Due Diligence
Report
Minerals Due Diligence Report
Minerals Due Diligence Report (2021)
Introduction
Global Advanced Metals (GAM) is a world leader in tantalum exploration, mining and processing. GAM produces ethically sourced tantalum powders and metallurgical products at its Pennsylvania, USA and Aizu, Japan plants for a range of industries, including: electronics, aerospace, automotive, defense, medical, and chemical processing. GAM is committed to responsible minerals trade and the promotion of worldwide responsible supply chains for tantalum.
GAM joined the Conflict-Free Smelter Program—CFSP (now Responsible Minerals Initiative—RMI) in 2009 to promote legal, ethical and responsible minerals mining and trade. The RMI is comprised of leading companies throughout the electronics and other industries who have developed and implemented an audit process to help companies source minerals responsibly, and meet their legal and corporate responsibility objectives. As an active member of the RMI, GAM’s processing sites in Boyertown Pennsylvania, U.S.A. and Aizu Wakamatsu, Japan were the first to successfully participate in the CFSP (now known as the Responsible Minerals Assurance Process—RMAP) audit in 2010 and have since maintained their “RMI-conformant smelter” status.
As a smelter, GAM adheres to the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (CAHRA). Through the OECD Due Diligence Guidance and RMI-RMAP audit GAM is committed to supporting compliance with conflict minerals due diligence requirements as detailed by section 1502 of the U.S. Dodd Frank Act and its related Security and Exchange Commission (SEC) implementation rules, the European Union regulation on conflict minerals, and other applicable regulations.
The due diligence program for conflict minerals at GAM includes the following:
- Implementation of the Standard Operating Procedure (SOP) for tantalum material acquisition that meets upstream and downstream compliance requirements, within the framework of our management system.
- Communication of our due diligence expectations to suppliers via our Conflict Minerals Policy and Supplier Code of Conduct.
- Successful completion of the RMI-RMAP audit under the new audit standard with broaden requirements for Conflict-Affected and High-Risk Areas (CAHRAs)
- Cooperation with organizations and agencies such as the RMI, OECD, iTSCi of the International Tin Research Institute (ITRI), and the Public Private Alliance for Responsible Minerals Trade (PPA) to establish credible and effective processes for conflict-free tantalum mining and trade, and allow continuation of legitimate minerals’ activities in “conflict regions.”
- Support of ongoing efforts by relevant organizations like the PPA and OECD that have the potential to ensure legitimate, socially responsible commerce and bring sustainable improvements and economic stability in “conflict regions”.
- Compliance with applicable legislation such as the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (July, 2010) which encourages legitimate and conflict-free trade of minerals sourced from the D. R. of the Congo (DRC) and the Great Lakes Region of Africa.
- Interview with US Government Accountability Office (GAO) in support of their Dodd-Frank 1502 requirement to report annually on industry compliance.
- Integration of conflict-free due diligence requirements in contracts’ terms with suppliers
- Assurance that all purchases from “conflict regions” such as the DRC, comply with the applicable requirements of the OECD Due Diligence Guidance for Responsible Supply Chains.
- Assurance that all shipments to GAM of tantalum containing material adhere to the appropriate domestic and international transportation regulations, including requirements for Class 7 material.
- Communication of our ethical and sustainable sourcing practices to our suppliers, employees, and customers, and internal monitoring of our performance to these standards.
- Visits to tantalum mine sites and suppliers in Central Africa to support due diligence and compliance efforts. These visits enable us to further assess upstream supply chain risk and devise appropriate risk mitigations as needed.
- Providing RMI’s Conflict Minerals Reporting Template (CMRT) to customers to support their Reasonable Country of Origin Inquiry (RCOI) as required under SEC rules.
- Issuance of a press release to communicate about successful RMI-RMAP conformant smelter audits.
GAM September 2021 RMI-RMAP audits covered material received between September 2020 and August 2021. GAM due diligence program is managed by the Director of Sourcing and Corporate Sustainability, in concert with the Vice-President of Global Operations, General Counsel, and CEO who provide the proper oversight as needed. Staff from the Purchasing, Finance, Legal, Operations, and Shipping /Logistics organizations are involved in the due diligence process as needed. Yearly training sessions on the OECD Guidance are conducted to ensure awareness and continuous improvement in the implementation process. Records of tantalum feedstock transactions are retained on site for 7 years.
RMAP Assessment Summary
GAM Boyertown, PA USA (CID002557) and Aizu, Japan (CID002558) facilities have undergone RMAP assessments in September 2021 for transactions that occurred between September 2020 and August 2021. The assessment is valid for one year and was conducted by Arche Advisors on behalf of the RMI-RMAP. The assessment summary reports for Boyertown and Aizu are public and available at:
Company Supply Chain Policy
To avoid the use of conflict minerals, which directly or indirectly finance or benefit armed groups and/or involve other serious human right abuses in high-risk and conflict-affected regions, GAM has developed a supply chain policy aligned with the third edition of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance). It covers all of the risks identified in Annex II of the OECD Guidance and its geographic scope is global. GAM is committed to addressing any Annex II risks if identified. The policy was reviewed and approved by senior management, who is committed to its implementation. The policy has been widely disseminated to relevant stakeholders (suppliers, customers, employees etc.) and is available on GAM website at: https://globaladvancedmetals.com/supply-chain-policy/
Company Management Systems
Management Structure
GAM followed through on its commitments in the supply chain policy, and has developed an internal procedure for due diligence with the following highlights:
- GAM’s Global Vice-President of Operations and Senior Director of Global Supply Chain are responsible to oversee the due diligence program and risk management design and implementation.
