Annual OECD Guidance Due Diligence Report

Annual OECD Guidance Due Diligence Report

NPM Silmet OÜ’s (NPM Silmet) owns a smelting and refining facility in Sillamäe, Estonia. This operation, known as NPM Silmet, is one of the biggest, rare metal and rare earth metal producers in Europe. Manufacturing operations at the facility, which employs about 350 people, includes several factories that conduct the following operations: rare metals production (Tantalum, Niobium) and rare earth metals separation. NPM Silmet’s Tantalum is sold primarily in a metal form to the alloy industry.

NPM Silmet works only with approved suppliers to assure all tantalum-containing material they receive is conformant with the Responsible Mineral Initiative’s (RMI’s) Responsible Minerals Assurance Process (RMAP) protocol.

NPM Silmet, RMAP CID 001200, undergoes an annual RMAP assessment. This report covers our operations during this assessment period April 1, 2023 to May 31, 2024. The last RMAP assessment of the facility was on the 15-16^th May 2023 and conducted by BDO. The summary report is public and can be found on the RMI website: http://www.responsiblemineralsinitiative.org/tantalum-conformant-smelters/

NPM Silmet’s Conflict Minerals Sourcing Policy conforms with RMAP and can be accessed here.

NPM Silmet has developed and implements a Due Diligence Program which is briefly described here.

Management and oversight

The CEO has ultimate oversight over the Due Diligence Program. The CEO is provided with the updates on the routine basis and the CEO is involved whenever an incident happens.
The Sales Manager is responsible for Due Diligence Program implementation, including coordinating activities between production, warehouse, technical control department and reacts if any red flags are identified in their operations.
The Sales Manager is also responsible for ensuring relevant employees who are responsible for the procurement, receiving or handling of tantalum-containing materials are trained and informed about the program requirements and standards.

Implementation

In May 2024, NPM Silmet has developed and trained commercial employees on the following: “Non-conflict minerals and supporting procedures” that covered the requirements of the EICC Code of Conduct the OECD (2016) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (third edition), and the Supply Chain Transparency Smelter Audit Protocol for Tin and Tantalum (Rev. 21^st of November 2013) (OECD Guidance).
In accordance the with OECD Guidance and NPM Silmet procedures, during the audit period NPM Silmet conducted due diligence of each of its direct suppliers and informed them of our updated supply chain policy and the requirements to source only conflict-free material. The policy includes a link to our grievance mechanism and was sent to the downstream partners upon their request. Our supply chain policy requirements—including only sourcing from conflict-free sources—are integrated into contract terms with suppliers.
NPM Silmet inspects all tantalum-containing material and transaction documentation for each shipment received. Processes are in place to segregate any material that does not align with the applicable purchase order, is missing documentation, or is associated with any other concern until those concerns or discrepancies are resolved. NPM Silmet did not receive any shipments with discrepancies during this assessment period.
Upon approval and receipt, all tantalum-containing material is registered into our inventory control system. This system is used to account for all tantalum-containing material received, processes and sold from NPM Silmet.
Communication of our ethical and sustainable sourcing policy to our suppliers, employees, and customers, and internal monitoring of our performance to these standards.
NPM Silmet utilizes RMI’s Grievance Mechanism. We have a process to investigate and respond to any grievance raised, including raising any substantiated concerns to the CEO and tracking responses and closure of any grievance in a Grievance Tracking Form. We did not receive any grievances during the assessment period covered by this report.
According to our internal as well as standard’s requirements we keep all records of due diligence program at least 5 years in an electronic system.
NPM Silmet works with suppliers to mitigate any risks that are identified or terminate business with suppliers that do not work with us to address risks in a timely manner.
NPM Silmet assesses any new source of tantalum, suppliers, or transportation routes against the following resources to identify Conflict-Affected and High-Risk Areas (CAHRAs) as outlined in Table 1.

