinery and is
located in Rondon do Pará, which is near the city of Marabá,
in the southeast of the state of Pará. Alumina (aluminum
oxide) is produced by refining bauxite. Although alumina is
mainly used for the production of primary aluminum, it is
also used in the manufacture of special ceramic products,
such as electrical insulators. The project has been prepared
in line with best market practices. For example, some of
the features worthy of note are: the rehabilitation of mined
areas to return them to their original uses; the co-generation
of power and steam; the 100% reuse of water; and the
disposal of waste in a dry form. The project is currently in
the process of environmental licensing. After obtaining the
licenses and the approval to go ahead it will take three years
of construction before the start-up of operations. The facility
will have an annual capacity to process 7 million metric tons
of bauxite and produce 3 million metric tons of alumina.
57
Votorantim Metais’ Business Model and Performance WORKFORCE TRAINING
As preparation for the Rondon Alumina we participated
in the organization of training courses for the regional
workforce.
The courses will train around 9 thousand people up to
2015, in the municipalities of Rondon do Pará, Dom
Eliseu and Abel Figueiredo, in Pará They will be able
to compete for about 6 thousand jobs for the project
implementation and 1,600 jobs for the operation of the
alumina refinery and bauxite mine.
This initiative is part of National Program for Access to
Technical Education and Employment (Pronatec) and is
conducted in partnership with the municipal government
of Rondon do Pará, the National Industrial Training
Service (SENAI), the National Rural Education Service
(SENAR) and the Federal Institute of Education, Science
and Technology of Pará (IFPA).
The workforce training courses also includes specific
training for smallholder farmers. The Agricultural
Production Support Program provides training for
operators of machinery and agricultural implements,
technical assistants in agriculture, agro-forestry farmers,
market gardeners, smallholder farmers and forestry
workers. The goal is to foster food production in
the region and enable the local producers to meet the
demands generated by the implementation of
the project.
ECO-EFFICIENCY AND THE RESPONSIBLE
USE OF RESOURCES
Electric Power Consumption/Energy Mix
In our strategic plan, we identified the optimization of energy
resources as one of the challenges for our business continuity.
Our goal for 2020 is to improve our energy efficiency
(per metric ton of production) by 10%, which is double the
goal set by VID. We have defined a list of actions needed to
achieve this goal and we are seeking the resources necessary
to carry them out.
58
This work is being developed by the Energy Technology area,
which was set up in 2012 with a focus on developing projects
to improve energy efficiency and reduce greenhouse gas
emissions, primarily in two areas:
• Energy efficiency – Improve the specific consumption of
our processes, thus reducing the consumption of energy
(electric power, natural gas, coke, fuel oil, etc.).
• Energy flexibility – Replacement of fossil fuels with
alternative fuels.
We are carrying out a number research studies on projects
that are applicable to all our units, such as: use of fuel
oils from renewable sources; use of bio gas; heat recovery
(from gases, solids and liquids) to reduce steam consumption;
automation of processes with a focus on reducing
energy consumption; and use of biomass in our
metallurgical processes.
As a result of these efforts to minimize energy consumption,
in 2013, we reduced consumption by 623,765 GJ and the
cost by R$ 13.4 million. Of this total, 151,226 GJ were of
thermal energy. This saving is equivalent to the thermal
energy required to drive a compact car around the world
1,389 times. The remaining energy saved would be enough to
power 851,104 homes for a month. If we compare these
savings to the energy needs of the city of Alumínio (SP), it
would be enough to power this city of 17,789 inhabitants
and 5,928 households for 12 years. Alternatively, it is
equivalent to the energy needs of the city of São Caetano do
Sul (SP), which has 156,362 inhabitants and 52,121
households, for 1.4 years.
In seeking energy efficiency and flexibility, the following
initiatives were the most important:
• In the Niquelândia (GO) plant, which is one of the largest
consumers of fuel oil in the company, we will test the use of
the biomass, generated by our farms in the region, as a
substitute for part of the coke used to produce steam.
