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 500 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 material they receive is conformant with the Responsible Mineral Initiative’s (RMI’s) Responsible Minerals Assurance Process (RMAP) protocol.

NPM Silmet undergoes an annual RMAP assessment. Our most recent assessment covered the period of 01.06.2017-01.06.2018. This report covers our operations during this assessment period. The last RMAP assessment of the facility was in August 2018 and conducted by Arche Advisors.

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.

  • CEO and Commercial Services Coordinator RM are responsible for Due Diligence Program implementation. Commercial Services Coordinator RM’s responsibility is to cooperate with production, warehouse, technical control department and react if report about any red flags occurred.
  • Commercial Services Coordinator RM is also responsible for ensuring relevant employees who are responsible for the procurement, receiving or handling the raw materials are trained and informed about the program requirements and standards. CEO is provided with the updates on the routine basis and the CEO in involved whenever an incident happens. In April 2018, NPM Silmet has developed and trained commercial employees on the following: “Non-conflict minerals and supporting procedures”, according with the suggestions of  EICC Code of Conduct, OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Supply Chain Transparency Smelter Audit Protocol for Tin and Tantalum (Rev. 21st of November 2013). The commercial department representatives have participated in the training “In-Person Smelter and Refiner Training to Revised RMAP Standards” held in Budapest, Hungary on the 26th of April 2018, arranged Responsible Minerals Initiative.
  • In accordance with OECD Guidance, 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.
  • Communication of our ethical and sustainable sourcing policy to our suppliers, employees, and customers, and internal monitoring of our performance to these standards.
  • 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.
  • NPM Silmet would work 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   Presence of armed conflict and widespread violence (Democratic Republic of the Congo) Transit risks (nine surrounding countries) Listed as a Covered Country
Heidelberg Conflict Barometer 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 Other 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  
  • 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). Any issues of concern are investigated and resolved with the supplier, as appropriate. 
  • It is NPM Silmet’s intention to only source low-risk tantalum-containing material from CAHRAs. To this end, we conduct additional due diligence for all material and its 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 if the risks associated with the material we source from the DRC and Rwanda. If the risks have been associated with mineral 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. The raw materials from CAHRAs that have all only with iTSCi tags are accepted. There were no risks were identified for material from CAHRAs during the last audit period. In addition, NPM Silmet has made 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.
    • 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, In early 2019, NPM Silmet stopped purchasing from two suppliers that provided material from a CAHRA without assurances that the material was not associated with 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 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.