Table 1 CAHRA Identification Sources and Criteria
Resource	CAHRA criteria	The country (or sub-country region) is classified a CAHRA if it:
US Dodd-Frank Act	OECD Annex II risks: Direct or indirect support to non-state armed groups, or public or private security forces. · Presence of armed conflict and widespread violence (Democratic Republic of the Congo) · Transit risks (nine surrounding countries)	· Listed as a Covered Country
European Union CAHRAs List	OECD Annex II risks: All risks.	· Listed as a CAHRA
Heidelberg Conflict Barometer [1]	OECD Annex II risks: Direct or indirect support to non-state armed groups, or public or private security forces. Risks evaluated this resource: · Presence of armed conflict · Widespread violence	· Has a national or sub-national ranking of 3 or higher in the region of origin (e.g. mine) or transit route
Fragile State Index: Human Rights and Rule of Law indicator	OECD Annex II risks: Serious abuses (torture, cruel, inhuman and degrading treatment; forced labor; worst forms of child labor; sexual violence; war crimes) Risks evaluated this resource: · Risks of harm to people · Political instability or repression · Institutional weakness · Insecurity · Collapse of civil infrastructure · Widespread human rights abuses · Violations of national or international law	· Has a score of 8 or higher for the Human Rights and Rule of Law (HR) indicator
Worldwide Governance Indicators, Control of Corruption indicator	OECD Annex II risks: Bribery, fraudulent misrepresentation of the origin of minerals, money laundering, Non-payment of taxes, fees and royalties to governments. Risks evaluated this resource: · Governance, with a focus on corruption or to the extent that public power is exercised for private gain	· Scores in the 80 percentile or lower for the most recent Control of Corruption indicator
Control Risks’ Security RiskMap	OECD Annex II risks: Direct or indirect support to public or private security forces.	· Ranked medium, high or extreme risk on Security RiskMap

In addition, we evaluate supply chain risks by completing a review of findings from our supplier due diligence, CAHRAs identification procedure and any other non-conformance with our sourcing policy (e.g. incomplete transport documentation, iTSCI tags with transaction documentation). Any issues of concern are investigated and resolved with the supplier. We have not identified red flags during the assessment period, and our suppliers are RMI conformant smelters.
NPM Silmet only sourced low-risk tantalum-containing material from non-CAHRAs in the assessed period. It is our intention to have a CAHRA process in place in the event that we do source from high-risk regions. If we were to source material from CAHRA’s, we would conduct additional due diligence on all material and suppliers located in CAHRAs as follows:
- NPM Silmet has been a Full Member of iTSCi Program since 2013: we use the reports from iTSCi: incident, mine visit, audit, iTSCi shipment, etc. to assess the risks associated with the material. If the risks associated with minerals have been detected, we return it to the supplier. To avoid material and supply chain risks we conduct the contracts only with the full members of iTSCi. Only the raw materials from CAHRAs that have iTSCi tags will be accepted. In addition, NPM Silmet has in the past made visits to tantalum mine sites and suppliers 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.

- For countries that do not have upstream mechanisms like iTSCi, we require our suppliers to provide assurance—along with supporting evidence—that the material they supply NPM Silmet is not associated with conflict, human rights abuses or financial wrongdoings as defined in Annex II of the OECD Guidance. As a result of our due diligence, during the period of the audit, NPM Silmet purchased the material from low-risk CAHRA areas only and identified no red flags. All materials are purchased from RMI conformant suppliers only in the assessed period. The material was not associated with any of the risks identified in Annex II of the OECD Guidance.

We complete and provide RMI’s Conflict Minerals Reporting Template (CMRT) to customers to support their Reasonable Country of Origin Inquiry (RCOI) as required under the US’ Security and Exchange Committee rules.
NPM Silmet reviews its Due Diligence Program on an annual basis to confirm it is being implemented as intended and is effective. If any opportunities to improve our program are identified during the annual assessment or when issues of non-compliance occur, necessary improvements are made to the program.

[1] If a country is not listed in the HBC, these risks will be evaluated using WGI’s for the Political Stability and Absence of Violence indicator. A country will be considered a CAHRA if it ranks 60 percentile or lower for this WGI indicator. The 60 percentile was chosen because it appears to align with a 3 ranking under HCB, using Oman, Paraguay, Timor-Lest United States, Vietnam and others as a reference.