• Also in Niquelândia, we are testing the use of the waste from
the aluminum production furnaces (a toxic class I material) as
an alternative energy input. The probability of success of this
project is high and we could potentially send to Niquelândia
the 1,500 metric tons of waste generated monthly in the
aluminum business. As a result, we could both reduce the
consumption of fossil fuel and high cost in the Niquelândia
plant and dispose of a hazardous waste with a high cost of
storage.
metric tons of waste per year. Of this total, we have already reused
or eliminated 27%. For a further 33%, we have developed a
technological solution, but implementation will depend on making
it economically viable. For the remaining 40% we have ongoing
research projects.
• T hese developments were made possible by an investment of
R$ 500 thousand to modernize the project pilot plant in
Niquelândia. In 2014, our priority will be the modernization of
the pilot plant in Juiz de Fora (MG). In this case the goal is to
replace coke by alternative fuels.
The scope of these projects goes well beyond simply treating
or eliminating waste. We seek to create value from our waste,
including third party waste, as is already occurring, for
example, in our Metalex unit, which is using industrial waste
as an input, and in the Juiz de Fora (MG) plant, which is
recovering zinc from electric arc furnace (EAF) dust. In 2013,
the total revenue total generated from the treatment or
recycling of waste exceeded R$ 100 million.
• In our plant in Três Marias (MG), we have developed an
innovative project which is at an advanced stage of engineering
and feasibility studies, to recover heat from 40 zinc oxide
furnaces. The furnace exhaust gases will be used to generate
steam, which is currently produced by burning fuel oil.
• In our plant in Vazante (MG) we are in the initial stage of a
project to build a small hydroelectric power plant, where the
turbines will be driven by the water that is pumped from the
subsoil to lower the water table.
•Our Technology area is participating in a project, also in an
initial stage, in partnership with Votorantim Energia and a Swiss
research institution, on the use of organic microelectronics to
produce thin photovoltaic films for energy production.
Waste Management
In 2011, we set a target of “zero waste” for our mining and
metallurgical activities by 2020. A survey conducted in 2012
revealed that Votorantim Metals currently generates 5.4 million
Furthermore, the avoidance of investments in new tailing
dams, which is an expenditure that does not add value or
bring environmental or social benefits, is one of the subjects
that has attracted our attention. In addition to reducing
financial costs, it eliminates the negative environmental
impacts of new dams that require virgin land, resettlement of
people and liability control processes.
Since 2010, the Morro Agudo (Paracatu – MG) plant has achieved
“zero waste” in its activities. Following investments in new
technology, the plant no longer generates waste, but produces a
new product, agricultural limestone powder. We invested only
R$ 300 thousand in a new process that avoided the need to build
a new dam every three years at a cost of R$ 35 million each. We
are now producing about 700 thousand metric tons per year of
agricultural limestone powder, which is used to correct soil acidity.
Our agricultural limestone powder product has been approved by
the Ministry of Agriculture and its quality has been certified by the
Votorantim Metais’ Business Model and Performance Federal University of Lavras (MG).
Our successful experience at the Morro Agudo plant has inspired
us to set up further projects to pursue the goal of zero waste by
2020. For example, we have found a viable solution to extend the
useful life of the tailings dam at our Niquelândia (GO) plant for 17
years, thereby avoiding the need to invest R$ 350 million to build a
new dam.
The current dam has been in operation for 30 years and cannot be
expanded by conventional methods. We have developed a new
tailings storage method, based on the experience of our plant in
Fortaleza de Minas (MG). We take all necessary steps to mitigate
the engineering and environmental risks. The first phase of
construction has been completed, and the project is expected to
cost only 1/3 of a new dam without considering the positive
environmental impacts.
In the aluminum business, we set ourselves a goal to double the
life of the Palmital tailings dam by 2020. By using filter presses to
remove the liquid portion of the waste, we created an innovative
solution to a problem that has long bedeviled the global aluminum
industry, prolonged the life of the dam until 2045, and avoided the
need to invest R$ 300 million in building a new dam. During the
execution of the project, we also perceived that we could use the
current dam indefinitely. We are testing the use of our waste as an
input for another industry that could reduce costs and emit 30%
less greenhouse gases. The liquid removed by filter presses will be
reused in the refinery, bringing savings in the consumption of
caustic soda and chlorine. We estimate that we can start to
operate this process on an industrial scale in 2016.
