Corporate GovernanceCompliance
Tax Governance

GovernanceRisk Management
Quality Assurance
Information Security

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Governance GovernanceCorporate Governance

Basic Approach

Corporate Governance Framework

SMM views corporate governance as a disciplinary framework both for maximizing the corporate value of the SMM Group and for
ensuring sound management practices. As such, it is one of the most important management issues.
SMM has established the SMM Group Corporate Philosophy based on the Sumitomo Business Spirit. Through striving to enhance
our corporate governance, we will conduct efficient and sound business activities, make positive contributions to society, and fulfill
our responsibilities to our shareholders and all other stakeholders in order to realize the SMM Group Corporate Philosophy.

In line with its Corporate Governance Guidelines, which summarize the Company’s basic philosophy for corporate governance andthe framework therefore, the Company believes that its governance is a system that ensures that business execution and the associated monitoring and supervision are each functioning fully by using audit and supervisory board and executive officer systems
with which to conduct governance through a three-part organizational structure in which decision-making and supervision are
addressed by the Board of Directors, business execution by the president and the executive officers, and auditing by the Audit &Supervisory Board members and the independent public accountant.

GRI 2-9

Formulating Corporate Governance Guidelines
SMM has established Corporate Governance Guidelines which cover our basic philosophy on corporate governance and our corporate governance framework, including our relationship with stakeholders. More details are available on the Company’s website.

General Meeting of Shareholders

Corporate Governance Guidelines
https://www.smm.co.jp/en/ir/management/governance_policy/
Decision-Making and Supervision

Initiatives to Strengthen Governance

Auditing

Audit &
Supervisory Board

Board of Directors

SMM positions corporate governance as one of the most important issues in our management, and is taking steps to strengthen
governance. We continue to constantly review, improve, and deepen the current state of our corporate governance in light of legal
revisions and social circumstances in order to achieve even better corporate governance.

Governance Committee
ReportingBusiness Execution

Reports to all Audit & Supervisory Board members

PresidentInternal
Control Committee Transitions in Governance at SMM
2000 2001 2003 2004 2006 2007 2011 2012 2015 2016 2017 2018 2019 2021 2022 2023

Audit & Supervisory Board Board of Directors

Executive Officers(FY)Management Committee
Sustainability Committee

Separation ofmanagement andexecution
Number ofmembers*

Independent
Public Accountant

Coordination

Introduction of the executive officer system

Operating Department


14

6

OutsideDirectors
Number ofmembers*4

Outside Audit& Supervisory
Board
members2

7

Internal Audit Department

8
Appointment of an outside director

Appointment of a female director

1



2

3

7 Sustainability
Subcommittees

4 Management
Systems Working
GroupsCorporate Value
Enhancement
Strategic Committee Percent of Outside Directors on the Board of Directors

DigitalTransformation
Committee

Carbon Neutrality
Committee

 Percent of Female Directors

OutsideEstablishment of a GovernanceAppointment of the chair of the Governance Committee
Committee

Optional committees on nomination,
remuneration, etc.

Outside Officers
CouncilInternal

5

Outside Directors Council meeting heldOutside Directors/
Audit & Supervisory
Board Members’
Liaison Committee

3
3/8
37.5%

Female

1

Male

1/8
12.5%

7

Outside Directors/Audit & Supervisory Board
Members’ Liaison Committee meeting held

Executive advisor
systemAbolition of the executive advisor system

 Percent of Outside Directors in the Governance Committee
Evaluation of the effectiveness of theBoard of Directors

Effectivenessevaluations



Takeover defense
measures

Introduction of takeover defense measures







Establishment of Corporate Governance Guidelines/Discussion of what the Boardof Directors should ideally be

Guidelines and
Ideal Vision

OutsideEvaluation of the effectiveness of the
Audit & Supervisory Board

Decision to discontinue takeover
defense measures Percent of Outside Officers(Directors and Audit & Supervisory Board Members)

Internal

1

3
3/4
75.0%

Outside officers
Internal officers

7

5
5/12
41.7%



* The Number of members of the Board of Directors and Audit & Supervisory Board are after the General Meeting of Shareholders.