- GAM Director of Sourcing and Corporate Sustainability is tasked with managing the due diligence program and coordinating the related work of the relevant departments: Purchasing, Finance, Quality, Production, Warehouse Management… are expected to follow up on their roles and responsibilities to implement the due diligence program and report any red flags and potential risks identified.
- GAM conducts training on due diligence management system once a year for key staff from all relevant departments required in due diligence program. If there is an update to the program, GAM conducts additional training as necessary.
Internal Systems of Control
GAM updated its due diligence management system to be aligned with the OECD Guidance and RMI-RMAP. GAM communicated the updated supply chain policy and sourcing requirements to all tantalum suppliers. GAM has incorporated due diligence requirements into legally binding agreements with direct suppliers. GAM meets or communicates with all direct suppliers on a regular basis and includes due diligence requirements on meeting agenda. GAM relies on its internal grievance mechanism as well as RMI and iTSCi grievance mechanisms to collect information on grievances from interested parties.
Record Keeping System
GAM requires that all records relating to the due diligence program are maintained for at least seven years and that they be properly used and safely stored.
Risk Identification
GAM has a robust process to identify risks in the supply chain. Firstly, GAM established a procedure to identify conflict-affected and high-risk areas (CAHRAs). The procedure includes the resources used, the criteria to define a CAHRA as well as the frequency with which our determination is reviewed. GAM uses the following resources to determine CAHRAs:
- The Bertelsmann Stiftung’s Transformation Index (BTI) that “analyzes and evaluates the quality of democracy, market economy and political management in developing and transition countries. It measures successes and setbacks on the path toward a democracy based on the rule of law and a socially responsible market economy.” https://www.bti-project.org/en/
- The RMI sponsored Elevate tool (https://portal.elevatelimited.com/) which measures country risk based on compiled data on criteria such as conflict, governance, corruption from organizations like Transparency International, Heidelberg Institute of International Conflict Research, World Justice Project.
Referring to its supply chain policy and external resources, GAM has defined criteria and benchmark indicators to determine CAHRAs, sourcing actions from CAHRAs are subject to enhanced due diligence including suppliers’ visits, support of iTSCi, or production plausibility data assessment.
Secondly, GAM designed a Know Your Supplier (KYS) process to include information concerning supplier legal status and identity, supplier mapping and potential risks. Our tantalum ore suppliers have completed and returned a New Supplier Questionnaire form. GAM reviewed the provided information and crossed-checked it with Dilisense and internal intelligence. Whenever inconsistencies, errors or incomplete information were identified in the KYS (Supplier Questionnaire) form, GAM communicated the improvement areas to suppliers and requested an updated form. Identified issues triggered further engagement with suppliers to clarify and improve the documents as needed. During this reporting period, no red flags were identified beyond the source and transport route managed in concert with iTSCi. GAM requested origin information for each tantalum ore transaction and ensured that it was able to understand the transaction’s origin, transportation route, as well as direct suppliers’ names and locations.
Lastly, all information collected was reviewed by GAM against CAHRAs, sanction lists, local laws and internal sourcing requirements.
Risk Assessment (HIGH RISK SOURCING ONLY)
For material and supply chains determined to be “high-risk”, GAM conducted enhanced due diligence. This included:
- Assessing the context of CAHRAs;
- Clarifying the chain of custody;
- Assessing the activities and relationships of upstream suppliers;
- Identifying locations and qualitative conditions of the extraction, trade, handling, and export of minerals; and,
- Conducting on-the-ground assessments.
In order to map the factual circumstances, conduct on the ground assessments and assess risks in the high-risk supply chains, we relied on in-region mine site visits and iTSCi. GAM has been an active member of iTSCi during this reporting period. For each high-risk sourcing transaction, iTSCi provides the following documents:
1) Incident summary reports as they become available
2) Mine Visit Recommendations including a list of mine sites with potential risks (it is advised that companies sourcing from these mine sites conduct enhanced due diligence and risk assessment)
3) Monthly country and region reports, which review the general situation on the ground
4) Data summary and other reports
GAM has conducted further due diligence to review these documents from the upstream program against information in the public domain and the actual transaction information to assess the level of risk.
Risk Mitigation (HIGH RISK SOURCING ONLY)
GAM’s Supply Chain Policy defines three possible risk mitigation strategies in accordance with the OECD Guidance Annex II Model Policy. To mitigate identified risk in high-risk supply chains with iTSCi’s support GAM checks with the supplier and iTSCi secretariat to obtain details of the risk mitigation process, when applicable, to help the following:
- Identify the specific source of the material including the name of the producer and exporter
- Identify whether the reported risks have been addressed and/or are re-reported in the subsequent reporting period.
- Query the methodology for addressing the risks including who performed risk mitigation activities
- Request regular updates of the risk mitigation activities for relevant supply chains
For this audit period, GAM outreach highlights included:
- April 2021 presentation to a local university students to share the importance of the role of business in promoting ethical sourcing based on the OECD Due Diligence Guidance
- June 2021 presentation at the D. R. Congo CNECO (national episcopal conference) about the role of corporation in managing natural resources and the environment
- September 2021 hosting of RMI-RMAP staff for audit shadowing
- November 2021 in-region visits and meetings with suppliers and other stakeholders in D.R. Congo and Rwanda
- December 2021 participation in PPA-sponsored virtual in-region tour with stakeholders including US diplomatic representative in D.R. Congo and Central Africa Republic