These projects for the tailings dams at Niquelândia and Palmital
have great potential and will further enhance our dam management
system, which is monitored and audited by Geo Consulting and
considered one of the best in the world. Our pioneering
management system, which was developed in-house, was designed
to meet the requirements of the most stringent international
legislation in order to ensure safety. Any indications of problems are
identified well in advance and promptly remediated.
The new projects are designed from the outset to have minimal
waste generation. Additionally, we look for ways to use such
waste to the fullest extent, even if only in the future to close
down the mine. We are also seeking solutions to eliminate the
need for a dam altogether. Our plans for the Bongará and
Aripuanã projects, which are still under study, do not include the
construction of tailings dams.
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If they prove to be absolutely necessary, we will employ the most
modern methods, such as dry stacking, which makes waste easier
to handle, has a lower risk of breakage and can be covered by
vegetation. The minimum generation and maximum utilization of
waste, in addition to environmental benefits, eliminates the need
for a tailings dam, and consequently the expense of its
construction and monitoring.
The reuse of the waste from the aluminum furnaces has been
tested successfully in two applications. The first application is to
use it as a substitute for part of the fuel oil in the Niquelândia plant
(for more details see the section above entitled Electric Power
Consumption/Energy Mix). Another interesting possibility is the use
of this waste by Votorantim Steel as a slag fluidizing agent. If the
application is approved, we could ship aluminum waste, which is a
class I hazardous substance, to other steel mills.
Another initiative that generates economic gains and mitigates
environmental risks is the use of EAF dust (a class I hazardous
waste generated by the steel industry) as a substitute for part
of the zinc concentrate at the Juiz de Fora (MG) plant. We
initiated this process in 2012 by processing EAF dust received
from Votorantim Siderurgia and by 2013 the volume had
quadrupled. In addition to resolving a disposal problem this
contributed to increasing the profitability of the Juiz de Fora
plant, by lowering its production costs.
We are now providing this service to other companies and have
the capacity to further expand the use of EAF dust in our raw
material mix. More recently, we began testing the use of
batteries as replacements for zinc concentrate.
Another aspect regarding the responsible use of resources is
the long-term planning of our existing mines. We have
established a team dedicated to this aspect that forecasts the
changes in mineral content over time, calculates the need for
opening new galleries and identifies ways to extend the useful
life of these mines.
In Vazante (MG), we detected mineral deposits in an area
belonging to the estate of a bankrupt company. We purchased
the property and will extend the useful life of the mine life by
five years, from 2025 to 2030. Although previously we
estimated that the mine at Morro Agudo (Paracatu – MG)
would be depleted by 2015, new research has revealed an
opportunity to extend its life until 2020.
AGRICULTURAL LIMESTONE POWDER:
A NEW PRODUCT FROM
VOTORANTIM METAIS
Since July 2010, our unit in Morro Agudo (Paracatu –
MG) no longer generates any waste in its zinc
processing. Following an investment in new technology
it is using the former industrial limestone powder (ILP)
waste to produce a new product, agricultural limestone
powder (ALP), which is then sold. We invested R$ 300
thousand in this “zero waste” project. The revenues from
ALP sales were R$ 7.7 million in 2013, R$ 10.5 million in
2012 and R$ 6.8 million in 2011. In addition, we avoided
an expense of R$ 20 million to build a new tailings dam
for the disposal and handling of the ILP.
There was also an environmental gain since the ILP
waste was originally disposed of in a tailings dam, which
represented an environmental liability. The ILP deposited
in the dam between 2008 and 2010 is also being
reprocessed to recover zinc and lead and, with the
removal of these deposits, the areas can be rehabilitated
and reused.
