DUE DELIGENCE REPORT
DUE DELIGENCE REPORT
1. COMPANY INFORMATION (ALL SOURCES)
Jiangxi Tuohong New Material Co., Ltd. (THXC for short) was established in 2011 with a registered capital of 55,002,300 yuan. It is a holding subsidiary of Jiangxi Guotai Group Co., Ltd. (stock code: 603977), a Shanghai stock exchange listed company under the Jiangxi Provincial State-owned Assets Supervision and Administration Commission. The CID number is CID002842. Company address: No. 3, Chunyi Road, Economic Development Zone, Yichun City, Zip Code: 336000, Tel: 0086-795-3259660. The company is committed to the production of tantalum niobium oxide and potassium fluorotantalate. The main products are potassium fluorotantalate, niobium oxide and tantalum oxide. THXC is fully committed to avoiding the use of conflicting materials. We do not forget our original intention. While providing customers with satisfactory products, we have formulated our own responsible procurement and supply chain policy. We are committed to bear the corresponding social responsibilities and strictly abide by the OECD guidelines and Relevant laws and regulations.
Processing material: Tantalum niobium ore
The time period covered by this report: May 1, 2020 to July 26, 2021
The responsible supply chain policy has been reviewed and approved by the senior management. The management is committed to supporting the implementation of this policy. At the same time, it is widely disseminated to relevant stakeholders (suppliers, customers, employees, etc.) and published on the company website:
http://www.hmgj28.cn/English/.
2. RMAP ASSESSMENT SUMMARY (ALL SOURCES)
As a responsible company, THXC has been actively supporting and participating in the annual review of RMAP. From 2015 to 2020, THXC has undergone 3 audits. The last audit was passed on June 4, 2020. The audit company was Beijing Green Forest. According to the audit, the RMI Audit Committee (ARC) decided that THXC complies with (2017). ) Tantalum Audit Manual. The validity period is valid within one year from the date of decision. The review period in 2021 is from May 1, 2020 to May 25, 2021, and the review date is scheduled for July 26, 2021. The status of THXC's compliance smelters in the RMI official website. This due diligence report is published on the company's website at http://www.hmgj28.cn/English/.
3. THE COMPANY'S SUPPLY CHAIN POLICY (ALL SOURCES)
In order to avoid the use of conflict minerals that directly or indirectly fund or benefit armed groups and/or conflict minerals that involve other serious human rights violations in high-risk and conflict-affected areas, the company has formulated its own supply chain policy , This supply chain policy is in full compliance with the third edition of the OECD Guidelines for Responsible Supply Chain Due Diligence (OECD Guidelines) for minerals from conflict-affected and high-risk areas. It covers all the risks identified in Appendix II of the OECD Guidelines and applies globally. The company promises to deal with any Appendix II risks as soon as it is discovered. This policy has been reviewed and approved by the senior management, and the management is committed to supporting the implementation of this policy. This policy has been widely disseminated to relevant stakeholders (suppliers, customers, employees, etc.) and can be viewed on the company's website http://www.hmgj28.cn/English/.
4. COMPANY MANAGEMENT SYSTEM (ALL SOURCES)
THXC has established a strict and responsible mineral supply chain management system, and formulated a series of integrated supply chain management systems, through the following measures and procedures for purchasing and never using raw materials affected by conflict areas to prevent any conflicts between unknown materials and raw materials Enter the confession chain to prevent mineral exploration and trade from becoming a source of conflict, human rights violations and insecurity. THXC strictly abides by its commitments in supply chain policy, and has established internal due diligence procedures in the following areas:
——THXC issued the "RMI Internal Control System Operation and Management Measures", appointing the general manager to supervise the design and implementation of the due diligence plan and risk management, and coordinate the relevant departments (including the operation management department, the quality assurance department, the finance department, the production unit and the Warehouse) work to ensure that all departments fulfill their duties, perform responsible mineral supply chain management and report any warning signs and potential risks found.
——THXC conducts an annual due diligence management system training for key personnel of all relevant departments in accordance with the requirements of responsible mineral supply chain management. If the plan is updated, the company will carry out additional training as needed.
A. Internal control system
-THXC has updated its due diligence management system to align it with OECD guidelines and RMAP.
——THXC has communicated the latest supply chain policies and procurement requirements to all identified upstream suppliers.
——Open and transparent procurement policy
1) The raw material procurement statement has been posted on THXC's website, so that every supplier has a clear understanding of our procurement policy.
