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SUSTAINABILITY

REPORT

2014

SUSTAINABILITY REPORT 2014
92 GRI LIST OF CONTENTS/ INDICATORS 60 PERFORMANCE 124 INDEPENDENT LIMITED ASSURANCE REPORT ABOUT THE
92 GRI LIST OF CONTENTS/ INDICATORS
92
GRI LIST OF CONTENTS/
INDICATORS
60 PERFORMANCE
60
PERFORMANCE
124 INDEPENDENT LIMITED ASSURANCE REPORT
124
INDEPENDENT LIMITED
ASSURANCE REPORT
ABOUT THE REPORT 90
ABOUT THE REPORT
90
REPORT PRODUCTION 126
REPORT PRODUCTION
126
PAGE REFERENCE LEGEND GRI Indicators Material Issues
PAGE REFERENCE LEGEND
GRI Indicators
Material Issues
Our people are at the core of our long-term strategy to grow. It is no
Our people are at the core of our long-term strategy to grow. It is no

Our people are at the core of our long-term strategy to grow. It is no coincidence that we have stepped up our investment in the ongoing development of our teams and the training of our leaders. We believe in the capacity of our internal talent to transform the company and the importance of valuing diversity to build a more social and inclusive work environment. To this end, we want to evolve in terms of gender diversity encouraging more and more women to develop their careers with us. Besides this, we understand that women are increasingly prepared to take on challenges and compete on equal terms for jobs that were once considered strongholds of men, such as the operation of heavy equipment in underground mines.

Last year, Votorantim Metais established its own Board. The Board is responsible for setting and monitoring the company’s goals, defining strategy, monitoring performance and ensuring the company’s long-term business continuity in terms of results, people management and social and environmentally responsible practices, while also ensuring that it preserves the values and corporate identity of the Votorantim Group. This new governance structure was a consequence of the decentralization of Votorantim Industrial’s management model, implemented in late 2013. The new structure has enabled the company to be more agile in its decision-making and more efficient in its operations, both of which contribute directly to the long-term sustainability of our business.

Furthermore, we believe that the company’s long-term business continuity depends on respectful relations and mutual development with our local communities. We are part of a shared network of aspirations, objectives and initiatives aimed at improving the social and economic indicators of the localities where we are present. During the year we made progress in our social strategy by means of our partnerships and collaboration with the public sector and civil society in order to align our activities to a positive agenda for municipalities, achieving and sharing resources and results. For 2015, we intend to further strengthen the open and strategic dialogue between the company and the local communities as well as to improve the performance management of the social actions carried out by our units.

management of the social actions carried out by our units. “WE ARE PART OF A SHARED
“WE ARE PART OF A SHARED NETWORK OF ASPIRATIONS, OBJECTIVES AND INITIATIVES AIMED AT IMPROVING
“WE ARE PART OF A
SHARED NETWORK
OF ASPIRATIONS,
OBJECTIVES AND
INITIATIVES AIMED
AT IMPROVING
THE SOCIAL
AND ECONOMIC
INDICATORS OF THE
LOCALITIES WHERE
WE ARE PRESENT.”

SUSTAINABILITY REPORT 2014

5

In terms of operational excellence , our performance was higher than expected, which is not

In terms of operational excellence, our performance was higher than expected, which is not to say that we didn’t face challenges. We made good progress in the metals market sectors in which we operate, especially overseas, but our results were due, mainly, to our own management efforts and the relentless pursuit of internal improvements, focused on operational stability. The results obtained were due to the dedication of our teams, which combined knowledge, boldness, creativity, integrity and entrepreneurial spirit, with the objective of seeking internal improvements in a number of areas. Some of the main initiatives were: the continuous improvement the efficiency of our operations by maximizing the utilization of the company’s assets; the ongoing development of our leaders and employees; and investments in technology and projects to increase energy efficiency. We sought, in short, with the maximum of effort, to find the best solutions for all aspects of our activities.

find the best solutions for all aspects of our activities. As regards capacity expansion we made

As regards capacity expansion we made significant progress in our green-field projects. We obtained the provisional license for the Rondon Alumina Project. We also advanced with our projects in Aripuanã (MT) and Santa Maria (RS), in Brazil, and in Bongará, Shalipayco, Hilarion, Magistral and Pukaqaqa, in Peru.

Another important milestone in 2014 was the revision of our sustainability strategy. We revisited our material issues and also reassessed our strategic planning process for social action. In 2015, we will implement new management controls for social investment, strengthening the theme in the day-to day routine of the operating units.

We are optimistic about our prospects for the coming years. We believe we are at the beginning of a positive cycle for non-ferrous metals. An important sign was the resumption of investments in new metals and mining projects around the world. Furthermore, the urbanization process in developing countries will have a significant impact on demand.

We had a good year in 2014 and expect, at least, to repeat this performance in 2015, a year of major economic change for Brazil. For our part, we can count on the support of a dedicated and trained team of employees, an appropriate management approach, structured processes and a strong technical base. We will continue to be attentive to our priorities, business strategies and opportunities. We seek to generate value, maintain growth and ensure the long-term business continuity of Votorantim Metais. We aim to obtain the best results for the company, our employees, our other main stakeholder groups, and society in general.

“WE ARE OPTIMISTIC ABOUT OUR PROSPECTS FOR THE COMING YEARS. WE BELIEVE WE ARE AT
“WE ARE OPTIMISTIC
ABOUT OUR
PROSPECTS FOR THE
COMING YEARS. WE
BELIEVE WE ARE AT
THE BEGINNING OF A
POSITIVE CYCLE FOR
NON-FERROUS
METALS.“
BEGINNING OF A POSITIVE CYCLE FOR NON-FERROUS METALS.“ Tito Martins CEO of Votorantim Metais SUSTAINABILITY REPORT

Tito Martins CEO of Votorantim Metais

SUSTAINABILITY REPORT 2014

7

With 76 years of history, Votorantim Metais is a company operating in the metals and

With 76 years of history, Votorantim Metais is a company operating in the metals and mining industry. We are part of the Votorantim Group, one of Brazil’s largest business conglomerates. We hold leading positions in two segments of the non-ferrous metals sector: Polymetallics and Aluminum. We are the fifth largest producer of zinc metal in the world, the largest producer of electrolytic nickel in Latin America and have one of the largest vertically-integrated aluminum plants in the world.

On a daily basis we seek to consolidate our position as a metals and mining company that is profitable, competitive and guided by globally-recognized sustainable practices.

OUR PRODUCTION CAPACITY

OUR PRODUCTION CAPACITY ADMINISTRATIVE/SALES OFFICES IN BELO HORIZONTE (MG), HOUSTON (TEXAS, UNITED STATES), LIMA
OUR PRODUCTION CAPACITY ADMINISTRATIVE/SALES OFFICES IN BELO HORIZONTE (MG), HOUSTON (TEXAS, UNITED STATES), LIMA

ADMINISTRATIVE/SALES OFFICES IN BELO HORIZONTE (MG),

HOUSTON (TEXAS, UNITED STATES),

IN BELO HORIZONTE (MG), HOUSTON (TEXAS, UNITED STATES), LIMA (PERU) AND CHANGSHU (CHINA) CHINA 51 EMPLOYEES
LIMA (PERU) AND CHANGSHU (CHINA) CHINA 51 EMPLOYEES WE ALSO PRODUCE OTHER PRODUCTS, INCLUDING
LIMA (PERU) AND
CHANGSHU (CHINA)
CHINA
51
EMPLOYEES
WE ALSO PRODUCE OTHER PRODUCTS, INCLUDING

COPPER, LEAD, SILVER, ELECTROLYTIC COBALT, CADMIUM, ANHYDROUS SODIUM SULFATE, COPPER SULFATE, SULFURIC ACID, LIQUID SULFUR DIOXIDE AND MINERAL CONCENTRATES.

Polymetallics division (Zinc)

Transshipment yards

Port Terminal

Juiz de Fora (MG) – metal productiondivision (Zinc) Transshipment yards Port Terminal Morro Agudo (Paracatu – MG) – mining and ore processing

Morro Agudo (Paracatu – MG) – mining and ore processingyards Port Terminal Juiz de Fora (MG) – metal production Três Marias (MG) – zinc metal

Três Marias (MG) – zinc metal and zinc oxide productionMorro Agudo (Paracatu – MG) – mining and ore processing Vazante (MG) – mining and ore

Vazante (MG) – mining and ore processingTrês Marias (MG) – zinc metal and zinc oxide production Cajamarquilla (Peru) – metal production Milpo

Cajamarquilla (Peru) – metal production Milpo (Peru) – mining Cerro Lindo El Porvenir Atacocha U.S. Zinc Houston (Texas, USA) – sales office and metal production (zinc metal and zinc powder))oxide production Vazante (MG) – mining and ore processing U.S. Zinc Coldwater (Michigan, USA) – metal

U.S. Zinc Coldwater (Michigan, USA) – metal production (zinc oxide)office and metal production (zinc metal and zinc powder)) U.S. Zinc Clarksville (Tennessee, USA) – metal

U.S. Zinc Clarksville (Tennessee, USA) – metal production (zinc oxide)Coldwater (Michigan, USA) – metal production (zinc oxide) U.S. Zinc Millington (Tennessee, USA) – metal production

U.S. Zinc Millington (Tennessee, USA) – metal production (zinc oxide)(Tennessee, USA) – metal production (zinc oxide) Changshu (China) – metal production (zinc oxide) Barão de

Changshu (China) – metal production (zinc oxide)(Tennessee, USA) – metal production (zinc oxide) Barão de Angra – Paraíba do Sul (RJ) Barão

Barão de Angra – Paraíba do Sul (RJ)oxide) Changshu (China) – metal production (zinc oxide) Barão de Camargo – Cataguases (MG) Port –

Barão de Camargo – Cataguases (MG)(zinc oxide) Barão de Angra – Paraíba do Sul (RJ) Port – São Vicente (SP) Mineral

Port – São Vicente (SP)Paraíba do Sul (RJ) Barão de Camargo – Cataguases (MG) Mineral Exploration Brazil Canada Peru Offices

Mineral Exploration

Brazil(MG) Port – São Vicente (SP) Mineral Exploration Canada Peru Offices São Paulo (SP) – head-office

Canada(MG) Port – São Vicente (SP) Mineral Exploration Brazil Peru Offices São Paulo (SP) – head-office

PeruPort – São Vicente (SP) Mineral Exploration Brazil Canada Offices São Paulo (SP) – head-office Belo

Offices

São Paulo (SP) – head-officeVicente (SP) Mineral Exploration Brazil Canada Peru Offices Belo Horizonte (MG) – administration Namíbia

Belo Horizonte (MG) – administration Namíbia

Belo Horizonte (MG) – administrationNamíbia

NamíbiaBelo Horizonte (MG) – administration

Houston (Texas, USA) – salesBelo Horizonte (MG) – administration Namíbia Toronto (Canada) – administration Lima (Peru) – sales and

Toronto (Canada) – administrationBelo Horizonte (MG) – administration Namíbia Houston (Texas, USA) – sales Lima (Peru) – sales and

Lima (Peru) – sales and administrationBelo Horizonte (MG) – administration Namíbia Houston (Texas, USA) – sales Toronto (Canada) – administration

South Africaadministration Lima (Peru) – sales and administration Distribution Centers (“CD”) Jundiaí – Jundiaí (SP)

Distribution Centers (“CD”)

Jundiaí – Jundiaí (SP)administration South Africa Distribution Centers (“CD”) Caxias – Caxias do Sul (RS) Gaspar – Gaspar (SC)

Caxias – Caxias do Sul (RS)Distribution Centers (“CD”) Jundiaí – Jundiaí (SP) Gaspar – Gaspar (SC) Rio de Janeiro – Rio

Gaspar – Gaspar (SC)Jundiaí – Jundiaí (SP) Caxias – Caxias do Sul (RS) Rio de Janeiro – Rio de

Rio de Janeiro – Rio de Janeiro (RJ)– Jundiaí (SP) Caxias – Caxias do Sul (RS) Gaspar – Gaspar (SC) CD CD CD

CD

CD

CD

CD

SUSTAINABILITY REPORT 2014

11

PERFORMANCE HIGHLIGHTS We implemented a new organizational structure , more in line with our operating

PERFORMANCE

HIGHLIGHTS

We implemented a new organizational structure , more in line with our operating strategy, and

We implemented a new organizational

structure, more in line with our operating strategy, and mapped out the critical capabilities for our business activities. Our Human and Organizational Development (HOD) area carried out

a review of roles and responsibilities and made assessments of our leadership positions.

and made assessments of our leadership positions. R$ 225,9 MILHÕES Our social investments , carried out

R$225,9MILHÕES

Our social investments, carried out in partnership with the Votorantim Institute, considering the operations in Brazil and Peru (Cajamarquilla), totaled R$ 10.2 million in the year. The investments were distributed among the municipalities where we operate according to development plans prepared locally, according to their social and economic contexts and the level of interdependence with our operations. In addition, Milpo made social investments equivalent to R$ 37.9 million; its investments were divided between fostering community relations and local development, covering both existing operating units and new projects. Our environmental investments rose to R$ 225.9 million in initiatives aimed at consolidating sustainability practices in the business areas, including reforestation activities, preservation, environmental education and natural resource management.

In the case of our brown-field, projects we expanded and upgraded mineral resources

through the deepening of the mines at Vazante (MG) and the development of the Ambrosia Project, which will enable us to extend the useful lives of the mines in Vazante and Morro Agudo. Our Mineral Exploration area conducted further surveys and developed a new resource model for the Aripuanã and Santa Maria projects.

resource model for the Aripuanã and Santa Maria projects. We continued to make solid progress in
resource model for the Aripuanã and Santa Maria projects. We continued to make solid progress in
resource model for the Aripuanã and Santa Maria projects. We continued to make solid progress in
resource model for the Aripuanã and Santa Maria projects. We continued to make solid progress in

We continued to make solid progress in our Technology area which, together with the business areas, has developed creative and innovative solutions to operational and environmental issues. Among the many advances made were improvements in the reuse of waste, the rationalization of water usage and the development of alternative energies.

of water usage and the development of alternative energies. In May 2014, we obtained a preliminary

In May 2014, we obtained a preliminary license from the state authorities for one of our green-field projects, the Rondon Alumina Project, which is located in the southwest region of the state of Pará. The license was approved unanimously by the State Council for the Environment (COEMA), which considered the project to be environmentally feasible. The sustainability of the project also includes the planning of social actions and the construction of a positive agenda in the municipalities in the project’s area of influence, in partnership with municipal and state governments. The project involves the construction of an Integrated facility for a bauxite mine and an alumina refinery and it incorporates the most modern environmental practices available in the market.

SUSTAINABILITY REPORT 2014

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WHO WE ARE A HISTORY OF GROWTH AND STRENGTH G4-13 G4-17 Votorantim Metals is part

WHO

WE ARE

A HISTORY OF GROWTH AND STRENGTH

G4-13 G4-17
G4-13
G4-17

Votorantim Metals is part of the Votorantim Group, which is one of Brazil’s largest industrial conglomerates and close to completing a century of business activities. Our activities in the mining sector began in 1938 ,in the steel industry, with the acquisition of an iron ore mine in Miguel Bournier (MG) and a steel-making plant in Barra Mansa (RJ).