The ALP has a high potential to provide soil nutrients due
to the zinc in its composition. It is being used both as an
agricultural input and for the correction of soil pH. The
product has very fine-grained filler particles that ensure a
higher level of nutrient absorption. In addition to
correcting the soil pH by neutralizing acidity, the product
maximizes the effects of fertilizers and permits their late
application, thus increasing the productivity of the soil.
The project “zero waste” represented a paradigm shift in
the zinc production process. By focusing on reducing the
generation of ILP, it was possible to eliminate waste by
processing it into ALP, which then became part of
Votorantim Metais’s product range.
Water and Waste Water Management
At present the total volume of water in consumed by all
Votorantim Metais’ units is around 20 million m³/year.
According to the water balance survey we carried out in 2013,
we reuse (and consider to be part of our “water efficiency”)
about half of this total and as a result the company is
considered a benchmark among the Votorantim Industrial
Companies. Despite this good performance we intend to
improve further. Our primary goal, as already mentioned, is to
re-circulate 100% of the process water, and achieve a zero
discharge of waste water by 2020. We propose to withdraw
water from external sources only to replace evaporation losses
or the water embedded in products.
The performance of the units is variable with respect to the
percentage of water reuse. Although the average reuse is
50%, some units stand out. For example, the Morro Agudo
(Paracatu – MG) plant achieved 89% efficiency and the
Cajamarquilla (Peru) unit, 67%.
These initiatives are in line with our goal of “creating shared
value”, since we contributed to conserving water resources
while also generating value for the company by reducing the
costs of water withdrawal and treatment and waste water
discharge. It is worth remembering that even though
currently the cost of water withdrawal from Brazilian rivers
is still low, it will tend to rise. A KPMG study revealed that
62
on average, industry pays US$ 0.25 per cubic meter of water
in Brazil. In France, the cost of water can be as much as US$
6 per cubic meter.
In day-to-day activities, we rely on the use of a water
balance tool which allows us to monitor water consumption
in a detailed and comprehensive manner. The water balance
tool is being used in a standardized way in all our units.
Based on the experience gained in accounting for water use,
and with the involvement of the process and environmental
teams, in 2014, we will implement the Votorantim Metais
Water Governance Program.
The program is based on the following findings:
• Water is a sensitive topic worldwide.
• At a global level, there are restrictions and growing
competition for access to water resources.
• The withdrawal and treatment of water, the discharge of
waste water, and the charging of fees for water, are
significant, and growing, costs for industry.
• We must be alert to the management of the risks
associated with water scarcity in the places where
Votorantim Metais has its operations. The mining process
generates a high demand for water.
• The company’s license to operate includes the use of
water resources.
• Our target is to re-circulate 100% of the process water
by 2020.
Our methodology, which was developed based on a study of
19 other methodologies, has become a market standard and
is being recommended by the Brazilian Aluminum
Association (Abal) for use by other companies in the sector.
The goal of the water governance program is to identify the
key internal and external opportunities for the efficient,
differentiated and ongoing management of water use,
enabling us to achieve our target for 2020, and to conserve
water resources. The program is based on four pillars: social,
strategic, educational and eco-efficiency.
We seek to make a rapid improvement in our reuse of water
since, in addition to energy, it will be one of the principal
bottlenecks for mining in the future. Therefore, we have
selected 2014 as “The Votorantim Metais Year of
Water”, and it will be marked by the execution of a number
of internal and external initiatives.
To standardize measurements, in 2012, we prepared the
Votorantim Metais Water Balance Manual based on a
methodology developed by the University of Queensland,
Australia. This manual applies a consistent and systematic
approach that allows us to identify, measure, record and
report information on the use of water. It also permits us
to quantify the water flows between processes or activities
in each Votorantim Metais unit, in a standardized
accounting manner.
Internally, we will analyze the performance gaps at each unit
and identify the projects that will be necessary to meet our
goal of re-circulating 100% of process water. At the plant in
Três Marias (MG), for example, we have developed a process
to reduce the sulfate content of the process water, which
currently prevents it from being re-circulated. In addition we
plan to produce a product for use in agriculture. The new
process is expected to go into operation in 2018, and will
enable the unit to reach a water efficiency level of 100%.
