Management Approach

Supply Chain Management

Approach

In response to growing social demands related to human rights issues in the sourcing of minerals and avoiding complicity in human rights violations in the supply chain, the SMM Group has a duty as a resource company to actively address these issues. We believe, as a group with global operations, we must undertake our business operations responsibly by respecting human rights in every aspect of our supply chain.

As to the latest information, please refere Integrated Report 2021.

Integrated Report

Policy

Given its business operations around the world, the SMM Group absolutely requires initiatives geared toward sustainability in its overall supply chain. According sufficient consideration to human rights and the environment impacts our ability to conduct our projects and businesses smoothly.
The SMM Group Policy on Human Rights stipulates the consideration to be given to human rights not only within the Group but among outside parties over which the Group has influence. We are working to meet these considerations.
Regarding mineral sourcing, we have established a SMM Group Responsible Mineral Sourcing Policy to clarify our stance toward fulfilling our social responsibility as a company with core businesses of Mineral Resources, Smelting & Refining, and Materials. This policy is established with respect to the guidance of the Organisation for Economic Co-operation and Development (OECD) on mineral sourcing.

Framework

Sustainability initiatives in our overall supply chain are executed by the executive officer in charge of CSR, under the ultimate responsibility of the president. The initiatives are promoted by a Human Rights Subcommittee made up of members from business and corporate divisions.

Initiatives

Human Rights in our Supply Chain

The SMM Group engages in close exchange of information with our partner companies at mines where we hold interests in addition to the mines and business sites that we operate, and takes due consideration to prevent human rights violations.

Establishment and Publication of SMM Group Responsible Sourcing Policy

The SMM Group Responsible Sourcing Policy was established and announced in April 2020 to clarify our Group stance toward building a sustainable supply chain that takes into consideration social issues such as human rights and environmental issues in all aspects of our sourcing activities, not only mineral sourcing. Not only do our Group officers and employees thoroughly comply with this policy, we are working to ensure all our suppliers also understand this policy.

Responsible Mineral Sourcing

Minerals mined from the Democratic Republic of the Congo and nine surrounding countries (tin, tantalum, tungsten and gold (3TG)) are subject to tighter regulations as “conflict minerals” that serve to fund armed groups and child labor, forced labor and other human rights violations, and supply a catalyst for the expansion and prolonging of conflict. In recent years there have also been initiatives launched related to non-3TG minerals such as cobalt, copper and nickel, including the Responsible Minerals Initiative (RMI) and the London Metals Exchange (LME) position paper.
To ensure that the smelting and refining of gold in our business does not make use of these conflict minerals, in FY2012, we began operating in accordance with the Responsible Gold Guidance of the London Bullion Market Association (LBMA) and undergo periodic audits by a third-party organization. We have also begun operating in accordance with the Responsible Silver Guidance of the LBMA with respect to silver since FY2018.
Moreover, we are establishing systems to conduct due diligence for cobalt, copper and nickel based on the SMM Group Responsible Mineral Sourcing Policy and with respect to the OECD guidance on mineral sourcing.

LBMA Responsible Gold Certificate

SMM Group Responsible Mineral Sourcing Policy

Pursuant to the SMM Group Policy on Human Rights, we do not buy minerals that may be associated with human rights violations such as child labor or forced labor, environmental destruction, illegal mining, or corruption, or minerals that may be used as a source of funding for armed groups or other such organizations. We respect the guidance established by the OECD regarding mineral sourcing, and we exercise appropriate influence over suppliers as we work for responsible mineral sourcing throughout the entire supply chain.

Reference

London Metal Exchange (LME)

The LME specializes in trading of non-ferrous metals such as copper, nickel, aluminum, lead and zinc. The LME trading prices for metals are used as the international pricing benchmarks for sales of refined metal and purchases of refining ores.

Responsible Minerals Initiative (RMI)

An international initiative on the responsible sourcing of minerals by the Responsible Business Alliance (RBA), an organization founded in 2004 for the purpose of promoting a common code of conduct in the world’s electronic equipment industry.

Cooperation with Suppliers

Every three years since 2015, our Mineral Resources, Smelting & Refining, and Materials divisions, in cooperation with the Purchasing Department, ask about 60 of our largest suppliers by annual transaction value to respond to a triennial questionnaire on human rights. Based on the results, the divisions and the Purchasing Department select companies as targets of inspection, and make visits to survey the companies. The survey we conducted in 2019 turned up no problematic suppliers.
When entering into a business relationship with new mining companies that are suppliers to our smelting and refining business, we perform environmental due diligence (environmental DD) to assess how those companies carry out environmental management. In FY2019, there were no new suppliers for which we conducted environmental DD.
Furthermore, since the occurrence of accidents at any time during the development of a mine creates the risk of significant environmental impacts, we work with our partners to mitigate environmental risks even at mines we do not operate, such as mines in which we hold an interest.

Initiatives to Take on Issues and Provide Improvements

In relation to promoting the preservation of biodiversity, we have set forth as targets: the verification of the environmental impact of our portfolio companies and supply chain and the implementation of measures to reduce risks. We are currently facing the issue of implementing those measures on an ongoing basis. In 2019, we had both Coral Bay Nickel Corporation and Taganito HPAL Nickel Corporation encourage suppliers to apply measures toward the stabilization of heavy metal concentrations.
Additionally, we have improved regional living environments through hiring individuals from the communities around our business operations and developing those regions, and are endeavoring to elevate our co-existence and co-prosperity with such local communities and our bonds of trust with them.