In 1996, following a reorganization of Votorantim’s management model, Votorantim Mineração e Metalurgia (VMM) was set up, that soon after became the current Votorantim Metais. At that time, the company produced zinc, nickel and steel. Today we have two main business divisions: the Polymetallics division (with an emphasis on the production of zinc and nickel) and the Aluminum division.

Among the major milestones in our 76-year history (up to 2014), we would highlight the
Among the major milestones in our
76-year history (up to 2014), we would
highlight the following:
Initiated steel production
Barra Mansa, in the state
Inauguration of the Companhia Brasileira
de Alumínio – CBA.
Foundation of the Companhia Mineira
future supplier of
concentrates for the zinc
plant in Três Marias (MG).
Votorantim assumed control of Companhia
Níquel Tocantins. The decade of the 1960’s
was marked by the beginning of the mining of
nickel ore located in Niquelândia (GO).
Start of open-cast mining
electrolytic zinc by the
Companhia Mineira de Metais (CMM), in the
units in Vazante and Três
both located in the state of Minas Gerais.

2001

The Três Marias Unit expanded its production

of zinc metal cathodes from 90 to 180

thousand metric tons/year.

2002

VMM, soon to become Votorantim Metais (VM), increased its share of the Brazilian zinc market with the acquisition of Companhia Paraibuna de Metais, located in Juiz de Fora (MG). The company’s production capacity, including the new unit, increased from 180

to 270 thousand metric tons/year.

2003

A new program to expand nickel production

capacity was initiated. New investments increased

production capacity to 20 thousand metric tons/ year in 2004. Votorantim Metais acquired

Mineração Serra de Fortaleza, located in Fortaleza de Minas (MG), increasing its nickel production capacity by 50%. The Morro Agudo Unit (Paracatu - MG) also underwent an expansion program and increased zinc production capacity

to 35 thousand metric tons/year.

2004

production capacity to 35 thousand metric tons/year. 2004 The company acquired a zinc refinery in Cajamarquilla,

The company acquired a zinc refinery in Cajamarquilla, Peru, and initiated the Votorantim Group’s expansion process in Latin America. The new unit had a zinc production capacity of 160 thousand metric tons/year.

2005

Votorantim Metals increased its participation in

the Peruvian zinc market, following the acquisition

of a 24.9% shareholding in Milpo, the fourth

largest zinc mining company in the country. The purchase was made through the Cajamarquilla zinc refinery, the company’s subsidiary in Peru.

2006

Votorantim Metals signed an agreement with

the Rio de Janeiro state government regarding fiscal and financial support and initiated a feasibility study to construct a new long steel

plant in the state - the Mini-mill Project.

2007

long steel plant in the state - the Mini-mill Project. 2007 In line with the Votorantim

In line with the Votorantim Group’s Latin America growth strategy, Votorantim Metais

acquired a 52% shareholding in Acerías Paz del Rio, the second largest steel company in Colombia, with a production capacity of 315 thousand metric tons/year of long and flat steel. The company also acquired U.S. Zinc, the leading company in the United States for the recycling of galvanized industrial waste, the production of zinc metal and higher value-added products such as zinc oxide and zinc powder. In December, the company acquired a 27% shareholding in AcerBrag, the second largest long steel producer in Argentina, with a 25% market share. The company produced 250 thousand metric tons/year of rebar, bars, wires, screens and wire rods.

2008

Votorantim Metais increased its shareholding in AcerBrag to 52.9% by purchasing shares in the market. Votorantim Siderurgia was created, as a separate from Votorantim Metais, to hold the Group’s steel-making business in Brazil, Colombia and Argentina. Votorantim Metais signed a long-term supply contract with Mirabella, an Australian metals and mining company, to acquire nickel concentrate. This enabled the company

to expand nickel production at the Fortaleza de Minas (MG) Unit from 6 to 19 thousand metric tons/year.

2009

The Companhia Brasileira de Alumínio – CBA became part of Votorantim Metais. Votorantim Metais signed an agreement with the government of Trinidad and Tobago to produce aluminum in that country as from 2012. This was the company’s first overseas investment in aluminum.

2010

the company’s first overseas investment in aluminum. 2010 Votorantim Metais took control of Milpo, at that

Votorantim Metais took control of Milpo, at that time the third-largest zinc mining company in Peru. That same year, the zinc refinery in Cajamarquilla, Peru, was expanded, increasing its production capacity from 160 to 330 thousand metric tons/year. This was part of the plan to achieve a zinc production capacity of 1 million metric tons/year by 2012, thus consolidating the company’s position as one of the global leaders in the production of this metal. The Trinidad and Tobago project was suspended by a decision of the country’s government.

2011

In November 2011, the Polymetallics project was implemented in the Juiz de Fora (MG) plant, enabling us to increase the level of zinc recovery.

2014

The Votorantim Group restructured its corporate governance model. Votorantim Industrial took on the roles of providing guidance and portfolio manager. The Votorantim Group’s industrial companies, including Votorantim Metais, gained greater autonomy. One of the main consequences of the new governance structure was the higher degree of empowerment and accountability of the senior management and the creation of a Board of Directors in each industrial company. Also in 2014 the Group carried out a wide-ranging review to identify Votorantim’s DNA, that is, the set of values, principles and practices constructed by the organization throughout its long history.

SUSTAINABILITY REPORT 2014

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Our products have the following applications: POLYMETALLICS DIVISION ZINC Application SHG Zinc Galvanized

Our products have the following applications:

POLYMETALLICS DIVISION

ZINC

Application

SHG Zinc

Galvanized and electrolytic galvanizing processes for ingots, jumbos and granules.

Zamac

Die-casting and centrifugal casting.

Special Zinc Alloys

Development according to customer needs.

Zinc Powder

Production of alkaline batteries and corrosion protection paints.

Zinc oxide

Vulcanization of rubber, cosmetics, zinc phosphates, drugs, ceramics, polymers, agribusiness, animal nutrition, etc.

Agricultural Lime Powder

Correction of soil pH and enhancement of effects of fertilizers.

Sulfur Dioxide

Bleaching of pulp, sugar and kaolin, preservatives for food products and bisulfite production.

Sulfuric Acid

Manufacture of fertilizers for agriculture.

Copper Sulfate

Applications in agriculture, livestock, mining, electroplating and the chemical industry.

Cadmium

Manufacture of Ni-Cd batteries, pigments for paints and metal alloys.

Lead and Silver Concentrate

Manufacture of metallic lead and silver

NICKEL

Electrolytic Nickel

Electroplating, super-alloys and non-ferrous alloys.

Nickel Coins.

Electroplating and titanium baskets.

Cobalt

Production of super-alloys, magnetic alloys, cutting tools, chemicals, batteries, fertilizers and animal feed, among other products.

Anhydrous Sodium

Chemicals, ceramics, textiles and related industries, soap and detergent, glass and pulp and paper.

Sulfate

Sulfuric Acid

Sugar and ethanol, pulp and paper, chemicals and fertilizers in general.

ALUMINUM DIVISION

Plates and Coils

Applications in buses, highway equipment, household articles, refrigerators, machinery and equipment and roofing.

Thin and Medium Sheets

Applications in food packaging and disposable packaging.

Thick Sheets

Applications in automotive heat exchangers and air conditioners.

Profiles

Applications in construction (walls, doors, windows, seals); infrastructure equipment (molds and scaffolding); transportation (bus, highway equipment, bicycles, motorcycles, rail tracks); consumer goods (ladders, chairs, furniture, solar panels); 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.

Our Metalex subsidiary, in addition to producing aluminum billets for direct sale, is a provider of recycling services for aluminum scrap from industrial processes.

SUSTAINABILITY REPORT 2014

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DIAGRAM OF Legend: Precipitation Process Product for sale MACRO-PROCESSES ALUMINUM Aluminum oxide Calcination
DIAGRAM OF Legend: Precipitation Process Product for sale MACRO-PROCESSES ALUMINUM Aluminum oxide Calcination
DIAGRAM OF Legend: Precipitation Process Product for sale MACRO-PROCESSES ALUMINUM Aluminum oxide Calcination
DIAGRAM OF Legend: Precipitation Process Product for sale MACRO-PROCESSES ALUMINUM Aluminum oxide Calcination
DIAGRAM OF
Legend:
Precipitation
Process
Product for sale
MACRO-PROCESSES
ALUMINUM
Aluminum oxide
Calcination
Ingot
Billet
Rebar
Caster rolls
Crushing
Sludge
separation
Furnace room
Plate
Filtration
Rolling
Digestion
Bauxite
Foil
Profile
Casting
Grinding
Extrusion
Special alloys
ZINC
Zamac
Flotation
Crushing
Sulfuric acid and liquid
sulfur dioxide
SHG zinc
Roasting
Lead
concentrate
Zinc sulfide
concentrate
Cadmium, copper sulfate
and silver concentrate
Homogenization
Electrolysis
Thickening
and filtration
Leaching, purification and filtration
Zinc oxide
Grinding
Oxide plant
Magnesium removal
Zinc silicate
Casting
Precipitation
Nickel
concentrate
NICKEL
Crushing
carbonate
Nickel refining
Electrolytic nickel
Nickel
coins
Metal-
reduction
furnace
Acid leaching
Electrolysis
Homogenization
Cobalt refining
Electrolytic
Solvent extraction
Ammonia leaching
Electrolysis
cobalt
Grinding
21
SUSTAINABILITY REPORT 2014
20 SUSTAINABILITY REPORT 2014
The temporary suspension of production at the Fortaleza de Minas Unit In November 2013, we

The temporary suspension of production at the Fortaleza de Minas Unit

In November 2013, we temporarily suspended the production of nickel matte at our Fortaleza de Minas Unit, due to the product’s lack of competitiveness. About 60 employees were retained in the unit to carry out facility and environmental maintenance, including the monitoring of the soil, air and water.

The temporary suspension of the production activities at the Fortaleza de Minas Unit was only decided after careful studies that concluded that it was economically unviable. In accordance with Votorantim’s values, we explained our position in a transparent manner and maintained an open dialogue with the various segments of society involved. The employees at the Fortaleza de Minas Unit were informed about the temporary suspension on the same date that we began the process of negotiating with the Union for Workers in Extractive Industries (Sintex).

We have looked for opportunities to transfer employees to other units of Votorantim Metals and other Group companies. Around 20% of the total number of employees of the Fortaleza de Minas plant had been referred for internal relocation. We have also searched for other employment relocation alternatives for the remaining employees, with the support of a specialist company.

In 2014, market conditions did not enable us to resume nickel matte production at the unit. Following our decision to suspend activities, teams from our Engineering and Technology area have been developing studies and projects to utilize the assets at the Fortaleza de Minas unit. One of these projects went into operation in mid-June 2015. The unit began to produce sulfuric acid from the combustion of sulfur. The sulfuric acid produced will be used in a number of applications in a variety of industries including fertilizers, agriculture, sugar and ethanol, chemicals, and pulp and paper, among others.

We are fully aware of our social responsibility role, and will increase our investments and initiatives aimed at promoting local development. These initiatives include programs to foster regional productive chains, provide training for public administration, promote community dialogues, and support improvements in education and the appreciation of children’s and adolescents’ rights. Overall we have invested approximately R$ 5 million since we initiated our activities in Fortaleza de Minas.

Among the main initiatives, worthy of mention are: “Eye on the Future” Program; Public Administration Support Program; Sustainable Integrated Agro-ecological Production (PAIS); Votorantim Partnership for Education, Women Entrepreneurs; and the School for Parents and Children of the Municipal Council for Children and Adolescents (CMDCA).

for Parents and Children of the Municipal Council for Children and Adolescents (CMDCA). SUSTAINABILITY REPORT 2014

SUSTAINABILITY REPORT 2014

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THE MANUFACTURING PROCESS USES BILLETS MADE WITH 80% OF PRE-CONSUMER ALUMINIUM ECOPERFIL: VOTORANTIM METAIS’

THE MANUFACTURING PROCESS USES BILLETS MADE

WITH 80%

OF PRE-CONSUMER ALUMINIUM

ECOPERFIL: VOTORANTIM METAIS’ FIRST ALUMINUM PROFILE FOR ENVIRONMENTALLY RESPONSIBLE BUILDINGS

We developed the Ecoperfil range of profile products to serve the market for environmentally responsible buildings, which is a growing trend in Brazil. This range of products is made from aluminum produced in a manufacturing process which uses recycled aluminum as its raw material. The Ecoperfil brand was launched in April 2014 at the ExpoAlumínio trade fair, and is directed at a number of different applications in construction projects.

The manufacturing process uses billets made with 80% of recycled pre-consumer aluminum, that is, surplus material from the other primary aluminum production processes in our aluminum plant. This process consumes less electrical energy and generates lower levels of greenhouse gases compared to the conventional methods.

The production processes are strictly controlled to ensure the proportion of recycled material in its composition. Its physical and chemical properties are fully preserved, assuring the same quality as the primary metal.

Another aspect that differentiates the Ecoperfil product range is a lower carbon footprint: 95% of the transportation of the raw material for the production of primary aluminum is by rail, and our mines are located around 700 km away from the plant.

These characteristics, combined with traceability and a high percentage of recycled content enable the product to meet the specifications required for environmental certification systems for buildings such as LEED (Leadership in Energy and Environmental Design) and AQUA (High Environmental Quality).

SUSTAINABILITY REPORT 2014

25

in Energy and Environmental Design) and AQUA (High Environmental Quality). SUSTAINABILITY REPORT 2014 2 5
THE VALUES OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM VOTORANTIM METAIS’ CORPORATE IDENTITY

THE VALUES

OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM

OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM VOTORANTIM METAIS’ CORPORATE IDENTITY G4-56 Our corporate
OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM VOTORANTIM METAIS’ CORPORATE IDENTITY G4-56 Our corporate
OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM VOTORANTIM METAIS’ CORPORATE IDENTITY G4-56 Our corporate
OF THE VOTORANTIM GROUP ARE REPRESENTED BY THE ACRONYM VOTORANTIM METAIS’ CORPORATE IDENTITY G4-56 Our corporate

VOTORANTIM METAIS’ CORPORATE IDENTITY

G4-56
G4-56

Our corporate identity is represented by a set of aspects that guide our actions and are expressed through our relationships, attitudes, behaviors and also in our products, processes and results.

These aspects are vision, values, management beliefs, sustainability principles, material issues and our code of conduct.

Vision

To be a Brazilian metals and mining company which is globally diversified, reliable and respected, and the fastest growing mining house in the world. To generate high and increasing returns for our shareholders, through investments in base metals and other minerals.

Values

The values of the Votorantim Group 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.

SUSTAINABILITY REPORT 2014

27

Sustainability Principles These principles, which apply to all Votorantim Group companies, are as follows: 1.
Sustainability Principles These principles, which apply to all Votorantim Group companies, are as follows: 1.
Sustainability Principles These principles, which apply to all Votorantim Group companies, are as follows: 1.

Sustainability Principles

These principles, which apply to all Votorantim Group companies, are as follows:

1. To be recognized by society as a socially and environmentally responsible company.

2. To have sustainability as a strategy, guiding governance, management, education, and investment decisions, thereby creating value.

3. To consistently improve our economic, social and environmental performance, striving to achieve world-class standards of efficiency and operational reliability.

4. To be recognized as a company that attracts, develops and retains talent to create value and build a fair and inclusive society.