In 2013, we revised the manual and implemented it in
all units, except Milpo (Peru), where implementation is
planned for 2014.
In Peru, where access to water is already a critical issue, we
hired a consultant in 2013 to analyze the trends in
sustainability. In Cajamarquilla, we have implemented a
process for reverse osmosis to allow water to be re-circulated.
63
In the aluminum business all water, including rainwater, is
collected, treated and reused. In the São Miguel Paulista
(São Paulo – SP) unit we are re-circulating the water used in
the production of anhydrous sodium sulfate. This results in a
saving of 120 m³/day of industrial water, thereby reducing
the discharge of waste water.
Among our external initiatives, one of the highlights is
the project for the “Rehabilitation of permanent preservation
areas of the springs in the headwater areas: marsh-lands”,
implemented in 2012, at our unit in Três Marias (MG). The
goal is to take action to restore springs that play a key role
in the formation and maintenance of the water resources of
the São Francisco River basin. A survey of the area revealed
that, among a number of problems, the greatest adverse
impact on the springs was the trampling of the surrounding
soil by cattle. We sought the support of local farmers and
fenced in the São José Tolda marsh-land, to prevent access
by animals.
Another initiative is the “Water Entrepreneurs” project which
is being conducted in the towns of Três Marias (MG), Vazante
(MG) and Fortaleza de Minas (MG), with participants coming
also from Cataguases, Itamarati de Minas and São Sebastião
da Vargem Alegre. The aim is to encourage and support local
entrepreneurship to take action on the rational use of water
and in the improvement of water resources in the state of
Minas Gerais.
Soil Management
We have set up a project to assess the “Viability of Coffee
Production, Pasture Land, Eucalyptus and Native Trees in
Former Bauxite Mining Areas” in the Zona da Mata region
in the state of Minas Gerais.
This project aims to contribute to identifying better soil
management and planting practices in areas formerly mined
by Votorantim Metais. The project, which began in 2008 in
partnership with the University of Viçosa (UFV), includes soil
research aimed at identifying the most appropriate end-use for
each restored area. The project includes an experimental field at
our plant in Miraí (MG). This makes it possible to assess the viability
of crops (pasture land, coffee, eucalyptus and red angico trees) and
native species in impacted areas, and their growth patterns in the
short, medium and long terms. In 2013, we invested R$ 15 million
in the program to rehabilitation former mining areas.
GHG EMISSIONS FROM INDUSTRIAL ACTIVITY
BIODIVERSITY AND ECOSYSTEM SERVICES
Among the various industrial activities of the Votorantim
Group, the metals amd mining businesses are those that
emit the least amount of greenhouse gases. The GHG
emissions for the company were around 4.7 million metric
tons of CO2 equivalent, which represents about 13% of VID’s
total emissions.
We are developing a more focused approach to this issue
and, in 2014, we aim to develop a Biodiversity and
Ecosystem Services Policy.
As of 2015, we plan to give greater priority to this issue, with
the creation of a GHG Emission Policy, in order to achieve our
goal for 2020, of having the same level of emissions per metric
ton of product as the base year, 2010. This will be one of the
topics addressed by our eco-efficiency thematic teams.
The aluminum plant in Alumínio (SP), which has an energy
mix that depends heavily on natural gas, is the single most
critical challenge for Votorantim Metais, accounting for 52%
of the company’s total GHG emissions. Our actions to reduce
these emissions are focused mainly on improving process
management.
The processes at our plants in Três Marias (MG) and
Niquelândia (GO) account for 47% of our emissions, and the
remaining 1% relates to mining. At Niquelândia we have a
project to use biomass, which will reduce the the company’s
total emissions by 1%. At Três Marias, we have projects to
recover heat for use in steam production.
In March 2013, we initiated a pilot project to review
ecosystem services at our unit in Rondon do Pará (PA). This
was conducted in conjunction with Votorantim Industrial,
and the results to date were presented at the fourth and
last workshop held by “The “Business Partnership on
Ecosystem Services (PESE)”, in São Paulo.”