2) Distributed the "Responsible Mineral Supply Chain Management System" and "Management Regulations on Purchasing Tantalum Raw Materials" to various internal departments of the company, so that every employee is aware of and implements them in accordance with the requirements.
——Control procedures for the purchase of raw materials
THXC has formulated the "Supplier Management Regulations", "Management Regulations on the Traceability of the Origin of Tantalum-containing Raw Materials and Products", "Management Regulations on Tantalum-Niobium Raw Material Batch Numbers", "Management Regulations on the Transportation of Tantalum-Niobium Raw Materials", and "Management Regulations on Inspection and Acceptance of Tantalum-Niobium Mine ”, “Raw Material Supply Chain Risk Assessment Management Regulations”, “Supplier’s Anti-Corruption and Anti-Bribery Commitment Letter” and “KYC Understanding Supplier Management Regulations” to restrict and prevent any “conflicting raw materials” and unknown raw materials from entering the supply of THXC chain.
——THXC conducts due diligence on suppliers and maintains continuity. In accordance with the OECD guidelines and the audit requirements of the Responsible Minerals Initiative, it conducts due diligence on raw material suppliers every year, and conducts due diligence on suppliers’ legality, quality assurance level and complexity. Re-examination and verification, as the basis for the acceptance or cancellation of its supplier qualifications. While maintaining communication with downstream customers, THXC provides downstream customers with CMRT forms as required by RBA to ensure due diligence in the supply chain.
——THXC has established a risk assessment committee under the RMI system operation management leading group, and has appointed the general manager, purchaser, and RMI responsible commissioner to evaluate all supplier and raw material-related information, and to determine the rationality of the source of raw materials ( Such as: production area, production capacity, type characteristics, etc.) to determine the origin of the investigation, the transportation process, and the supplier in accordance with the warning signals, and the warning signals are found, the warning signals are investigated and the handling opinions are issued
——The company has established procedures to support the Extractive Industries and Transparency Initiative (EITI) and made a public statement on the company’s website.
——THXC has officially become a member of the International Tantalum and Niobium Research Center (TIC) in 2020, and will follow TIC’s new reports in real time to understand the new policy; meanwhile, we have contacted the ITSCI organization in December 2020 to apply to join the upstream The mechanism to ensure the legal compliance of the supply chain is currently undergoing further approval process.
——Actively fulfill social responsibilities and establish a compliant corporate image. Operation and social responsibility. The company has always closely integrated the economic development of the company and fulfilled its social responsibilities, ensuring that technological innovation, safe production, employee rights, environmental protection and energy conservation are passed under the premise of laws and laws. Reduce emissions, realize ethical management and other activities, and fully fulfill social responsibilities.
——We will strictly abide by the international transportation standards for 7 types of substances, and we will ensure that the handling, storage, and transportation of hazardous substances comply with the requirements of relevant laws and regulations. We guarantee that there will be no leakage during transportation and production, so as to prevent adverse effects on the environment and humans
——THXC has established RMI’s complaint mechanism, established contact channels, collected complaint information from relevant parties, including complaint email addresses, telephone numbers, and responsible persons, and accepted supervision from all walks of life. During the time covered by this report, the company did not receive relevant parties. (Affected persons or whistleblowers) appeals.
——Train employees in a variety of ways. THXC trains through centralized training, OA promotion, conference promotion, display board promotion, RMI official website training academy video (WeChat promotion), etc. All employees, including the general manager, should fully understand them OECD guidelines and RMAP verification requirements.
B. Record retention system: The company requires all records related to responsible mineral supply chain management to be kept for at least five years, and requires correct use and safe storage in the company's database.
5. RISK IDENTIFICATION (ALL SOURCES)
First, the company has a set of CAHRAS identification and control procedures, including the resources used, applicable standards and review frequency. The company's raw material procurement risk assessment committee has conducted risk identification of all involved tantalum-containing raw material procurement in accordance with the provisions of the high-risk identification procedure, and recorded the identification results. CAHRA has established "High/Low Risk Area List" and "Qualified Supplier List". The relevant sanctions lists were reviewed for all individual suppliers and companies. During the reporting period, no individual suppliers and companies were found to have any sanctions information.