5. To be committed to the welfare, and health and Safety of our employees, customers and partners.

6. To contribute to the development of the communities where we operate.

7. To encourage the cooperation and participation of all employees and stakeholders in building partnerships and working together in order to generate value for all.

Our Material Issues

To provide direction for our work in sustainability we have identified the company’s material issues and have established their respective long-term targets. They are as follows:

ENERGY/EMISSIONS LOCAL DEVELOPMENT
ENERGY/EMISSIONS
LOCAL
DEVELOPMENT
HEALTH AND SAFETY
HEALTH
AND SAFETY

WATERENERGY/EMISSIONS LOCAL DEVELOPMENT HEALTH AND SAFETY WASTE PEOPLE HUMAN RIGHTS Each material issue and its

WASTE
WASTE
PEOPLE
PEOPLE
HUMAN RIGHTS
HUMAN
RIGHTS

Each material issue and its associated targets are described in detail in the section “Sustainable Practices” in the chapter “Our Strategy and Drivers”.

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29

Ombudsman The Votorantim Ombudsman service is available to external stakeholders, such as customers, suppliers, local
Ombudsman
The Votorantim Ombudsman service is available to external stakeholders, such as customers, suppliers,
local communities and the media, in Brazil and overseas, on any issue, but especially those addressed in
our Code of Conduct, such as harassment (moral, sexual), discrimination, suspected fraud, abuse of
power, embezzlement, unlawful acts and any other breaches of the Code.
All requests and complaints are treated confidentially (identification is optional) and with impartiality. The
Ombudsman service can be accessed in a number of ways, as follows:
All complaints received by the Ombudsman are investigated by our Internal Audit area. The results of each
investigation are sent to the Ombudsman, which is responsible for responding to the complainant.
Complaints are discussed at bimonthly meetings between the Internal Audit area and the Conduct
Committees, and at the monthly Audit Committee meetings. Incidents related to harassment and abuse of
power are directed to the area of Human and Organizational Development (HOD), which is responsible for
the implementation of training for managers. The objective is to improve the organizational climate in
order to reduce the number of complaints and allegations received.
As a consequence of the new Votorantim governance structure, in addition to the Corporate Ombudsman,
each industrial company established its own Ombudsman.
G4-HR3 – Total number of incidents of discrimination and the corrective actions taken.
Complaints received by the Ombudsman in 2014
263
Incidents under review
20
Incidents analyzed and considered unfounded
190
Incidents analyzed and considered valid
53
For the 53 complaints considered valid, corrective measures were taken, such as: verbal warnings,
suspensions and dismissals.
31
SUSTAINABILITY REPORT 2014

OUR

STRATEGY

AND DRIVERS

ORGANIC GROWTH Operational excellence We have a business model based on operational excellence , that
ORGANIC GROWTH Operational excellence We have a business model based on operational excellence , that

ORGANIC GROWTH

Operational excellence

We have a business model based on operational excellence, that is, we seek to maximize the utilization of our mineral resources and industrial assets. The Corporate Management area is continually looking for opportunities to improve the management of the business and administrative areas through the adoption of tools, methodologies, and specific processes, thereby enabling the construction of a structured and robust management approach.

In addition to the Corporate Management area, we have management sectors in all the operating units which are responsible for implementing the various management methods and tools aimed at improving processes, such as PDCA (Plan, Do, Check and Act), SDCA (Standardize, Do, Check and Act), TOC (Theory of Constraints), DRM (Daily Routine Management), 7S (Strategy, Structure, Systems, Skills, Staff, Style and Shared Values), and the Six Sigma Program, among other methods.

Maximizing the utilization of assets

The concept of operational stability in production and in maintenance is the pathway to enable us to improve our industrial performance. We are constructing a new culture, where we have abandoned the search for daily production records and are giving value to predictability. A new methodology for the monitoring of operational stability in Votorantim Metais was implemented in 2012. It started with increasing the awareness of senior management, and then the concept was disseminated throughout the entire organization.

Multi-annual stability targets were established for each unit, according to each one’s level of maturity, and these goals are being systematically monitored. The monitoring process is based on the Operational Stability Matrix and the Weekly Operational Stability Report, and focuses on two main indicators. These indicators are the Operational Deviation Indicator (ODI), which measures the daily deviation between the planned level and the actual performance level, and the Operational Stability Indicator (OSI), which measures how close this variable is to its technical limit. In general, the objective is to operate the plant with minimal variations (low ODI) and at a level close to the maximum production limit (high OSI). For 2017 the target for ODI is 3% and the target for OSI is 100%.

We have already made significant progress, with measurable and tangible results. All units have reacted positively and embraced both the concept and the changes introduced into the industrial routine. In 16 of the 22 units the improvement in the Operational Deviation Index was more than 20% compared to 2013. The benefits came in the form of a reduction of inputs in general, reduced fixed costs and decreased inventory levels for finished and semi-finished products.

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35

Extending the useful life of mines In order to ensure a continuous increase in the

Extending the useful life of mines

In order to ensure a continuous increase in the useful life of our mines, we are constantly investing in mineral exploration through exploratory and detailed drilling and other practices that enable us to increase our mineral resources. The drilling data is interpreted and processed according to the Australian Joint Ore Reserves Committee (JORC) Code, which guarantees the reliability and credibility of the information on resources and reserves that we report. All stages of this valuation process are subjected to rigorous external audits. The information is made available in the Mineral Resources and Reserves Management System, which serves as the basis for the company’s strategic planning process and is approved by all the managers involved.

With a focus on continuous improvement we have an ongoing project to develop mineral resources and reserves, which aims to increase the reliability of our operations. Part of this project is dedicated to the intensification of detailed drilling at two of our principal mines, Niquelândia (GO) and Vazante (MG).

Another project is the deepening of the underground mine at Vazante (MG) which will enable it to continue in production until 2028. These

WITH A FOCUS ON CONTINUOUS

IMPROVEMENT,

WE HAVE AN ONGOING PROJECT TO DEVELOP MINERAL RESOURCES AND RESERVES

projects will require investments of more than R$ 500 million in the next few years. The zinc concentrate produced will ensure the supply of raw material for our plant in Três Marias (MG), located 300 kilometers from Vazante (MG).

The Ambrosia project is another initiative to extend the useful life of a mine. This is a zinc mineral deposit, which was identified by drilling, in an area close to our existing mine in Morro Agudo (Paracatu - MG), which is currently forecast to have a useful life up to 2020. The beginning of mining in this second area of mineral deposits is planned for 2017 and will allow us to continue using the ore processing facilities at Morro Agudo, up until 2029.

In Peru, we have also been drilling for zinc and copper with a view to extending the useful life of Milpo’s mines. And, finally, we also have a project to integrate the El Porvenir and Atacocha, mines which will increase the volume mined, bring greater operational synergy and reduce the need for investments by eliminating the need to raise the height of the tailings dam.

the need for investments by eliminating the need to raise the height of the tailings dam.

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37

ETOSHA A project for the exploration of zinc in an early stage. Namíbia MAIN PROJECTS
ETOSHA A project for the exploration of zinc in an early stage. Namíbia MAIN PROJECTS
ETOSHA A project for the exploration of zinc in an early stage. Namíbia
ETOSHA
A
project for the exploration
of
zinc in an early stage.
Namíbia
for the exploration of zinc in an early stage. Namíbia MAIN PROJECTS IN BRAZIL AND AROUND

MAIN PROJECTS IN BRAZIL AND AROUND THE WORLD

SHALYPAICO* Underground mining project for zinc, lead and silver. * Joint Venture between Votorantim Metals
SHALYPAICO*
Underground mining project for zinc,
lead and silver.
*
Joint Venture between Votorantim Metals
and Pan America Silver.
BONGARÁ*
Underground mining project for zinc.
*
Joint Venture between Milpo
and Solitario Resources.
Peru
RONDON ALUMINA PROJECT facility consisting of a bauxite mine and an alumina refinery. Location: Rondon
RONDON ALUMINA PROJECT
facility consisting of a bauxite mine and an alumina refinery.
Location: Rondon do Pará (PA).
Mineral resource: 1.6 billion metric tons of bauxite.
The Rondon Alumina project is Votorantim Metais’ largest investment in Brazil, and is an integrated
The Rondon Alumina project is Votorantim Metais’
largest investment in Brazil, and is an integrated
Planned investment: US$ 3.7 billion.
A
of
A
of

VAZANTE BELT PROJECT

project for the exploration

zinc which is in the

exploratory drilling phase.

AMBRÓSIA PROJECT

project for the exploration

zinc which is in the

exploratory drilling phase.

ARIPUANÃ PROJECT* This is one of the largest deposits of zinc and lead in Brazil
ARIPUANÃ PROJECT*
This is one of the largest deposits
of zinc and lead in Brazil and also
contains copper, gold and silver as
by-products.
Location: Aripuanã (MT).
Mineral resource: 34 million metric
tons of polymetallic ores including zinc,
lead, copper, silver, and gold.
Planned investment: US$ 175 million.
* Joint Venture between
Votorantim Metais, Milpo and Karmin Inc.

SANTA MARIA PROJECT* Open-cast mining project located in an area with the potential for zinc, lead and copper.

Location: Caçapava do Sul (RS). Mineral resource: 26.4 million metric tons of zinc ore. Planned investment: US$ 197.2 million.

* Joint-venture between Votorantim Metais and Mineração Iamgold Brasil.

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39

STRATEGIC DRIVERS People management and communication G4-LA1 G4-LA9 G4-LA11 G4-MM4 Our people are at the

STRATEGIC DRIVERS

People management and communication G4-LA1 G4-LA9 G4-LA11 G4-MM4
People management and communication
G4-LA1
G4-LA9
G4-LA11
G4-MM4

Our people are at the core of our long-term strategy. It is they who will steer Votorantim Metais towards its goal of being the fastest growing metals and mining company in the world and the one that most generates value for its shareholders.

Therefore, with regard to people management, our aim is to provide a pleasant working environment, where we can build and retain high performance teams. Our teams seek operational excellence, delivering what has been agreed in terms of quality, timing and cost.

We encourage our people to be the best at what they do, to seek excellence and value creation for the company, while always respecting our corporate identity. Our development process aims to train the

leaders, experts and project managers of tomorrow, who will contribute to positioning Votorantim Metais at the forefront of the sectors in which we operate through excellence and continuous improvement.

To this end, our Human and Organizational Development (HOD) and Corporate Communication areas have made efforts on a number of fronts and registered significant advances, particularly over the last two years. One of these initiatives was the efforts made to align the actions taken by the DHO area to the company’s business strategies and aspirations in Brazil, considering the short, medium and long-term challenges.

Moreover, we want to be a company that offers its people support and growth opportunities, by delivering a benefit package which is complete and aligned to the market and that is based on fair compensation practices, which promote a culture of meritocracy.

To achieve this, we established long-term strategic objectives for the area’s activities, as indicated in the diagram below.

Effectiveness People Build a high performance organization. Create and sustain a high level of employee
Effectiveness
People
Build a high performance
organization.
Create and sustain a high
level of employee engagement.
• Reliable process to attract talented people
Effective governance
• Sustainable employee cost
management (including a lean structure)
• Effective management of talented
people
• Accurate manpower planning
• Efficient and ongoing employee
development
• Command of critical business skills
• Inspirational leadership
• Human resources area which is
analytical and connected to strategy
Competitive remuneration
• Effective cascading down of targets
Efficient employee relations
and internal communication
• Organization which is up to date and
constantly learning
Behavior
and Culture
Organization
Build an organization which
is admired in the market.
• Positive image and reputation
• Strong brand
• Values and beliefs embedded
• Pleasant working environment
• Diverse and inclusive

SUSTAINABILITY REPORT 2014

41

implementation of a master plan for labor and union relations, which generated positive results for

implementation of a master plan for labor and union relations, which generated positive results for the company.

• Progress on policies that differentiated us in the market, including making the variable remuneration of general managers more competitive.

• Implementation of new work practices at the corporate head-office including “home office” and “short Friday”. By the end of the year, 60 head-office employees had officially adhered to these practices.

• Creation of the Valuing Diversity Program, including increasing the percentage of women in the company’s workforce from 6.4% in 2013 to 7.1% in 2015. The company also adopted practices to create conditions to increase diversity, making the working environment more attractive for women, for example, by setting up a breastfeeding room corporate head-office in São Paulo.

STRENGTHENING

OF LABOR RELATIONS,

WITH THE IMPLEMENTATION OF A MASTER PLAN FOR LABOR AND UNION RELATIONS WHICH GENERATED POSITIVE RESULTS FOR THE COMPANY AND EMPLOYEES

GENERATED POSITIVE RESULTS FOR THE COMPANY AND EMPLOYEES • Definition of mandatory people management targets for

• Definition of mandatory people management targets for leaders, including establishing a succession plan and taking on a more pro-active development role.

• Structured actions to strengthen Votorantim’s DNA (the values, principles and practices built up throughout the organization’s history), together with the other Group companies.

• Developed the digital communication strategy with the objective of strengthening Votorantim Metais’ positioning in social networks.

• Improved the positioning of the company’s image in spontaneous media references, with an increase of 37% in the volume of qualified exposure aligned to the company’s strategic pillars, compared to 2013.

WE INCREASINGLY SEEK

TO DEVELOP OUR

TALENTED

EMPLOYEES

AND ACTIVELY PRACTICE A CULTURE OF MERITOCRACY

SUSTAINABILITY REPORT 2014

43

In addition, within the development pillar, we have designed a number of career tracks within

In addition, within the development pillar, we have designed a number of career

tracks within Votorantim Metais, in which we described the challenges at each level in the areas of strategy, finance, know-how, personnel management and relations with stakeholders. We prepared Individual Development Plans (IDP) for 84% of all employees in salary groups GS 32 and above, with an emphasis on highly talented individuals, which we have denominated “blue boxes”.

More important than merely fulfilling the numerical target for preparing IDPs, our goal was to ensure that that these plans were of high quality and truly provided the expected development of these employees so that they were really prepared for new challenges and career opportunities.

As regards the evaluation processes, 96% of employees have annual performance targets, established either as collective goals, for employees in the

operational levels (Profit-sharing Program - PPR), or individual goals in the case

of those employees eligible for variable compensation (salary group SG 29 and

above). All employees in this latter group also have a career development plan.

To assist managers, we have conducted training courses on the challenges of the

leadership role. This development process stimulates reflections on how to ensure that leaders use their position effectively to motivate their teams to strive to achieve results. It also provides practical guidance on how to give constructive feedback and to draw up a consistent IDP, that is, one that can help support the subordinate to overcome any development gaps and prepare him/herself for the next growth cycle. We believe that our leaders must be prepared to act as a role model for their teams and to actively engage with them.

In 2014, we introduced a number of retention strategies. The first initiative was the “home office” policy, open to all employees, which has already been adopted by more than 60 employees. We also initiated a “short Friday” policy, for those who work in the corporate head-office. Finally, as

a pilot program, we set up a breastfeeding room in São Paulo.This latter

initiative was one of the actions taken by the Valuing Diversity Committee aimed at making the company a more attractive place of work for women.

With these actions, we believe that there will be a significant reduction in the loss

of talented employees in the short term and in the medium term we will achieve

the retention of the talented people we need to ensure the continuity of the Votorantim Metais we believe in. In 2013, 13.8% of the employees denominated as “blue boxes” resigned from the company.