PESE is a partnership between business and civil society
organized by the Brazilian Business Council for Sustainable
Development (CEBDS), the Center for Sustainability Studies
of the Getulio Vargas Foundation (GVces) and the World
Resources Institute (WRI), with support from the US
Agency for International Development (USAID).
Representatives of eight companies, including Votorantim,
participated in this initiative, meeting regularly to share
their experiences. The initiative aims to strengthen the
capacity of its members to assess and manage ecosystem
services. At the workshop the participating companies
presented the progress made by their respective
organizations in general and also their experience in
applying the Ecosystem Services Review (ESR) tool which
measures the impacts on, and the dependence of,
industrial activity on ecosystem services.
65
TO INTEGRATE
RISK MANAGEMENT
INTO MANAGEMENT
AS A WHOLE, WE ARE
DEVELOPING A STRATEGIC
RISK MATRIX.
RISK MANAGEMENT
To adapt the company to the new Votorantim
Industrial corporate governance structure, we are
setting up an area for strategic risks and intend to
construct a matrix of strategic and business risks. This
process will take place during 2014.
In addition to market risks (such as commodity prices,
exchange rates, interest rates, etc.), which we
monitor jointly with VID’s Treasury area, our risk
matrix, which is specific to our businesses,
66
encompasses our production and management
process and the management processes, from the
mine to the to the final customer, including logistics,
imports, exports and delivery. The matrix identifies
the vulnerabilities, quantifies their impacts, evaluates
the probabilities of occurrence and finally prioritizes
an action plan to minimize risks. If we encounter risk
situations such as, depending on a logistical system
in our supply chain, a situation at a mine that
requires attention, a bottleneck at a factory, a heavy
reliance on a specific customer or a supplier,
then the risk is evaluated, monitored and has
its impacts quantified. We intend to expand the
risk matrix to ensure it corresponds, more and
more, to our day-to-day reality.
The ultimate goal is to integrate risk
management into the management system as a
whole, in order to prevent and mitigate risks.
In this respect, for example, our focus on
operational stability, which has been embedded
in the work practices of all of our units, is
contributing to the gradual reduction of risks.
67
plus additional opportunities arising from the two major
sporting events being held in Brazil: the 2014 World Cup and
the 2016 Olympics. Despite the expectation of rising interest
rates, there are still good prospects for credit availability for
the residential housing market, which continues to show a
healthy level of activity.
THE PROSPECTS FOR THE
METALS AND MINING SECTORS
ARE POSITIVE, DESPITE THE
BACKDROP OF ECONOMIC
VOLATILITY.
Although keenly aware that we will continue to face a
challenging environment, we remain steadfast in the pursuit of
our objectives to grow, to increase operational efficiency, and
to reduce financial leverage (as measured by net debt/EBITDA).
In parallel, we will work on developing internal initiatives that
contribute to improved profitability, with the emphasis on
reducing operating costs and increasing the effectiveness of our
management systems.
VISION OF THE FUTURE
GLOBALLY AND IN BRAZIL
We believe that in 2014 the Brazilian and global economic
scenes will remain volatile. In such conditions, execution
capacity, operations management, creativity and capital
investment discipline will continue to be key factors in
delivering superior results.
At the global level the World Bank, in its Global Economic
Prospects Report published in January 2014, forecast overall
global growth for 2014 to be 3.2%, with growth of 5.3% in
developing countries and 2.2% in developed countries.
Furthermore, according to the same report, five years after the
last major financial crisis, global activity in 2014 is
strengthening compared to prior years, driven mainly by the
recovery of higher-income economies. In turn, the growth
performance of developing countries is also more robust,
reflecting the improvement in external demand. However, the
prospects for 2014 are subject to risks, for example, the
gradual reduction in the US monetary stimulus program and
the structural changes underway in China.
