Nexa Resources: The Zinc Cycle Just Turned, And The Market Hasn't Fully Repriced It

Why It Matters

A tightening zinc supply curve combined with Nexa’s undervalued pricing creates upside potential, while operational catalysts could lift cash generation and support dividend growth.

Key Takeaways

• Zinc market tightening lifts Nexa’s pricing power
• Forward EV/EBITDA at 3.3×, far below peers
• Q1 2026 revenue up 42% YoY, EPS $0.67
• Silver streaming step‑down frees cash for growth
• Aripuanã ramp adds volume, improves leverage to 1.59×

Pulse Analysis

The global zinc market has entered a new cycle of scarcity, driven by constrained mine expansions and rising demand from construction and renewable‑energy sectors. Prices, which have hovered near multi‑year lows, are now climbing as inventories dwindle, giving miners with low‑cost assets a pricing advantage. This macro backdrop is especially favorable for companies like Nexa Resources, whose portfolio is heavily weighted toward primary zinc production and therefore positioned to capture higher realized prices without significant capital outlays.

Nexa’s recent operational moves reinforce its upside narrative. The company is reducing its silver streaming commitment, freeing up cash that can be redirected to core zinc operations or debt reduction. Simultaneously, the Aripuanã mine in Brazil is ramping toward full‑scale output, adding several hundred thousand tonnes of zinc concentrate annually. These developments have already improved the firm’s financial profile: Q1 2026 revenue jumped 42% year‑over‑year, gross margins rose to 30.3%, and net debt fell to 1.59 × EBITDA. Yet the market still values Nexa at just 3.3 × forward EV/EBITDA, well below peers such as Teck (≈7 ×) and Hudbay (≈6 ×), suggesting a pricing gap that could close as the zinc cycle matures.

For investors, Nexa presents a blend of macro‑driven commodity tailwinds and company‑specific catalysts. The undervalued multiple, combined with a clear path to higher cash flow from the silver stream reduction and Aripuanã ramp, positions the stock for potential re‑rating. Risks remain, including geopolitical exposure in Brazil and the volatility inherent in commodity pricing. However, if the zinc market continues its upward trajectory and Nexa sustains margin expansion, the stock could see a multi‑year rally, making it a compelling addition for portfolios seeking exposure to the next wave of zinc‑driven growth.