What we hope to achieve from all the initiatives already implemented, in addition to work areas planned for this year, is the consolidation of a culture of openness, based on trust and transparency, where there is an appropriate balance between the employee’s professional and personal lives, thereby creating a healthier and more enjoyable work environment.

Union relations

We have established a department to provide support to the operating units in developing a master plan for labor and union relations. The aim is to achieve the effective management of negotiations with unions, and so generate results which are beneficial for both the company and the employees.

In 2014, the master plan for labor and union relations for the aluminum plant in Alumínio (SP), drafted in 2013, served as a model for the other units. The master plan identifies and involves all stakeholders (employees, media, local community, authorities and the union) and sets out the actions to be taken in the case of conflicts.

Listening to people

Openness, transparency and sincerity are values which are increasingly exercised in the company. During the year the CEO and the Director of HOD and Corporate Communication visited most of our operating units to participate in events we call “Open Dialogue”. In 2014 we organized a 14 structured meetings, and two other events, called “More VM”, which in each case involved around one thousand employees, from units in Brazil, Peru and the United States. Overall the meetings received an average satisfaction rating of 96.8%.

We intend to expand the schedule of the Open Dialogue meetings, to cover all units, and to continue with the “Face to Face” program, so that all leaders can, in a structured manner, promote a dialogue with their teams. With these initiatives, we seek to provide employees with access to information on our strategies and encourage the exchange of ideas in both directions.

Also in 2014, we initiated the development of the Top Team program, which are workshops involving the CEO and his direct reports. This development initiative also includes individual coaching sessions for members of the Top Team. The objective is to ensure that this team can, in fact, inspire a high performance culture in the company.

Moreover, in 2015, we initiated a Mentoring program, whereby all directors and the CEO act as mentors to certain general managers. The goal is to increase their skills and identify opportunities for improvement through the sharing of personal experiences and the provision of guidance within the organization. This is a two-way program where those involved develop in a mutual manner. The mentors underwent a training program and seven to ten mentoring sessions have been scheduled for directors and general managers up until December 2015.

In 2015 we will hold another organizational climate survey. This survey, which was previously annual and is now bi-annual, evaluates the following aspects: clarity and direction; external image; leadership; principles and values; quality and customer focus; compensation and benefits; respect and

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45

BY EXCHANGING KNOWLEDGE WITH UNIVERSITIES, RESEARCH CENTERS AND PUBLIC INSTITUTIONS, WE THINK ABOUT AND CREATE

BY EXCHANGING KNOWLEDGE WITH UNIVERSITIES,

RESEARCH CENTERS AND PUBLIC INSTITUTIONS, WE THINK ABOUT AND CREATE

SOLUTIONS TO INCREASE THE COMPETITIVENESS OF THE METALS AND MINING SECTOR.

THE COMPETITIVENESS OF THE METALS AND MINING SECTOR . Focus on innovation and technology Our Technology

Focus on innovation and technology

Our Technology and Engineering area focuses on identifying, developing, adapting and implementing new technologies in our production processes.

We invest in innovation and technological development as pathways to advance in competitiveness, cost reduction, flexibility, energy efficiency, water efficiency, and the avoidance and reuse of waste (new sources of revenue).

People are at the center of our innovation management strategy and dedicated to the search for solutions to overcome the challenges of the future. Our team is composed of 70 professionals who have extensive market experience and hold master, doctoral and post-doctoral degrees.

By exchanging knowledge with universities, research centers and public institutions, we think about and create solutions to increase the competitiveness of the metals and mining sector.

This means that our researchers are not isolated in a research center, but carry out their work directly in our industrial plants and mines. To support their needs for additional information, studies and testing, we have signed contracts with 10 important universities and institutes for

certain priority themes. These include the University of São Paulo (USP), the University of São Carlos (UFSCar), the Federal University of Minas Gerais (UFMG) and the Institute for Technological Research (IPT).

In the case of energy efficiency, for example, we have established a partnership with the IPT where they provide support in our technical discussions and in carrying out reliable measurements in a fuel testing program at a pilot plant in our unit in Niquelândia (GO). In the case of water efficiency, we have set up a partnership with the UFMG, where they have contributed to theoretical research and to the planning of the laboratory and pilot project testing that is conducted on our plant’s premises.

The productivity of the Technology and Engineering area and results achieved so far are clear signs that the innovation model we have chosen is on the right track. In 2014, we conducted 76 research and development projects, and implemented a further 21 projects in our industrial plants in the same year.

The total investment in R &D in 2014 amounted to R$ 32.3 million. Of this amount, 70% was financed by FINEP (Financier of Studies and Projects). Another important benefit arising from this financing structureis the tax incentive under the so-called “Good Law”, which enabled us to recover R$ 8.0 million/year.

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Innovation creating value In the Polymetallics division our innovation strategy is to develop and broaden

Innovation creating value

In the Polymetallics division our innovation strategy is to develop and broaden the applications for zinc. In recent years, we have developed markets in Brazil for zinc oxide in various industrial sectors, such as:

pharmaceuticals, ceramics, tires and agriculture.

The Aluminum division is also constantly seeking to develop innovative applications for its products. Currently, we have 15 ongoing innovation projects, especially in the segments for transportation, construction, and carton packaging, flexible and disposable. A good example is the truck-silo, which was developed in partnership with a manufacturer of highway equipment. The prototype is being tested in field trials and has been submitted for approval by

the transport authorities. Compared to a conventional truck, it will be two tons lighter, which will decrease the wear and tear on the vehicle and reduce the consumption of fuel per metric ton transported.

Since 2013, we have been participating in an open innovation development project, called the Dry Cargo project, which is coordinated by the Brazilian Aluminum Association (ABAL), together with other participants in the aluminum industry. The project aims to develop an aluminum body for dry loads, and a prototype is now undergoing field tests. The idea is to stimulate the use of aluminum by replacing the current wooden bodies by new ones made of aluminum. The aluminum body is one ton lighter than a wooden one, which contributes to reducing fuel consumption, and is more durable.

to reducing fuel consumption, and is more durable. UNIVERSITY CHALLENGE The Polymetallics division sponsored

UNIVERSITY CHALLENGE

The Polymetallics division sponsored the Battle of Concepts for the second time. This is a Dutch initiative for an open innovation model that has been replicated in Brazil since 2009. The model seeks to bring external solutions into the internal environment of organizations, by bringing together young talented people from the most innovative companies.

In 2014, we launched the university challenge, an initiative which aimed to identify new solutions for the use of zinc in the sectors of agribusiness and human health. We received 39 projects, which were evaluated by a panel of experts from Votorantim Metais. As a result we awarded prizes to 10 projects, produced by students from six universities.

The winning project was a proposal for a biodegradable plastic bag enriched with zinc, called “BioZin”. The product’s differential in relation to existing biodegradable bags was that the new bags, by being enriched with zinc, could be reused in agriculture after disposal, helping to rebuild zinc levels in the soil, since it is an important element for the production of food. The authors of the project were Petry Carvalhal Melo and William Frondoli Romeiro, both 20 years old and students in the 3rd year of the Environmental Engineering course at the São Carlos (SP) campus of the University of São Paulo (USP). The project placed second in the contest, with the title of “Zn Food”, proposed the creation of an agricultural program aimed at adding value to foodstuffs rich in zinc. The third placed project, called “Seal + Z”, proposed the creation of a quality label that informed consumers about which products would benefit their health because of being rich in zinc.

Further information on all ten winning entries, which were awarded a total of R$ 15 thousand in prize money, can be found on the website: www.sougenial.com.br/. Following the prize-giving ceremony, the winning authors visited the company’s facilities.

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49

Development of local suppliers In all units, we seek to accompany and support the development

Development of local suppliers

In all units, we seek to accompany and support the development of local suppliers so that they can both serve our needs and even further expand their portfolio of customers. We believe this to be a strategic way to facilitate our existing operations and also our new projects, since, as a mining company, we must maintain close relations with the communities where we operate and a strong involvement in local development.

As an example, in 2012 we entered into a partnership with the mining companies Anglo American and Anglo Gold, to establish a Supplier Development Program in the state of Goiás. The three companies are the program sponsors, and the program partners responsible for delivering the program are the Euvaldo Lodi Institute and the Federation of Industries of the State of Goiás (FIEG).

The program is focused on the development of a chain of local suppliers in the Center-North region of the state, and one of the highlights of the program is the fact of being sponsored by a group of companies all operating in the same industrial sector. We joined together to leverage our power to transform and seek solutions, and also because of our understanding that we shared common values and faced similar challenges.

In order to develop local companies to meet the supply of goods and services being demanded, one of the program’s objectives is to enable them to increase the number of customers in their portfolios.

After analyzing the social and economic circumstances and potential of the region, which is composed of 12 municipalities, five municipalities were selected in which to focus the actions of the program, which was launched in December 2013. The program established four principal lines of action: articulation of partners and resources, training, strengthening of class associations and business origination meetings.

IN 2014,WE HAD

A TOTAL OF 40,487 APPROVED SUPPLIERS FROM WHOM WE PURCHASED

R$ 4.4 BILLION IN GOODS AND SERVICES

IN 2014, 74 COMPANIES PARTICIPATED IN TRAINING PROGRAMS, INVOLVING 118

PEOPLE AND 592 HOURS OF CONSULTING WITH THE BRAZILIAN SERVICE FOR THE SUPPORT OF MICRO AND SMALL BUSINESSES (SEBRAE)

A survey carried out by IEL identified that strategic planning, financial

management, people and team management and effective negotiation skills were the main training needs required by the 143 companies that signed up for the program. In 2014, 74 of them participated in training activities, involving 118 people and 592 hours of consulting time with the Brazilian Service for the Support of Micro and Small Enterprises (Sebrae).

Business origination meetings were held in the municipalities of Niquelândia, Crixás and Barro Alto, with the participation of 65 companies, and potential business of around R$ 500 thousand was identified.

Another important front included initiatives aimed at strengthening trade and industry associations, seeking to stimulate them to assume a leading role in the planning of new projects focused on local self-development.

Strategic plans, where the vision, mission, strategic goals and objectives were defined, were developed for the trade and industry associations of Barro Alto, Goianésia, Niquelândia and Uruaçu. The municipality of Crixás

is

still in the process of setting up such entities.

In

2015, a survey will be carried out to measure the progress made by the

companies participating in the training courses and business origination

meetings and to monitor the activities of the trade and industry associations.

In February 2015, the agreement between the sponsors and the IEL was

renewed. As a result, a plan for new training courses will be prepared and a study will be undertaken to structure quality control systems for use by suppliers.

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51

SUSTAINABLE PRACTICES G4-18 G4-19 G4-20 G4-21 G4-24 G4-26 G4-27 Sustainability strategy In 2010, Votorantim
SUSTAINABLE PRACTICES G4-18 G4-19 G4-20 G4-21 G4-24 G4-26 G4-27
SUSTAINABLE PRACTICES
G4-18
G4-19
G4-20
G4-21
G4-24
G4-26
G4-27

Sustainability strategy

In 2010, Votorantim Industrial defined the material issues that represented the priorities for action by the Votorantim Group as a whole. They were based on the Sustainability Principles developed in 2009. In line with the guidelines set by Votorantim Industrial, in 2010, Votorantim Metais defined how it would proceed in relation to sustainability.

In 2010, in order to define the material issues relevant to our businesses, we referred to industry documents such as the Brazilian National Mining Plan for 2030 and the World Scenario Series - Mining and Metals 2030, which indicated there were significant concerns for the sector in Brazil and globally. We also conducted a survey to identify which companies were considered to be the best national or global benchmarks on sustainability issues in our three main business segments. In addition, we surveyed our customers to establish their level of perception and needs on these issues. As a result of this work, which was complemented by internal consultations with our key managers, we defined eight material issues. These material issues are: waste, greenhouse gas emissions, energy, water efficiency, products, social and environmental development, culture of open dialogue and Safety.

Since then, we have continued to discuss the theme of sustainability in the company and how it relates to our strategic objectives, and have established long-term goals for each material issue.

IN 2010 VOTORANTIM METAIS

DEFINED, HOW IT WOULD

PROCEED IN RELATION TO

SUSTAINABILITY

METAIS DEFINED , HOW IT WOULD P R O C E E D I N RELATION

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53

Sustainability material issues and long-term targets Material Issues Targets for 2025 W a t e
Sustainability material issues and long-term targets Material Issues Targets for 2025 W a t e

Sustainability material issues and long-term targets

Material Issues

Targets for 2025

W a t e r Increase water efficiency to 75% and reduce the specific consumption

Water

Increase water efficiency to 75% and reduce the specific consumption of fresh water.

L o c a l D e v e l o p m e n

Local Development

Achieve progress in the social indicators established for each location, ensuring 90% efficiency in the plans for community development and relations that were established for the prioritized locations.

H u m a n R i g h t s Ensure that our suppliers

Human Rights

Ensure that our suppliers meet the conditions in the program for the prevention and mitigation of environmental risks.

Energy and Emissions Reduce emissions of greenhouse gases (GHGs) by 5%, by investing in energy

Energy and Emissions

Reduce emissions of greenhouse gases (GHGs) by 5%, by investing in energy efficiency and energy mix flexibility, focusing on renewable sources and technological innovation projects.

P e o p l e Promote the valuing of diversity and achieve a proportion

People

Promote the valuing of diversity and achieve a proportion of 22% of women employees in Votorantim Metais.

Waste Reduce the specific generation of mining and metallurgical waste by 50% and reduce the

Waste

Reduce the specific generation of mining and metallurgical waste by 50% and reduce the environmental impact of waste disposal by focusing on investments in process efficiency, use of new technologies and creation of economic value.

Health and Safety Achieve an accident frequency rate with and without lost days that is

Health and Safety

Achieve an accident frequency rate with and without lost days that is less than or equal to the global benchmark for the metals and mining sector, and a Safe Behavior Index (SBI) greater than 90% for all units and companies controlled by Votorantim Metais.

SUSTAINABILITY REPORT 2014

55

  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization Material Issues Aspects Qualitative Analysis
 

Inside the organization

Outside the organization

Material Issues

Aspects

Qualitative Analysis

RELEVANCE

Qualitative Analysis

RELEVANCE

 

Supplier evaluation for labor practices

Votorantim Metais strictly conforms to the labor laws and requires the same behavior from its suppliers who must undergo approval process in which their labor practices are analyzed. Moreover, the company is a signatory to voluntary agreements regarding worker protection and the eradication of child labor and forced or compulsory labor. We are starting to study how to create mechanisms to monitor labor practices in our supply chain. Internally, we seek to stimulate a culture of respect for diversity and maintain specific communication channels for reporting and handling complaints by employees.

   

Investments

Non-discrimination

Brazil is a country of significant social and economic differences. Despite the progress made in recent years, it is still common to encounter incidents of child labor,

 
Child labor

Child labor

disrespect for labor rights, informal work, and forced and compulsory labor. The Ministry of Labor
disrespect for labor rights, informal work, and forced and compulsory labor. The Ministry of Labor
disrespect for labor rights, informal work, and forced and compulsory labor. The Ministry of Labor

disrespect for labor rights, informal work, and forced and compulsory labor. The Ministry of Labor publishes a “black list” of companies involved in incidents of forced or compulsory labor.