68
The Euro zone economy continues on its path of slow
recovery, and there are still concerns about deflation
(resulting in a lack of investments and a higher level of
bankruptcies), and the persistent levels of unemployment,
especially in Spain. Even the most developed economies
such as France, the Netherlands and Germany, have
obstacles to overcome to achieve a more robust level of
GDP growth. On the other hand, some Asian economies are
expected to maintain their strong growth rates. In the case
of China, although GDP will not grow at the same high rate
as in previous years, it will still increase faster than the rest
of the world.
In Brazil, the prospects of a year with elections and the
World Cup may result in many companies delaying projects
or investment decisions. Interest rates are expected to rise
further, and this is a major factor that inhibits investments
and credit for financing purchases of consumer goods. On
the other hand, the infrastructure sector should continue to
attract high levels of investment and incentives, particularly
for: the modernization and expansion of highways, railways,
ports and airports; the construction of hydroelectric plants;
The search for synergies and the continuous improvement of
processes will be constant concerns. In addition, we seek to
offer a range and mix of products that result in the highest level
of customer satisfaction, and, through our new sales and
operational approaches, work towards strengthening the
development of relations with our customers, suppliers,
partners, and other stakeholder groups. In this context, we
believe that the new decentralized governance structure will
enable us to operate in a more independent manner, thus
providing faster decision-making and improved operational
efficiency, fundamental aspects that lead us to believe that we
are well-placed to deliver solid results in 2014.
Votorantim will complete 100 years of business activities
in 2018. We believe that our business continuity is founded
on a process of responsible growth, our strong brand, and
our competitive advantages, in people, sustainability and
innovation. These three pillars are the foundations which
stimulate the development of management processes, the
search for innovative business solutions, such as new uses
of our raw materials and improvements in our products
and services. We seek to generate shared value, with respect
for the present and an eye on the future.
METALS AND MINING INDUSTRY
The metals and mining industry is is going through a period
of austerity, which has adopted a more rigid financial
discipline. In order to remain active and competitive,
companies must focus on the reduction of fixed costs and
operating expenses, the optimization of the supply chain, the
modernization and automation of processes and increased
asset productivity.
The first decade of the century saw a boom in demand
triggered by the entry of China into the WTO in 2001.
This prompted a race to accelerate projects and make others
viable, even when not fully mature, and this resulted in the
inflation of input costs, taxes and royalties and market
services. Then the more restrictive economic scenarios of
recent years caused the stock of projects to shrink back
Although many projects have not confirmed their expected
success, there is still currently an oversupply of products in the
market, which situation is expected to be reversed within a
few years time. The slowdown in exploration projects for
mineral resources may lead to supply problems later on. These
projects need to be restarted, but meeting the greater
financial discipline required by investors.
We consider the prospects for the metals and mining industry
to be positive. China’s population will continue to grow, albeit
at a slower rate than in the past, and it should maintain its
process of urbanization. The population of India is expected
to increase significantly. In 2030, China and India together are
forecast to represent 35% of the global population. The
global population is expected to exceed
9 billion people by 2050. Thus, it is clear that “there will be a
high demand for metals for infrastructure projects.
The industry’s main challenge is to ensure a continuous supply
of metals to meet this demand in the long term. It will have to
find solutions to adapt to a situation of low elasticity of supply
because of the technical, geological, geographical and
financial difficulties of the new projects.
69
VISION OF THE FUTURE
On the other hand, we expect to see the arrival of new
Chinese and Indian market players in the coming years, which
will have to contend with raw material cost inflation, taxes
and royalties. The cancellation and postponement of projects
could reduce future supply. Should the expected demand
materialize, it will result in pressure on prices.
We anticipate that there will be a high level of economic
volatility in the coming years and that the return to economic
recovery will bring a good deal of risk. Therefore, our strategic
plan for the coming years has been designed to address this
recovery. We have given priority to the initiatives and projects
that are under our control. We have planned to generate half
of our income from projects related to better management
practices such as the search for greater operational efficiency
and stability, and cost reduction projects, such as those aimed
at obtaining value from waste, saving energy and avoiding
investments in tailings dams.
We expect, in the medium term, to see a recovery in
commodity prices, and although new projects remain on our
radar, the key word is caution. Given this more restrictive
scenario, we will focus on highly profitable projects and seek
partnerships to share investments and risks.