Second, understand the supplier process. The company has conducted basic due diligence on all transaction parties. The company has set up a set of KYC process to collect and update the information of the transaction party (supplier). The content includes at least the supply Supplier’s business license, shareholder identity information, supplier’s legal status, scope of goods and origin of goods, etc., strictly collect relevant supporting documents; require all suppliers to complete and return KYC related forms at the same time that the company has set up a difference audit In the process, if inconsistencies, errors or incomplete information are found, the company will ask the other party to provide correct, consistent and complete supporting documents again, or it will not be included in the list of qualified suppliers. The KYC of each supply chain purchased by the company has been carefully evaluated. During the reporting period, if there are discrepancies in the KYC investigation, our company will promptly implement the discrepancy review and have obtained relevant KYC supporting documents afterwards. All of our The suppliers have filled in and returned the form, and the discrepancies were resolved in time.
Third, identify and evaluate supply chain risks. The company has established the "Supply Chain Risk Identification and Evaluation Procedure" for supply chain risk identification and evaluation, and analyzes the potential risks of all suppliers and their raw materials to ensure that they will not be triggered The warning signs mentioned in the OECD guidelines regarding tin, tantalum and tungsten supplements; the establishment of a discrepancy review procedure to conduct discrepancies review of individual suppliers and their raw materials, and no related discrepancies related to raw materials were found during the reporting period. After the risk identification and assessment of all suppliers, the company issued a corresponding risk assessment report. After all the above actions are completed, our company will proceed to the next step of the procurement process.
6. RISK MANAGEMENT (HIGH-RISK AREAS)
Based on the above risk identification methods, an enhanced due diligence plan has been carried out for raw materials and supply chains identified as “high-risk”. This includes: 1 assessing the activities and relationships of upstream suppliers; 2 identifying locations and quantitative conditions for mining, trading, processing and export of ore; 3 conducting on-site risk assessments when necessary. During this year’s procurement process, many suppliers recommended raw materials from high-risk areas to our company. However, considering that we currently do not have the ability to conduct enhanced due diligence in some high-risk areas, we rejected the suppliers on the spot. Do not conduct business with it.
During the reporting period, the company conducted risk identification and assessment of all relevant countries purchasing raw materials in the company's supply chain, and conducted enhanced due diligence for mineral sources in high-risk countries to mitigate risks.
Our company has also made relevant due diligence plans for procurement in high-risk areas, conducted training on OECD guidelines for all suppliers, sent documents on responsible procurement for suppliers to learn, and notified suppliers to clarify the procurement needs in some areas. Based on due diligence, our company will not make procurement plans for high-risk areas before we have the ability to do enhanced due diligence. At the same time, our company is responsible for due diligence and requires suppliers in low-risk areas to provide sufficient documents as much as possible. Support. For each transaction, the company requires suppliers to provide origin information and a complete set of traceability documents to ensure that they can understand the true source of the transaction, the legal transportation route, the name and location of the direct supplier, and the address of the mine.
At the same time, the company adopts the following plan to assess its risks. Widely participate in the recognized upstream guarantee mechanism-iTSCi marking and bagging system. Our company applied to join iTSCi in December 2020, and complete the application process as soon as possible. For tantalum raw materials from high-risk areas, the company conducts enhanced due diligence without notice to ensure that only raw materials certified by the iTSCi marking and bagging system or raw materials with BSP traceability are purchased from iTSCi members. For each high-risk procurement transaction, iTSCi provides the following documents:
1) Event summary report 2) Mine survey recommendations, including a list of mines with potential risks (it is recommended to carry out enhanced due diligence and risk assessment from companies purchasing from these mines) 3) National and regional monthly reports to review general on-site Situation 4) Data summary and other reports THXC will focus on learning other iTSCi reports and documents, such as accident reports, management evaluation reports, and company audit reports. The company conducted further due diligence and reviewed relevant documents from upstream plans against information in the public domain and actual transaction information. At the same time, regardless of whether it is high-risk or low-risk, THXC requires all suppliers to provide the following documents and information, which is related to each transaction: The supplier’s due diligence plan, including KYC questionnaire, company registration certificate or company business license , Mining license (if it is a mining company). Pay close attention to governance information related to local company operations/national background. Collecting the supply chain chain of custody documents for each transaction to ensure that the source of the transaction and the transportation route are understood.
2) In short, our company will conduct due diligence in strict accordance with the requirements of the OECD Organization for Economic Cooperation and Development in the future work to ensure that the company's due diligence system can fully identify and adequately manage the OECD Guidelines Appendix 2 Demonstration Supply Chain Policy-related risks, insist on responsible procurement.
Jiangxi Tuohong New Material Co., Ltd.
May 20 2021
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