The Ministry of Labor publishes a “black list” of companies involved in incidents of forced or
The Ministry of Labor publishes a “black list” of companies involved in incidents of forced or

Human

Forced and compulsory labor

   

Rights

Supplier evaluation for human rights practices

Human rights grievance mechanisms

 
 

Energy and emissions

Energy consumption and therefore greenhouse gas emissions are inherent to our production processes, especially in the case of aluminum. We have established programs that focus on reducing the consumption of energy per metric ton of product produced and have made efforts to increase energy flexibility by substituting non-renewable energy sources by renewable sources such as biomass and bio-diesel, among others. Furthermore, the majority of the energy we consume is generated by hydro-electric power plants.

 

Historically, Brazil always been proud of its hydro-electric system, which is responsible for over 60% of the production of electrical energy. However the current water crisis has already impacted the national production of electrical energy. In addition, the country has not

 
General

General

Conformity

Conformity invested sufficiently in the diversification of its energy mix. The contingency plan is based entirely
Conformity invested sufficiently in the diversification of its energy mix. The contingency plan is based entirely
Conformity invested sufficiently in the diversification of its energy mix. The contingency plan is based entirely

invested sufficiently in the diversification of its energy mix. The contingency plan is based entirely on thermal-electric plants, and there is still little investment in the search for renewable alternatives. The cost of energy is high in Brazil, especially for consumers that are intensive users of electrical energy.

The cost of energy is high in Brazil, especially for consumers that are intensive users of
The cost of energy is high in Brazil, especially for consumers that are intensive users of

Energy/

   

Emissions

Environmental grievance

mechanisms

High Low
High
Low

Medium

SUSTAINABILITY REPORT 2014

57

  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
  Inside the organization Outside the organization   Material Issues Aspects Qualitative Analysis
 

Inside the organization

Outside the organization

 

Material Issues

Aspects

Qualitative Analysis

RELEVANCE

Qualitative Analysis

RELEVANCE

 

Employment

   

Health and safety

Our operations, by their nature, inherently involve risks to the health and safety of our employees and contract staff. The health and safety of our workforce are priorities for Votorantim Metais. For this reason, we invest continually in improving training and working conditions. The company has been continually progressing in its health and safety performance through initiatives, indicators and tools that enable the improvement of management and controls.

 

The Statistical Yearbook published by the National Institute for Social Security revealed that there had been a decrease in the number of accidents and work-related deaths in Brazil. However, the statistics included only those employees with

 
Training and Education Diversity and equal opportunity

Training and Education

Diversity and equal opportunity

a formal labor contract, which covers
a formal labor contract, which covers
a formal labor contract, which covers

a

formal labor contract, which covers

a formal labor contract, which covers
a formal labor contract, which covers
a formal labor contract, which covers

Health

 

less than 50% of the country’s working population.In addition to the fact that half the working population was not included in the occupational safety statistics, there is

 

and Safety

Supplier evaluation for labor practices

Relations between labor and management

culture in Brazil of under-reporting accidents at work.

a

Transportation

   
High Low
High
Low

Medium

SUSTAINABILITY REPORT 2014

59

PERFORMANCE

This chapter presents the company’s economic and financial performance, and also its achievements in relation to social and environmental issues.

Financial Performance The reality of the situation in 2014 proved to be better than the

Financial Performance

The reality of the situation in 2014 proved to be better than the scenario we had forecast for the year. EBITDA, which grew significantly, rose to R$ 2.2 billion and we also had a strong generation of free cash flow, which contributed to reducing the company’s leverage.

This improvement was due to an increase in average metal prices on the London Metal Exchange (LME), the devaluation of the R$/US$ exchange rate, and improved operational stability.

In 2014 our net revenues totaled R$ 9.2 billion, 5% higher than

the previous year. The zinc business accounted for R$ 4.6 billion; aluminum, for R$ 3.6 billion; and nickel, for R$ 1.0 billion.

Zinc revenues in Reais increased by 15% due to the combined effect of the increase in the average price in US Dollars on the LME, and the devaluation of the R$/US$ exchange rate. Nickel revenues decreased by 28%, due mainly to the lower level of production caused by the temporary suspension of activities at the Fortaleza de Minas plant. Metal prices increased in Reais, partially offsetting the effect of the lower volume.

The Aluminum division’s revenues increased by 6%, due to the increase in average price of the metal in Reais and the income from the sale of surplus energy. This was made possible due to the lower level of production due to reduced demand by the construction and transportation sectors.

The cost of goods sold totaled R$ 7.3 billion, a decrease of 1% compared to 2013. The costs for zinc increased by 13%, due to the price increase for concentrate in Peru and Brazil. The costs for nickel fell by 35%, reflecting the lower volume of sales. The costs for aluminum remained stable at R$ 2.8 billion.

Selling, general and administrative expenses reduced by 5% in 2014, totaling R$ 1.0 billion. This was due mainly to

a reduction in freight costs for zinc operations in Brazil, as

a result of the lower volume exported, and the lower volume of nickel sales.

In Milpo, revenues totaled R$ 1.8 billion in 2014, 15% higher than in 2013, due to the increased volume of concentrate sales and the higher average LME price for zinc which offset the impact of the lower LME prices for copper and silver. The cost of goods sold rose by 15%, due to the higher sales volumes and increased costs for maintenance and development at the Cerro Lindo mine, where the run-of-mine (ROM) capacity was increased from 15 to 18 thousand metric tons/day.

Selling expenses, general and administrative remained stable, totaling R$ 142 million. There was a 9% reduction in administrative expenses, due to the lower expenses of the corporate office, which was offset by an increase in selling expenses resulting from the higher volume of concentrates sold. EBITDA increased to R$ 622 million in 2014, 13% higher than the previous year, mainly due to the increased sales volumes of concentrates.

SUSTAINABILITY REPORT 2014

63

HEALTH AND SAFETY PERFORMANCE G4-LA6 Safety is a core value for Votorantim Metais and is

HEALTH AND SAFETY PERFORMANCE

G4-LA6
G4-LA6

Safety is a core value for Votorantim Metais and is the direct responsibility

of leadership. Therefore, increasingly, we spare no effort, we provide the

resources, we carry out awareness campaigns and audits, we invest in

training and we constantly review our Safety procedures, looking for ways

to detect non-compliant behavior. We give the subject of Safety our full

attention and apply all of our expertise to the continuous improvement of our management system.

We have developed a Critical Risks Control Program to manage the risk control of activities that could lead to serious injury or death. We identified 14 risks as being the most critical in our operations and inherent in our types of our activities. For each of these critical risks we developed procedures for their control whenever our employees become exposed to them. The critical risks are: energy lockout and tagout; access to a confined space; handling of suspended loads; electrical installations; working at heights; machinery protection; light vehicles and mobile equipment; hazardous chemicals; hand tools; handling and storage of pressurized gases; burns with liquid metal; unstable rock falls (rock fragments that fall from the ceiling or sides of the galleries in underground mines); poisonous animals; and excavations (underground, open-cast, and civil construction).

One of our most important initiatives in 2014 was to carry out a thorough review of the procedures, aligning them to best practices. We also reviewed the metrics and audit methods and went back to carrying out internal audits, which had been suspended since 2011. We have a team

of 50 internal auditors, made up of technical and Safety engineers, and

representatives of the operational areas that support them in the implementation of the procedures. In 2015, we will put an emphasis ``on those activities involving critical risks that caused the most serious accidents over the last two years, as follows: light vehicles and mobile equipment; energy lockout and tagout; machinery protection; and unstable rock falls.

A

Safety method that is worthy of mention is the Management Inspection,

in

which the general manager and other managers and coordinators

conduct an inspection to detect conditions and behaviors in the workplace that could lead to accidents. In addition, this inspection is a clear demonstration of the involvement of senior management in Safety at each

unit, and serves as an example for other employees in leadership positions.

In 2014, approximately one thousand such inspections were carried out.

SUSTAINABILITY REPORT 2014

65

The program’s indicators and the unit’s results are presented at these meetings. Operational staff may

The program’s indicators and the unit’s results are presented at these meetings. Operational staff may attend the meetings by invitation. In 2014, around 500 Pro-Action Meetings were held.

Preliminary Risk Analysis (PRA) - This is a tool that enables the identification and analysis of the risks which are inherent to the task before the start of activities in order to enable the worker(s) individually or collectively to neutralize all the possible personal accident, material or environmental risks. This helps employees to develop the habit of perceiving and reporting potential risk situations existing in their areas and the means of mitigation.

Permission to Work (PTW) - This is also a tool for the preliminary analysis of the risks involved in the work activity. This tool applies to non-routine services and critical activities, considering and guiding the work team and those responsible for the risk assessment in the identification and elimination of risks, comprehensively and effectively.

• Golden Rules - A Safety policy that defines practices that must be strictly followed. Failure to observe them implies the immediate application of the rules of the consequence management process.

Planned Task Observation (PTO) - This is an assessment made by those responsible for the processes and/or the areas that implement operational procedures. It is carried out while the activity is being conducted by team members, in order to ensure the safe execution of critical activities regarding health, Safety and the environment by correcting the deviations found during the implementation of operational standards, seeking continuous improvement.

Occupational Risk Observation (ORO) - This is a management tool used to change employee behavior. It is based on a learning methodology that aims to help people discuss the Safety issues present in the workplace, in such a manner that it leads to strengthening safe behavior and changing risk behavior.

Significant progress in Safety

In recent years we have achieved significant reductions in our accident frequency rates.

The accident frequency rate, with and without lost days, in 2014 was 2.74, 5% lower than that the rate of 2.88% recorded in 2013. In 2014, the highlight in reduction of the accident frequency rate with and without

lost days was the Aluminum division, where the rate reduced from 4.71 to 3.08. However, there was an increase in the accident frequency rate for the Polymetallics division, from 1.25 to 2.06. Although overall we are in a process of evolution, we did record two fatalities in 2014, one in Vazante (MG) and the other in Milpo (Peru).

Due to a high turnover rate and the high number of contract staff in Milpo, health and Safety management has been a major challenge. Thus, in 2014 a number of workshops were carried out with the leadership to identify the programs which were most appropriate for contract staff. Following these initiatives there was a reduction in the accident severity rate and the number of fatalities in the Milpo units.

Since 2013, we have incorporated Safety performance in the program for the variable compensation of all leadership positions, including the corporate areas. Up until recently accidents only impacted the compensation of the employees in the areas where they occurred. From 2015, they will also affect the compensation of all directors and managers in the corporate areas, including the company’s CEO.

Our long-term target for Safety is to reach 2025 with an accident frequency rate with and without lost days below 1 in all units, without any fatalities.

SUSTAINABILITY REPORT 2014

67

rate with and without lost days below 1 in all units, without any fatalities. SUSTAINABILITY REPORT
Local Development G4-26 G4-EC7 G4-SO1 Local development and community relations are an integral part of
Local Development G4-26 G4-EC7 G4-SO1
Local Development
G4-26
G4-EC7
G4-SO1

Local development and community relations are an integral part of the Votorantim Group’s business strategy. The objective is to ensure that the presence of a Group company contributes to the development of the locality where it operates.

Since 2002, the Votorantim Institute has been responsible for our social responsibility strategy and the approval of the operating unit’s external social investment. The Institute has also supported our social initiatives by contributing to the evaluation and management of their impacts and the implementation of social and cultural projects.

Each business area defines and accompanies the projects which it supports by means of careful strategic planning processes and social monitoring, which takes into account the specific needs and social dynamics of each location.

Our social initiatives are aimed at both promoting community relations (Social License to Operate) and stimulating local development. We seek to mitigate negative impacts and generate positive results for the community and the company. We work to stimulate local development in coordination with other sectors of the economy.

The projects we support are especially important in remote locations which have greater infrastructure and labor needs. We do not attempt to assume the role of government, but we take actions to create the necessary conditions to ensure the viability of our operations. Our methods have been recognized for their effectiveness and alignment with public policies, helping to strengthen them.

Total Investments

The projects contribute to the empowerment of communities, and we seek to encourage them take the leading role in promoting the necessary social transformations in their regions and thus avoid creating a high level of dependence on the mining activities.

We contribute to local development in four dimensions: human capital, institutional capital, social capital and economic dynamism. The same project can impact more than one dimension and cover more than a single topic, which include: education, employment, culture, sports, children’s and adolescents’ rights, entrepreneurship, training of NGOs, support for public administration, promotion of family farming, among other topics.

In this regard, in 2014, Votorantim Metais invested a total of R$ 10.3 million in its social strategy. These investments included social projects, donations to local organizations and company initiatives such as volunteering, diversity, development of local suppliers and environmental education, both in existing operating locations and areas near green-field projects (Brazil and Cajamarquilla). Of this amount, R$ 4.5 million were financed from the company’s own cash resources, and the remaining R$ 5.8 million from funds managed by Votorantim Institute. The total investment was channeled to around 46 projects involving 70 initiatives, in the areas where the company operates.

In 2014, Milpo invested a total of R$ 38 million in its social activities. This was financed by R$ 13.6 million from the company’s own cash flow, R$ 8.5 million from tax incentives in Peru and R$ 15.9 million from the government and other institutions. This investment was directed to 80 projects in the areas where the company operates.

R$ 2,781,043

l a t i p a C n a m u H
l
a
t
i
p
a
C
n
a
m
u
H

R$ 3,752,961

m s i m a n y D c i m o n o c
m
s
i
m
a
n
y
D
c
i
m
o
n
o
c
E

R$ 10,264,487

 

l

S

o

c

i

a

l

C

a

p

i

t

a

R$ 311,292S o c i a l C a p i t a

l

I

a

t

i

p

a

C

l

a

n

o

i

t

u

t

i

t

s

n

R$ 2,739,264a t i p a C l a n o i t u t i t

Other investments

R$ 679,927

SUSTAINABILITY REPORT 2014

69

Project Name Votorantim Partnership for Education (PVE) Program "Future in Our Hands" Family Center
Project Name
Votorantim
Partnership for
Education (PVE)
Program
"Future in Our
Hands"
Family
Center
Itinerant Cinema
"Conscienciarte"
ReDes
("Networks")
Program
Quality
Sustainable
Practices for Pig
Breeders

Dimension

Project Name

Description

Results achieved

 

Public

The program aims to modernize public administration and reduce the infrastructure deficits in the municipalities served. It provides municipal managers and staff with training, and methodologies and tools for increasing revenue and improving the management of the municipality’s resources.

This is a training program to improve management skills (planning, execution, monitoring and evaluation) in non-governmental organizations that are having difficulties in structuring projects for fund-raising.

Administration

Support Program

Institutional

Capital

   
 
 

NGO

This is a training program to improve management skills (planning, execution, monitoring and evaluation) in non-governmental organizations that are having difficulties in structuring projects for fund-raising.

In addition to the helping with the structuring of projects, the program also resulted in improvements in issues such as:

Capacity-

administrative and financial management, partnerships and fund raising, knowledge management, monitoring and evaluation of selected NGOs.

building

 

Building the

This program was set up following the temporary suspension of activities at the Fortaleza de Minas (MG) unit in November 2013 and aims at find economic alternatives to mobilize the local economy.

The Building the Future Together Program, in Fortaleza de Minas (MG), began in November 2013. In February 2014, with the support of a specialized consulting firm, a survey was prepared, which was presented to the community in March. Since then, the unit has organized monthly meetings with the stakeholders involved. The most significant result of these meetings was the setting up of work groups to foster local development in Fortaleza de Minas.

FutureTogether

Program

Social

Capital

 

Stakeholder

Construction and review of the key stakeholder engagement plans in our aluminum operation.