South America continues to be a strategic area for us, but we
are reevaluating the priorities of projects. In Peru, the most
advanced projects are those in Bongará and Shalipayco. They
are in the phase of exploration drilling to define the extent of
the mineral deposits. In Colombia, we are seeking a partner
for the metallurgical coal project. In Brazil, we have completed
the feasibility study for the Rondon Alumina project and its
execution may be delayed until certain logistical issues in the
region have been resolved. In mining exploration, the most
advanced project, in terms of studies, is Aripuanã.
In new mining frontiers such as Africa, Vietnam and Zambia,
we are redesigning projects in light of the current need for
stricter financial discipline.
70
REPORT PRODUCTION
SOCIAL LICENSE TO OPERATE
Prospecting for new mineral resources is essential for
our business continuity. Our Mining Exploration area
focuses its activities mainly on the Americas, particularly
Colombia, Argentina, Peru, Canada and Brazil. Two years
ago, we began to undertake exploration in South Africa.
In addition to identifying and quantifying the mineral
resources, this team has another strategic role, which
is to establish relations, grounded in ethics and
transparency, between Votorantim Metals and the local
authorities and communities, which we refer to as the
“social license”. It is necessary to have a high level of
interaction with the local authorities and communities,
even before having a geologist in the field.
We need to explain who we are, what our objectives
are, how the mining industry operates at all stages and
that at Votorantim Metais, we strive to carry out our
activities with great respect for the communities and
the environment. We operate in a way that supports
local development, generating employment and income,
promoting the development of public management,
and investing in the community’s education and health.
We seek to demonstrate that we respect the legislation
and we involve the local communities in quarterly
environmental monitoring, which begin to be realized
long before any mining activity.
In the Andean region, for example, where the land
does not belong to a person but to a community, the
major concern is with the preservation of water, which
is a scarce resource. We involve the community in the
environmental monitoring in order to show that we are
not harming the quality of the water or the soil.
In the case of the Bongará project, which is located a
region of jungle-covered mountains, we developed a
nursery and trained the community to produce seedlings
that we will buy and use to restore the vegetation in
areas affected by vehicular traffic and construction.
General Coordination
GRI Consulting
Sustainability General Management
Overall Responsibility: David Canassa
Coordination: Frineia Rezende
Deloitte Touche Tohmatsu
Votorantim Metais Coordination
fmcom
Ricardo Barbosa dos Santos
Sustainability General Manager
Translation
Votorantim Metais Report
Contributors
Ana Cláudia de Araújo Lima
André Luiz Rodriguez Martins
André Luís Machado de Vasconcelos
Aricely Lamontanha
Camila de Oliveira Dias Marquesin
Daniela Rocha Novoa
Davi Ribeiro dos Santos
Fernanda Diniz Bolzan de Oliveira
Flavia Helena Moraes De Oliveira
Laís Lucas Moreira
Liliane Rocha
Luciana do Prado Silva
VM Corporate Area Teams
Votorantim Metais Sales
(Aluminum, Nickel, Zinc)
Communication,
HOD, Administration, Finance, Legal,
Planning,
Production and Procurement.
VM Unit Teams
Environment, Health and Safety,
Communication,
HOD e Administration, Metalex and Milpo
Report Content
Editorial Consulting and Editing
Eduardo Dantas
Report Writing
Abgail Cardoso
Graphic Design,
Layout and Infographics
English: Richard Wightwick
Spanish: Sylvia Gómez y Artigas Belhot
Photographs
Banco de Imagens Votorantim
Typography
Frutiger, Adrian Frutiger, 1975
Publication Date
July/2014
PDF version at:
www.vmetais.com.br/pt-br/
Contact
Votorantim Metais
Av. Eusébio Matoso, 1375 – 12º andar
CEP 05423-180 | São Paulo/SP
Tel: (011) 3405-4499
[email protected]
www.vmetais.com.br

REPORT VOTORANTIM METAIS 2013

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