Engagement

The aim is to strengthen our stakeholder engagement strategy as an integral part of the company’s management approach, generating value for both the company and our stakeholders.

management approach, generating value for both the company and our stakeholders. SUSTAINABILITY REPORT 2014 7 1

SUSTAINABILITY REPORT 2014

71

FISH, SWEETS AND DELICACIES Votorantim invested over R$ 2 million, in 2015 in projects in
FISH, SWEETS AND DELICACIES Votorantim invested over R$ 2 million, in 2015 in projects in
FISH, SWEETS AND DELICACIES
Votorantim invested over R$ 2 million, in 2015 in projects in the areas
of education, modernization of public administration, development of
local suppliers and the promotion of productive chains.
One of the programs that helped local communities to develop
economic activities and a source of income is the ReDes Program,
carried out with the support of Votorantim Institute and in partnership
with the National Bank for Economic and Social Development (BNDES).
Since 2011, the ReDes Program has invested more than R$ 2.3 million,
in the state of Goiás alone.
In 2014, for example, the ReDes Program fostered a fish-farming
production chain, by supporting the creation of the Lago Serra da
Mesa Fish Farmers Cooperative (Cooperpesca) in Uruaçu (GO), a candy
and preserves facility run by the Rio Vermelho Women’s Association
(Amurv) in Niquelândia (GO) and a project to strengthen the dairy
production chain in Colinas do Sul (GO). The ReDes program is also
active at the units in Três Marias (MG), Vazante (MG) and Morro Agudo
(Paracatu - MG) and in a further 24 municipalities where companies of
the Votorantim Group have operations. In the municipalities where
Votorantim Metais operates there are 13 projects with a wide variety of
activities, such as the production of milk, poultry, agribusiness,
smallholder family farming, fashion, fruits, etc., and using various
business models, such as cooperatives and associations.

SUSTAINABILITY REPORT 2014

73

People: Diversity G4-LA12 G4-LA13 We have established a Valuing Diversity Committee which is composed of
People: Diversity G4-LA12 G4-LA13
People: Diversity
G4-LA12
G4-LA13

We have established a Valuing Diversity Committee which is composed of employees from the areas of Health, Social Responsibility, Sustainability, Legal, Human and Organizational Development and Communication. The committee has established a priority of promoting the inclusion and equality of opportunity for women.

Currently women occupy 5.3% of our leadership positions, including one Board member and three general managers (increasing from one during 2014). The overall average percentage of women employees in Votorantim Metais at year-end 2014 was 6.9%. This represented a small advance compared to year-end 2013, when 6.5% of our employees were women.

In 2014, we initiated the first year of our Diversity Policy with a campaign to increase awareness of the question among managers and the presentation of our goals. One of the highlights of the policy is our guarantee to treat women equally in selection processes and performance evaluations. We believe that women are increasingly prepared to take on challenges and compete on equal terms for jobs that were once the strongholds of men, such as the operation of heavy equipment in underground mines.

This policy has been personally championed by our CEO, who has emphasized that the idea is “neither to create advantages nor disadvantages”. Our long-term objective is to reach a level of 22% of women employees in Votorantim Metais by 2025, expanding their participation in both the industrial operating units and the corporate center.

Several actions are already underway, such as: increasing the awareness of managers with respect to the issue; the “Breakfast with the CEO” initiative; and the development of processes that make the company a more attractive working environment for women, such as offering maternity leave of six months, establishing a breastfeeding room at the head-office and the implementation of a counseling program for pregnant women. Furthermore we have established a policy for green-field projects to recruit employees on a 50:50 basis for men and women.

Another key point is that we are not seeking diversity just to follow the market trend. Our policy is based on our conviction that a diverse environment is more creative and more productive.

In relation to diversity issues in general, although we decided to start with the emphasis on women we intend to gradually initiate discussions, planning and metrics for other diversity issues such as age group, ethnic origin, income level, sexual orientation and nationality.

BREAKFAST WITH THE CEO

As a sign of recognition of the importance of diversity the CEO of Votorantim Metais, Tito Martins, invited 64 women in leadership positions, from various areas and units, to a breakfast meeting. The aim was to talk about the main challenges of women in the sector and the trends in the labor market. Tito emphasized that, independently of gender, the company needed to find the best employees available and so it was essential to provide an attractive and stimulating environment for all employees The event, held in September 2014, was also attended by the director for Human and Organization Development and Communication, Arlene Domingues, the only woman on the Board of Votorantim Metals.

SUSTAINABILITY REPORT 2014

75

ENVIRONMENTAL PERFORMANCE Waste G4-EN23 G4-MM3 In 2011, we established an internal goal to reduce the

ENVIRONMENTAL PERFORMANCE

Waste G4-EN23 G4-MM3
Waste
G4-EN23
G4-MM3

In 2011, we established an internal goal to reduce the volume of metals and mining waste in all Votorantim Metais’ units. We reviewed this situation and established a new goal for 2025 which is to reduce the specific generation of mining and metallurgical waste by 50% and reduce the environmental impact of waste disposal by focusing on investments in process efficiency, the adoption of new technologies and the creation of economic value.

In 2014, we generated 28.7 million metric tons of waste, of which 4.3 million metric tons were industrial waste and 24.4 million metric tons were metals and mining waste.

Our challenge is greater than simply achieving the environmentally appropriate disposal of waste. Our Technology and Engineering area is working on projects to add value to waste. The best example of this is the “Zero Waste” project, which eliminated the generation of metals and mining waste at our Morro Agudo

EN23 | MM3 - Waste (metric tons)

(Paracatu - MG) unit. This avoided the need to build a new tailings dam every three years and also created a new source of revenue (for more information please refer to the section “Limestone Powder: from waste to product”).

For the development of new projects, one of the guidelines is to include a study on the possibilities of reducing waste in the design phase. When this is not possible, we will search for alternatives with a lower impact. For example, the solution for waste disposal for the projects in Bongará (Peru) and Aripuanã (MT), is the replacement of traditional tailings dams by storing waste in heaps. Despite the complexity of handling, this method has a lower risk of collapse and allows the area to be rehabilitated more rapidly.

Furthermore, we have identified excellent business opportunities, such as the use of waste generated in one unit as an input in another, either within the company itself or in one of the Group’s other businesses, thus reducing costs and eliminating environmental liabilities. An example of this is the reuse of the spent pot liner (SPL) waste generated in the pot-rooms at our aluminum plant in Alumínio (SP). This waste is being co-processed in cement plants and, in the future, will be sent to our unit Niquelândia (GO) and to the steel industry.

3,000,000

2,850,000

1,579 289
1,579
289

2,962,621

4,730

2,800,415

21,067

136,410

1,982 880
1,982
880

Others Others

Non-hazardous

Types of Disposal

Storage on site1,982 880 Others Others Non-hazardous Types of Disposal Industrial landfill Sanitary landfill Composting

Industrial landfillOthers Non-hazardous Types of Disposal Storage on site Sanitary landfill Composting Co-processing/processing

Sanitary landfillTypes of Disposal Storage on site Industrial landfill Composting Co-processing/processing Incineration (or use as

CompostingStorage on site Industrial landfill Sanitary landfill Co-processing/processing Incineration (or use as a fuel)

Co-processing/processingon site Industrial landfill Sanitary landfill Composting Incineration (or use as a fuel) Underground injection

Incineration (or use as a fuel)Sanitary landfill Composting Co-processing/processing Underground injection Reuse/recycling 0 1,290,000 651

Underground injectionCo-processing/processing Incineration (or use as a fuel) Reuse/recycling 0 1,290,000 651 5,400 812 Others

Reuse/recyclingIncineration (or use as a fuel) Underground injection 0 1,290,000 651 5,400 812 Others 1,298,900

0

1,290,000

as a fuel) Underground injection Reuse/recycling 0 1,290,000 651 5,400 812 Others 1,298,900 6,929

651

5,400

651 5,400 812 Others

812

Others

1,298,900

6,929

51,430

1,240,541

55 11
55
11

Hazardous

Recovery6,929 51,430 1,240,541 55 11 Hazardous Others 20.8 Non-hazardous Hazardous Types of Waste Metals

Others6,929 51,430 1,240,541 55 11 Hazardous Recovery 20.8 Non-hazardous Hazardous Types of Waste Metals and

20.8

Non-hazardous

Hazardous

Types of Waste

Metals and mining11 Hazardous Recovery Others 20.8 Non-hazardous Hazardous Types of Waste Industrial waste SUSTAINABILITY REPORT 2014 7

Industrial wasteHazardous Recovery Others 20.8 Non-hazardous Hazardous Types of Waste Metals and mining SUSTAINABILITY REPORT 2014 7

SUSTAINABILITY REPORT 2014

77

1,240,000

0

(million tons)

3.0

3.6 1.3
3.6
1.3
WE INVESTED R$ 521 MILLION IN THE POLYMETALLICS PROJECT WHICH TRANSFORMED OUR ZINC UNIT JUIZ
WE INVESTED R$ 521 MILLION IN THE POLYMETALLICS PROJECT WHICH TRANSFORMED OUR ZINC UNIT JUIZ

WE INVESTED R$

521 MILLION

IN THE POLYMETALLICS PROJECT WHICH TRANSFORMED OUR ZINC UNIT

JUIZ DE FORA: CONTRIBUTING TO SUSTAINABILITY

We invested R$ 521 million in the Polymetallics Project, which has transformed our zinc plant in Juiz de Fora (MG) into a recycling operation for the zinc production chain, recovering zinc from the processing of alternative sources of raw materials. This is a strategy to reduce the volume of primary zinc sulfides which are imported. Until recently, the unit used 100% of imported raw materials in the production of zinc, zinc alloy, copper sulfate, sulfuric acid and silver concentrate.

Following our investments in a Waelz furnace, which has a strong environmental appeal, we are now able to process materials with low zinc concentration levels, which had not previously been used. These materials include the waste generated internally, in our unit in Juiz de Fora Unit and in our zinc mines in Brazil, and also electric arc furnace (EAF) dust, produced by the steel industry. EAF dust is classified as a Class 1 hazardous material which is generally disposed of in controlled landfills.

The Polymetallics Project is a pioneering project and highly identified with the theme of sustainability: in addition to reducing the zinc production cost it also provides an appropriate form of disposal of hazardous wastes, such as EAF dust.

The production of zinc from secondary sources has been growing. In 2012, the recycling of EAF dust allowed us to replace 13% of our primary zinc requirements. The following year, this proportion increased to 16% and in 2014, the proportion of zinc from secondary sources rose to 19.5%.

Considering the available capacity of our Waelz furnace for processing other materials containing zinc, we have the capability to process approximately 85% of the total EAF dust generated in Brazil, which is equivalent to the total amount of EAF dust generated in the state of Minas Gerais.

Another environmental gain from this project comes from the adjustment 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.

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79

Due to its complexity, the application of the program will require adjustments over time in

Due to its complexity, the application of the program will require adjustments over time in the individual units. This process of taking ownership of the methodology is still under way. We also have a goal to create a consolidated database of the information on the current situation and the trends in the availability and cost of water use in the regions. This includes both the regions where we have existing operations and those where we are studying the implementation of new projects, prioritizing areas with higher levels of water stress.

In 2014, we invested R$27.4 million in initiatives and new projects related to water resources management and R$ 36.7 million in water-related operating costs. In the previous year, the expenditure was also significant, with expenditures of R$ 32.9 million in investments and R$ 11.5 million in operating costs.

We also participate in the water governance program for the state of Minas Gerais. We have supported community initiatives to develop projects for submission to the Mining Institute of Water Management (IGAM) with the aim of obtain financing from the Fund for the Recovery, Protection and Sustainable Development of the River Basins of the State of Minas Gerais (Fhidro). At present, one of our projects is in the final stage of evaluation. The project, which is called the “Environmental Assessment of Watershed of Ribeirões do Cágado, Meia Pataca and Córrego do Caracol and Adjacent Areas within the Municipalities of Cataguases and Santana de Cataguases” was prepared by an NGO, called Environmental Pact.

G4-EN8 – Total water withdrawal by source (m 3 )

G4-EN10 – Percentage and total volume of water recycled and reused

The total volume of water recycled was equivalent to 79% of the total volume of
The total volume
of water recycled was
equivalent to
79%
of the total volume
of water withdrawn.

We recycled 44% of the total volume

of water used in our processes.

43,414,974 24,312,385 19,102,589 374,520 21,431,729 2,506,136 24,312,385 Volume (m 3 ) Surface water Total
43,414,974
24,312,385
19,102,589
374,520
21,431,729
2,506,136
24,312,385
Volume (m 3 )
Surface water
Total volume of water recycled
by the organization
Underground water

Water supply companiesof water recycled by the organization Underground water Total volume of water withdrawn reported in the

Total volume of water withdrawn reported in the indicator G4-EN8volume of water recycled by the organization Underground water Water supply companies SUSTAINABILITY REPORT 2014 8

Water supply companies Total volume of water withdrawn reported in the indicator G4-EN8 SUSTAINABILITY REPORT 2014

SUSTAINABILITY REPORT 2014

81

Energy mix features – 2014 39 % Non-renewable 61 % Renewable We are conducting a

Energy mix features – 2014

39%

Non-renewable

Energy mix features – 2014 39 % Non-renewable 61 % Renewable We are conducting a number

61%

Renewable

We are conducting a number of research projects, applicable to Votorantim Metais as a whole, including: the use of renewable fuel oils and bio-gas; heat recovery aimed at reducing steam consumption; automation focusing on the reduction of energy consumption; and the use of bio-mass.

One of the initiatives that facilitated the development of these projects was the modernization of the Niquelândia (GO) pilot plant, in which we invested R$ 2.2 million in 2013. In 2015, we are modernizing the Juiz de Fora (MG) pilot plant, with approximately R$ 2.6 million in investments. As a result, we were able to develop a project, in partnership with the Brazilian Research and Industrial Innovation Company (Embrapii), to use alternative fuels to replace coke, such as bio-mass, shredded tires and waste derived fuel (WDF).

Our GHG emissions, for 2014, were estimated at 3.9 million tons of CO 2eq , which represented a decrease of 16% compared to the 2013 emissions of 4.7 million tons of CO 2eq . In 2014, we created procedures to standardize the preparation of the GHG emissions inventory.

The combined emissions of our units in Três Marias (MG) and Niquelândia (GO) account for 30% of the company’s total emissions. In the Três Marias (MG) unit, we have installed heat recovery equipment for steam production; in the Niquelândia (GO) unit, we are testing the use of bio-mass in the boilers. These projects are being developed in conjunction with SENAI-Cimatec and receive financial support from the Brazilian Research and Industrial Innovation Company (Embrapii). The implementation of these projects will reduce the use of fossil fuels, which, in addition to reducing costs, will reduce our GHG emissions by 105 thousand tCO 2eq /year (for more information please refer to the inset “Flexible Combustion Chamber” in the section “Technology and Innovation” in the chapter “Our Strategy and Drivers”).

Our plant in Alumínio (SP), accounts for 51% of the company’s total emissions and is one of the main focuses of our attention in this regard. In terms of energy mix, 25% of the total is generated from natural gas. The improvements in the unit’s operational stability and specific energy

consumption have already contributed to reducing GHG emissions. In the casting process, we are developing a project to optimize the gas-fired torches and are continuing seeking to reduce fossil fuel consumption in the pot-room furnaces.

GHG emissions

Units

(tCO

2eq )

Description

2012

2013

2014

 

Stationary

1,962,612

1,832,110

1,704,043

combustion

Mobile sources

124,547

85,646

64,735

-

owned

Process

1,341,170

1,210,394

877,381

Waste

 
 

247

166

-

 

treatment

Soil - limestone

257

200

235

Soil - nitrogen fertilizer

 

Electrical

 

Scope 2

energy

781,075

1,201,553

1,257,569

Scope 3

Mobile sources

76,994

383,259

39,430

-

outsourced

Total

4,286,901

4,713,329

3,943,393

GHG emissions (thousand tCO 2eq )

4,713 4,287 3,943 2012 2013 2014
4,713
4,287
3,943
2012
2013
2014
S.2S.3 Scope 1
S.2S.3
Scope 1

Process

Stationary combustion

Mobile sources - owned

Electrical energy

Mobile sources - outsourced

TOTAL

SUSTAINABILITY REPORT 2014

83

• Environmental category: the award-winning project, developed by the Bauxite and Aluminum Technology area, related

Environmental category: the award-winning project, developed by the Bauxite and Aluminum Technology area, related to the work done to extend the useful life of the Palmital tailings dam, in our aluminum business, that otherwise would have exhausted its storage capacity by 2020. By installing filter presses to separate the liquid and solid materials, less space in the dam is used. Because of this change in the waste disposal process, the useful life of the dam has been extended by 27 years. During these studies, we also identified the possibility to recover 94% of the caustic soda present in the residues going into the dam. Caustic soda is the third largest cost item for our plant in Alumínio (SP). Its recovery will reduce the environmental liabilities and costs, by R$ 24 million per year, in addition to postponing the need for an investment of R$ 300 million for a new dam.

Brazil Brand Award

In September, the plant in Alumínio (SP) received the Brazil Brand Award for 2014, for investments in its relations and partnerships with customers. In total, 44 brands of companies and organizations were honored in 63 categories covering 14 economic sectors. Votorantim Metais received an award in the category “Extruded Aluminum Profile Manufacturer” for its innovation capacity and value delivered to customers. Our Aluminum Profile Surface Treatment Center is the largest and most modern of its kind in Latin America. The Brazil Brand Award is considered one of the most important forms of recognition in Brazilian business circles. The awards are based on the votes of the readers of technical journals for the participant’s market segments. They elect the outstanding companies in each year, in a direct, transparent, objective and democratic way. The receipt of this recognition is a clear sign of customer satisfaction, which validates our entire business strategy.

Participations in Trade Fairs, Conferences, Exhibitions and Seminars

In 2014, we intensified our participation in trade fairs, conferences, exhibitions and seminars. The aims were to increase brand awareness, emphasize institutional and commercial relations and engage in market development. Among the various events the highlights were:

ExpoAlumínio 2014 - São Paulo - April

At this trade fair we emphasized our investments in innovation and in social and environmental management. The event is organized by the Brazilian Aluminum Association (ABAL) and held every two years. This edition of the event attracted around 12 thousand visitors and buyers. In parallel to the fair, there was a trade conference and a recycling seminar. We exhibited the product line made at our aluminum plant in Alumínio (SP). The highlights were our range of Ecoperfil products (for more information please refer to the section” Organizational Profile” in the chapter “Who we are”) and our Aluminum Profile Surface Treatment Center, the largest and most modern of its kind in Latin America.

19th Edition of the Agricultural Exhibition in Niquelândia (GO) - July

The Niquelândia (GO) plant presented its social and environmental projects developed in the state of Goiás. The exhibits in our stand were linked to the campaign on the responsible use of water, called “Agua, Bem Presente”, which was carried out in the company’s units in 2014.

35th Edition of the Energy and Utilities Seminar - São Paulo - August

The theme of the event was: “Energy efficiency: the management challenge”. Our specialist staff made six presentations and participated in the roundtable on Energy Efficiency Management, where they described the projects which were developed by our Technology and Engineering area and are now in the process of patent registration. The concept and research and development plans (R & D) of some projects were developed in-house and aimed at specific applications appropriate to the particular characteristics of Votorantim Metais’ production processes. The event highlighted certain case studies of projects related to the optimization of energy use in the production processes, commonly used by the metals and mining companies.

Equipo Mining 2014 - Santa Luzia (MG) - August

The event attracted around 12 thousand participants, including representatives of the leading companies in the metals and mining, steel and civil construction sectors. Votorantim Metais made presentations on three projects related to cost reduction and increased production, as follows:

• The project to optimize the consumption of ore which enabled us to increase the bauxite mass recovery rate at our Miraí (MG) unit from 38.3% to 41.5%. The project required an investment of R$ 200 thousand and returned savings of R$ 1 million in the first 10 months

• Our plant in Alumínio (SP) installed a pioneering software system based on fuzzy logic to reduce the variability in the alumina concentration/ caustic soda content (A/C) ratio, which fell by 38%. There were further gains from reductions in the consumption of bauxite and steam in the ore digestion process and increased plant productivity.

• With the involvement of a number of their operational areas, the units in Vazante (MG) and Morro Agudo (Paracatu-MG) built a databank of geo-metallurgical and strategic information to support its technological research and development. This effort resulted in an increase in the ore recovery rate from 21% to 43% and contributed to the doubling of sales at the Vazante (MG) unit.

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85

NATIONAL VOLUNTARY COMMITMENTS • Open Letter to Brazil on Climate Change: Votorantim Industrial is a

NATIONAL VOLUNTARY COMMITMENTS

Open Letter to Brazil on Climate Change: Votorantim Industrial is a signatory to this initiative, signed in 2009, in which the participating companies have assumed a number of commitments to reduce the impacts of climate change and have also made proposals on actions to the federal government.

More information is available at: http://www.forumEmpresarialpeloclima.org.br/

Vision Brazil 2050: Votorantim Industrial participated in the elaboration of the guidelines of the document “Vision Brazil 2050,” in which the participating companies defined lines of work. The results were presented at the Rio+20 Conference in June 2012.

More information is available at: http://cebds.org/publicacoes/visao-brasil-2050/

• Through its plant in Aluminío (SP), the company is a member of the Green Building Council (GBC) - Brazil, an NGO affiliated to the World Green Building Council. The goal of the GBC is to promote the development a sustainable construction industry, through solutions for the construction market. By being a member of this association, we are reaffirming our commitment to the sustainable development of the construction industry and to conducting our activities in a safe and responsible manner, seeking to offer products that meet the interests of our various stakeholder groups. An example is our Ecoperfil range of products, made with a high percentage of recycled aluminum.

Memberships of associations

Standard

Description

Tito

Chairman of the Board of the Brazilian Aluminum Association (ABAL).

Martins

Jones

Vice President of the Agency for Technological Development of the Brazilian Mining Industry (ADIMB) and Board Member of the Brazilian Mining Institute (IBRAM).

Belther

Carlos

Marcelo

Chairman of the Board of the Non-ferrous Metals Institute (ICZ) and President of the Latin American Zinc Association (LATIZA).

Gonçalves

Henriques

Certifications help organizations to put together a set of methods and systems that enable them to manage the business processes and risks more efficiently. At Votorantim Metals we have obtained certifications of our management systems for quality control, the environment, occupational health and safety, social responsibility and laboratory testing. They demonstrate that we follow best market practices and help us improve our relations with customers and other stakeholders. Since a large proportion of our production is directed to serve other industries (“business to business”), we adopt the certification criteria that are required by them.

The highlights were as follows:

Certifications

Standard

Description

Certified units

ISO 9001

Quality Management System

Alumínio (SP), São Miguel Paulista (São Paulo – SP), Três Marias (MG), Morro Agudo (Paracatu – MG), Vazante (MG), Juiz de Fora (MG), Milpo (Peru) and Cajamarquilla (Peru).

ISO 14001

Environmental Management System.

Alumínio (SP), São Miguel Paulista (São Paulo – SP), Niquelândia (GO), Fortaleza de Minas (MG), Três Marias (MG), Morro Agudo (Paracatu – MG), Vazante (MG), Juiz de Fora (MG), Milpo (Peru) and Cajamarquilla (Peru).

OHSAS

Occupational Health and Safety

Niquelândia (GO), São Miguel Paulista (São Paulo – SP), Três Marias (MG), Morro Agudo (Paracatu – MG), Juiz de Fora (MG) and Milpo (Peru).

18001

Management System

ISO 17025

General Competence for Laboratory Testing

Vazante (MG) and Juiz de Fora (MG).

SUSTAINABILITY REPORT 2014

87

The Três Marias Unit: defending “Old Chico” together with the community Over the past decade,

The Três Marias Unit: defending “Old Chico” together with the community

Over the past decade, our unit in Três Marias (MG), located near the São Francisco River (known as “Old Chico”), has evolved significantly in its environmental management practices, such that it won the most important award in this area in the state, the Minas Gerais Environmental Management Award (PMGA). Among a number of factors, one of the most important was the evaluation of the company’s investments to improve the storage of waste. The unit built a waste storage area in accordance with the most stringent environmental requirements, and the management of judicial requirements.

But just as important as the PMGA award, is the recognition by the community that the company is committed to social and environmental issues and has been taking care of these matters in an extremely transparent and serious manner. A sign of this recognition was the presence of the fisherman Norberto Antonio dos Santos in the audience at the PMGA ceremony, sitting alongside representatives of Votorantim Metais.

Born and raised on the banks of São Francisco River, Mr. Norberto, who is one of the company’s neighbors, has been a fisherman for 56 years. No one else knows better how important it is to keep the river alive. “There is a production chain linked to the river, including hotels and sport fishing. Not only people, but animals depend on it as well”, said Mr. Norberto.

At Votorantim Metals, we have developed close relations with the local community and today we are taking a leading role in the region as regards initiatives to protect the river. One such initiative is the creation of environmental monitors, who are fishermen who photograph, weigh and record the features of the fish found dead in the São Francisco River and other rivers in the region. In this way we have built up a database from information collected over the last ten years which is now available for use in research. In order to develop these initiatives we entered into partnerships with specialized centers in prominent universities, such as the Federal University of Minas Gerais and the Federal University of São Carlos, in São Paulo.

The initiatives to promote closer relations between the company and the community included the development of social projects, environmental education initiatives and presentations to fishermen andother communities of river dwellers on the history of the river and its species of fauna and flora. We also created a dedicated telephone service (0800-0319261) to receive complaints, warnings and suggestions. All queries and comments received are analyzed by the responsible areas and replies are sent to the senders. Alternatively, people can visit the unit in person and be received by a company representative.

These and other initiatives have made the Três Marias unit a benchmark for environmental management. The unit receives visitors from other units of Votorantim Metais, Group companies and other companies. “One of the great advantages of our management system is that it is not cast in concrete, but is very dynamic and open to contributions from stakeholders. We have a lot of contact with the community”, says environmental analyst John Eudes Pereira, responsible for monitoring the river and for attending the dedicated telephone number.

“I have followed the work of Votorantim Metais in recent years and I see a transparent attitude and a real interest in solving environmental issues. I see you are looking to do the best you can and you welcome us with open arms when we have something to say”, said Mr. Norberto.

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89

The objective of this report is to present an account of our activities during the

The objective of this report is to present an account of our activities during the year, in a transparent, responsible and structured manner. The report contains information on our business model, business strategies, material issues and our initiatives to engage with our main stakeholder groups, that is, senior management and employees, institutional investors, governments, social and class entities, regulatory agencies, the media, the media, trade unions, non-governmental organizations, suppliers and customers.For the first time, we are publishing our own annual report, called the Votorantim Metais Sustainability Report 2014.

The preparation of the report was based on the most recent version (G4) of the Global Reporting Initiative (GRI) guidelines. The report integrates both financial and non-financial information in a single narrative which is permeated by the aspects which are most relevant for Votorantim Metais such as, corporate identity, governance structure, strategic approach to sustainability, strategic positioning of its business activities and its performance.

Our Sustainability Report provides information on Votorantim Metais’ strategies, projects and initiatives, products and services, operations and business activities, with the primary focus on its performance in 2014. Regarding the information related to the GRI indicators, any limitations on the scope or boundary of a specific indicator are indicated in the Table of GRI Indicators or in commentaries in the text of the report.

The social and environmental information presented in this report cover the business and operations of our Aluminum and Polymetallics division for the units located in Brazil and Peru, as follows:

Votorantim Metais head-office (São Paulo – SP), Alumínio (SP), Itamarati de Minas (MG), Miraí (MG), Poços de Caldas (MG), Araçariguama (SP) – Metalex, São Miguel Paulista (São Paulo – SP), Niquelândia (GO), Fortaleza de Minas (MG), Juiz de Fora (MG), Morro Agudo (Paracatu – MG), Três Marias (MG), Vazante (MG), Cajamarquilla (Peru), Milpo (Cerro Lindo, El Porvenir, Atacocha). The report does not include information on our unit in Sorocaba (SP) since this unit has only recently been acquired.

The economic and financial results presented herein refer to the following three legally constituted companies: Votorantim Metais Zinco S.A, Votorantim Metais S.A. and Companhia Brasileira de Alumínio.

Our external auditors, PricewaterhouseCoopers, have audited the financial information in the report and have provided limited assurance for certain non-financial data. In addition the Global Reporting Initiative (GRI) has reviewed the report in relation to the aspect of Materiality Disclosure. Although it is not required by internal policies, the external verification process was a requirement set by senior management.

The printed version of the Sustainability Report is being distributed to representatives of our stakeholders, including, investors, governments, economic and market analysts, community leaders, social and class entities, regulatory agencies, the media, among others.

In addition to the printed version, the report will be available in a PDF version. The full report may be accessed on the Votorantim Metais website at:

www.vmetais.com.br.

The report is being published in Portuguese, English and Spanish.

Your opinion is very important to us. Please send your feedback, comments or questions to: faleconosco@vmetais.com.br

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91

Disposal of HAZARDOUS waste Strategy and Analysis G4-1. President's Statement Organizational Profile G4-3 . Name
Disposal of HAZARDOUS waste
Strategy and Analysis
G4-1. President's Statement
Organizational Profile
G4-3 . Name of organization
G4-4. Primary brands,
G4-5. Location of the
G4-6. Geographical coverage
G4-8. Markets served
G4-9. Scale of the organization
G4-10. Total number of employees
of
G4-13. Significant changes in the organizational structure
to
G4-14. Precautionary
G4-15. List of charters and Initiatives
G4-16. Memberships of associations
Aspects and Material Boundaries
G4-17. List of entities
G4-18. Report content and Aspect Boundaries
G4-19. Material Aspects
G4-20. Aspect Boundaries
G4-21. Aspect Boundary outside the organization
G4-22. Effects of significant restatements of information
G4-23. Significant changes from previous reporting periods in Scope and
Aspect Boundaries
 

External

5.

Stakeholder Engagement

Page (Supplementary Data and/or DMA)

Assurance

G4-24. Stakeholder groups engaged

53, 90

G4-25. Basis for identification and selection of stakeholders

90

G4-26. Engagement approach

53

G4-27. Key topics and concerns identified and the organization's response

53

 

External

6.

Report Profile

Page (Supplementary Data and/or DMA)

Assurance

G4-28. Period covered by the report

90

G4-29. Date of most recent previous report

90

G4-30. Reporting cycle

90

G4-31. Contact point

90,126

G4-32. Report "in agreement" option

Essencial – pages 90 and 124

G4-33. External assurance policy

90

 

External

7.

Governance

Page (Supplementary Data and/or DMA)

Assurance

G4-34. Governance structure

15

 

External

8.

Ethics and Integrity

Page (Supplementary Data and/or DMA)

Assurance

G4-56. Values, principles, standards and norms of behavior

27

ECONOMIC PERFORMANCE

DMA – ASPECT: ECONOMIC PERFORMANCE

Votorantim Metais is a privately-held company que adopts the accounting and governance practices of publicly-listed companies. The company has a Board que establishes the company’s long-term direction and preserves the company’s values and management beliefs. The company has corporate policies for investments and debt que aim to maintain the company’s investment grade rating. The company’s long-term plans are based on macro economic scenarios, demand and availability of raw materials and energy. The strategic planning cycle encompasses all the material aspects of sustainability the guiding parameters. Budgets are made based on the ”year 1” of the strategic plan and short and medium-term targets are set for all the company’s executives. The remaining employees also have targets based on the breakdown of its unit’s overall targets. The control of the execution of the budget includes an analysis of the Distribution of Value Added (DVA). This analysis demonstrates the taxes paid and the amounts distributed to the company’s main stakeholder groups. The strategic plan includes a risk analysis of all the aspects material, including those related to climate change. The company’s management approach includes the use of insurance policies, mainly for issues directly related to the manufacturing operation and the supply of raw materials.

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95

G4-EC1 – Direct economic value generated and distributed, including revenues, and other payments Components of
G4-EC1 – Direct economic value generated and distributed, including
revenues,
and other
payments
Components of Value Added (R$ million)
DIRECT ECONOMIC VALUE GENERATED
1.1) Sales of products
1.2) Other net operational revenues (expenses)
1.3) Reduction (increase) in the reserve for doubtful credits
2) Inputs acquired from third parties
sold and services provided
2.2) Materials, energy, outsourced services and others
fixed assets
3) Gross value added
3.1) Depreciation, amortization and depletion
4) Net value added
5) Value added received in transfers
5.1) Result of equity investments
5.2) Financial revenues
Total value added received in transfers
6) Total value added to be distributed
7) Distribution of value added
7.1) Salaries and social charges / benefits
7.1.2) Social charges
7.2) Taxes, tariffs and
7.2.4) Deferred taxes
of
7.3.1) Financial expenses
of
7.4.1) Net income (loss) for period
8) Distribution of value added
1. Consolidated Statement of Value Added at December 31st, 2014 for the companies: Votorantim Metais Zinco SA; Votorantim Metais SA; and Companhia
Brasileira de Aluminio. Does not include the units of Metalex, Milpo and Cajamarquilla

DMA – ASPECT: MARKET PRESENCE

Votorantim Metals' compensation policies and practices are in line with the market. The company does discriminate salaries by gender. The salaries for employee categories are divided into salary groups (SG). The variations in salaries within each SG are due to merit, competence and the length of time in the job.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EC5 – Variation of the ratios of the standard entry level salary, broken down by gender, compared to the minimum wage at significant locations site of operation.

Variation between the standard entry level salary and the minimum wage location.

During the year 2014, two employees in the Morro Agudo unit received compensation below the local minimum wage. However, having identified these cases, the company made salary adjustments, valid from 2015.

Omissions

Omitted Information

Reasons for Omission

Explanation for Omission

Variation between the standard entry level salary and the minimum wage location.

Confidential information

Information was not reported to ensure employee safety.

Comments:

1. Does not include the costs incurred by Metalex. Information not available.

DMA – ASPECT: INDIRECT ECONOMIC IMPACTS

The indicators for Votorantim Metals' social projects are the monitored through the Votorantim Social Projects Management System, under guidelines from the Votorantim Institute. Each social organization prepares a progress report on its activities, each semester, and the social site project manager prepares a call report to validate the shared information. In addition, an outside consultant hired by Votorantim Metais visits each locality four times a year to check the indicators, targets, achievement of results, accountability, organization management potential and the social site project manager. The consultant prepares a report on each visits providing information on the status by project, unit and functional area.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EC7 – Development and impact of infrastructure investments and services supported.

69

Type of Investment

Amount (R$)

Size

Location

Commercial

88,943

More than 5 thousand beneficiaries

Brazil

Other types

15,988,529

More than 5 thousand beneficiaries

Brazil and Peru

Infrastructure Investments or supported services (R$)

2014

Total Investment

16,077,472

Comments:

1. Although Metalex is included in the list of units it is not considered to be the priority for social action.

SUSTAINABILITY REPORT 2014

97

Procurement of low-value non-critical services are delegated to the operating units. One of the goals
Procurement of low-value non-critical services are delegated to the operating units. One of the goals of this initiative is to promote the development of
the local markets, due to the proximity of our operations. There are no policies Which require the hiring of the local suppliers. However, in practice,
there is a preference for hiring the local suppliers as a tie-breaking factor in the event of equivalent competing offers.
G4-EC9 – Proportion of spending on Local suppliers at significant
locations
Amount Spent with Local Suppliers
the local suppliers
Total amount spent with suppliers
Proportion of spending with the local suppliers
The results included the spending also made by Votorantim Energia’s suppliers since it does not have its own procurement department. Votorantim Energia is
responsible for contracting services and non-recurring materials up to R$ 2 thousand. For other contracts, the company is responsible for generating the order,
issuing a purchase request and the instructions for the subsequent processing steps which are carried out by Votorantim Metais.
Does not include the
All Votorantim Metals’ raw materials are managed based on: a five-year demand forecast (strategic plan); available stocks of resources (renewable and non-renewable);
management of licenses for mining and production; and production capacity. Each year the budgeted amounts of inputs are fine-tuned for the following year. During
and production are planned on a monthly basis to manage flows material.
G4-EN1 – Materials used by weight and volume
Consumption of main materials (metric tons)
Zinc sulfate concentrate
Other non-renewable materials (External Supply)
Other non-renewable
Other renewable materials
Total volume of main materials (metric tons)

Comments:

1. For the purposes of this indicator Votorantim Metais adopted the practice of informing the main materials used by each unit. These consist of mineral ores and chemicals. An input was considered significant when its consumption was equal or greater than one ton per month.

2. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

3. Indicator does not include information for the Metalex unit. Not managed.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN2 – Percentage of materials used that are recycled materials

Amount Spent with Local Suppliers

2014

Total recycled materials used

123,316

Total materials used (EN1)

21,769,911

Percentage of recycled materials

1%

Comments:

1. Indicator applicable only to the Juiz de Fora and Metalex units.

DMA – ASPECT: ENERGY

The energy demand by segment is defined in the strategic plan. Action plans are prepared to meet this demand with medium and long-term supply contracts. For day-to-day energy management, the units have energy efficiency programs to optimize the use of inputs and the technology and development areas research the possibilities for new processes and energy sources.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN3 – Energy consumption inside the organization

82

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Not applicable to the São Paulo administrative office.

3. The data presented are managed by means of the energy balance of the units and are included in the greenhouse gas emissions (GHG) inventory which is prepared based on ISO 14064-1/07 and the Brazilian GHG Protocol program. For the cases where the Brazilian GHG Protocol program has not defined the methodology the IPCC guidelines were used. This inventory received a limited assurance review by PwC.

 

External

Aspect Indicators

Page (Supplementary Data and/or DMA)

Assurance

 

82

G4-EN5 – Energy Intensity

 

Renewable and non-renewable energy sources, inside and outside the organization

 
 

Rate

Main products

(GJ/t)

Aluminum

16.33

Zinc

13.21

Nickel

375.50

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Not applicable to the São Paulo administrative office.

3. Indicator does not include information for the Metalex unit. Not managed.

SUSTAINABILITY REPORT 2014

99

in in operations, either by recirculation, sequential use in a number of processes, and the
in
in operations, either by recirculation, sequential use in a number of processes, and the reduction of wastage and consumption. The goal is always to seek
loop for the use of water. Effluents are treated and monitored, and Their discharge into water bodies complies with the applicable
legislation. The monitoring of discharges is part of the environmental control system.
G4-EN8 – Total water withdrawn by source
Water supply companies
Total water withdrawn
Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.
Information is not available for the administrative office (São Paulo). Unit not included.
G4-EN10 – Percentage and total volume of water recycled and reused
Total amount of water recycled and reused by the organization
Total volume of water
Total volume of water
Total volume of water
Percentage of the total volume of water recycled compared to the total water used in the processes
Percentage of the total volume of water recycled compared to the total water used in the processes
Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.
Not applicable to the administrative office (São Paulo).
Does not include the units of Metalex, Milpo and Cajamarquilla Not managed.

DMA – ASPECT: EMISSIONS

All of the parameters for the authorizations for air emissions and particulate matter comply with the legal aspects and the values indicated in their licensing processes. The company has a goal of reducing emissions per metric ton of production in all its processes, related to greenhouse gases.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN15 – Direct greenhouse gas (GHG) emissions (Scope 1)

G4-EN16 – Energy indirect greenhouse gas (GHG) emissions (Scope 2)

G4-EN17 – Other indirect greenhouse gas (GHG) emissions, by weight (Scope 3)

82

82

82

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Not applicable to the São Paulo administrative office.

3. Indicator does not include information for the Metalex unit. Not managed.

4. The data presented is included in the greenhouse gas emissions (GHG) inventory which is prepared based on ISO 14064-1/07 and the Brazilian GHG Protocol program. For the cases where the Brazilian GHG Protocol program has not defined the methodology the IPCC guidelines were used. This inventory received a limited assurance review by PwC.

 

External

Aspect Indicators

Page (Supplementary Data and/or DMA)

Assurance

   

G4-EN18 – Emission intensity of greenhouse gases

 

Main Products

Rate (tCO 2eq /t)

Types of

Gases included

Energy

 

Own and

Aluminum

1,14

Purchased

CO 2 , CH 4 , N 2 O, CF 4 , C 2 F 6

 

Own and

Zinc

0,83

purchased

CO 2 , CH 4 , N 2 O

 

Own and

Nickel

30,24

purchased

CO 2 , CH 4 , N 2 O

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Not applicable to the São Paulo administrative office.

3. Indicator does not include information for the Metalex unit. Not managed.

SUSTAINABILITY REPORT 2014

101

We comply with all the which aims to reduce the generation of waste per metric
We comply with all the
which aims to reduce the generation of waste per metric ton produced in all processes. To achieve this our technology teams seek to develop new techniques
and technologies, for more sustainable and profitable alternatives for the waste generated, as well as other relevant aspects.
G4-EN23 – Total weight of waste by type and disposal method
Total Weight of Waste (metric tons)
Disposal of NON-HAZARDOUS waste
Incineration (or use as a fuel)
Co-processing / processing
Underground injection of waste
Disposal of HAZARDOUS waste
Incineration (or use as a fuel)
Co-processing / processing
Underground injection of waste
TOTAL Waste disposal
Incineration (or use as a fuel)
Co-processing / processing
Underground injection of waste
1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

DMA – ASPECT: PRODUCTS AND SERVICES

The high proportion of Votorantim Metals’ products are sold to other industries (B2B). Therefore, we follow the criteria demanded by customers related to these issues. For the products destined to direct consumption we have developed best practice manuals including information on their use and disposal.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN28 – Percentage of products and their packaging recovered in relation to the total products sold, broken down by product category

2014

In the Aluminum Division, the main initiatives are related to the metal packaging of the sheets of coils sold, which are 100% returned to the aluminum plant for reuse.

Additionally, a portion of the aluminum scrap resulting from the processing of our products is returned by customers to be reprocessed and resent to customers in the form of products, thus creating a closed cycle. Expanding these initiatives is one of our business goals.

In the Polymetallics Division, our main initiative is the return and reuse of the packaging of the zinc products sold by the Três Marias unit. In 2014 about 1,100 metric tons of “big bag” packaging was recovered, which represented 48% of total sales. Furthermore we recovered 100% of plastic and “”pack less”” pallets for reuse, totaling 1,130 metric tons.

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Indicator does not include information for the Metalex unit. Not managed.

DMA – ASPECT: COMPLIANCE

A high proportion of Votorantim Metais’ products are sold to other industries (B2B). We follow all the criteria demanded by customers related to these issues. For the products destined to direct consumption we have developed best practice manuals including information on their use and disposal.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN29 – Monetary value of significant fines and the total number of non-monetary sanctions for non-compliance with environmental laws and regulations

Period

2014

Total number of sanctions

26

Total monetary value of significant fines

2,338,072

Legal actions filed through arbitration mechanisms

0

Comments:

1. This item included the demands received and amounts paid, including both legal actions filed and administrative proceedings.

2. Indicator does not include information for the Metalex unit. Information not available.

SUSTAINABILITY REPORT 2014

103

Regarding its own fleet of vehicles, each unit updates the control system on a monthly
Regarding its own fleet of vehicles, each unit updates the control system on a monthly basis by entering the amount of fuel consumed. In the case of
the third-party companies providing logistical services, we request them to provide data on fuel consumption and mileage. All this information is then
consolidated to calculate the GHG emissions using the methodology established by the Brazilian GHG Protocol Program.
G4-EN30 – Significant environmental impacts resulting from
transporting products and other goods and materials
used for the organization’s operations, and the
transportation of its employees
Greenhouse gas emissions
Indicator does not include information for the Metalex unit. Not managed.
The budget for environmental issues and CAPEX projects are decided during the strategic planning process, which defines the allocation of resources
for the next five years. The next step of the management process is the completion of the annual budget, where the investments are detailed and
approved for implementation. The monitoring of the budget is performed monthly using data available in SAP and is discussed in internal meetings
held at each unit. CAPEX projects are monitored monthly, at Engineering area meetings, in accordance with the CAPEX Manual.
Investments and expenditures on environmental
protection, by type.
Environmental investments and expenditures (R$)
Environmental education.
Environmental management
Conservation, reforestation and biodiversity
Environmental protection
Treatment of air emissions
HOD - Environmental
remediation of contaminated areas (soil and water)
Environmental insurance
Other environmental costs
Not applicable to the administrative office (São Paulo).

DMA – ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENT

We evaluate suppliers in terms of environmental criteria with regard to their eligibility, registration and capability. In the phase of eligibility and registration, 100% of new suppliers are subject to an assessment of their Conformity Certificates. The evaluation of supplier capability also includes relevant environmental criteria.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN32 – Percentage of new suppliers that were screened using environmental criteria

50

Number of new suppliers that were screened using environmental criteria

Total

2014

Total number of new suppliers

999

Total number of new suppliers that were screened using environmental criteria

116

Percentage of suppliers screened using environmental criteria

12%

Comments:

1. Indicator not applicable to the Fortaleza de Minas unit, since its activities have been temporarily suspended.

2. Indicator does not include information for the Metalex unit. Not managed.

DMA – ASPECT: ENVIRONMENTAL GRIEVANCE MECHANISMS

The units have established channels of communication with the company’s main stakeholders, and participate in meetings with the community and professional associations. Grievances are received by letters, phone calls or personal contacts and are registered in the Votorantim Management System (GQI). The system also records information on the stakeholder who made the complaint, the action plans and area (s) responsible for implementation.

Aspect Indicators

Page (Supplementary Data and/or DMA)

External

Assurance

G4-EN34 – Number of grievances related to environmental impacts filed, addressed and resolved through formal mechanisms

Number of grievances related to environmental impacts received during the reporting period

2014