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Governance GovernanceCorporate Governance

Governance Committee

Positioning Mineral Resources, Smelting & Refining, and Materials as its three core businesses, SMM aims to realize its Long-Term
Vision of becoming a “World Leader in the Non-Ferrous Metals Industry.” Since all three businesses are related to non-ferrous metals,
they have a mutual organic relationship and their business contents and scale are such that the Board of Directors can make decisions itself regarding diverse management issues. Furthermore, from the viewpoint of the stronger coordination currently being
promoted among the three businesses, it will further stimulate the Company’s growth if the Board of Directors itself comprehensively makes decisions rather than giving strong independence to each business segment and permitting them to make their own
decisions. To this end, we consider that in principle a management model is appropriate for the Company’s governance, rather thana monitoring model that oversees overall business execution after the fact.
Furthermore, in view of the distinctive characteristics of the SMM Group’s business operations, it is important to strengthen the
management infrastructure (particularly regarding compliance, safety, and the environment) and therefore necessary to establish asystem whereby Audit & Supervisory Board members can point out issues to directors and executive officers without hesitation.
From this viewpoint, we have adopted an organizational structure of a company with an Audit & Supervisory Board in which Audit& Supervisory Board members with guaranteed independent authority can be expected to exercise their auditing functions stably
over a period of four years.
At present, Audit & Supervisory Board members do not have the right of convocation regarding decisions of the Board of Directors
or the right to vote on the Board of Directors. The resulting inability of Audit & Supervisory Board members to propose the removal ofa director to the Board of Directors is an issue for companies with an Audit & Supervisory Board. We are striving to overcome thisissue by appointing multiple outside directors (at least one-third of members), have them become members of the GovernanceCommittee, and deal with the appointment and dismissal of directors and executive officers in the Governance Committee.

The Governance Committee is composed of one member who is the chairman of the Board of Directors, who is not an executive
officer, and three independent outside directors. It was established to provide the president with advice from an objective standpoint with regard to particularly important matters relating to corporate governance, including the nomination and remunerationof directors, executive officers, and others.

Decision-Making and Supervisory System
Directors and the Board of Directors

GRI 2-9/2-11/2-12/2-13/2-15/2-16

8 directors (3 outside directors)

Chairman: Yoshiaki Nakazato (Chairman of the Board without representation)
Term of office: 1 year
Meetings held in FY2022: 17

The Board of Directors has a diverse composition by including both members from within the Company who are thoroughly familiar with each area of the Company’s business as well as outside experts with knowledge, experience, ability, insight and other attributes different from that of the members from within the Company and who can supervise management on behalf of shareholders
and other stakeholders.
Furthermore, striving for greater managerial transparency, the Company has a policy of appointing at least one-third of its directors as independent outside directors, and of the eight directors, three, including one with management experience, have been
appointed as independent outside directors.
Among the Company’s directors, there are four directors who are also executive officers. Conflicts of interest are addressed inaccordance with Japanese law. There are no controlling shareholders.
Main Agenda Items at Board Meetings• Related to existing and new projects in each business• Borrowings and other financing• Establishment or revision of important rules and regulations, including policies on human rights, DX, etc.

Outside directors are expected to perform two functions: an advisory function and a monitoring function.
Regarding the advisory function, in order for the SMM Group to achieve sustainable growth and increase its corporate value overthe medium to long term, outside directors are expected to enhance the quality of decision-making by the Board of Directors byproviding advice and making decisions based on their experience and other factors, without being bound by the Company’s conventional way of thinking or frameworks.
Regarding the monitoring function, outside directors are expected to serve a check function on management from an independent and objective standpoint via the Board of Directors, as well as to supervise management on behalf of shareholders and otherstakeholders by providing advice during decision-making on director nomination, remuneration, and other relevant matters as
members of the Governance Committee.

Auditing System
4 Audit & Supervisory Board members (2 outside Audit & Supervisory Board members)

Chairman: Koji Imai (Standing Audit & Supervisory Board member)
Meetings held in FY2022: 18

The Audit & Supervisory Board has four members (two standing Audit & Supervisory Board members and two outside Audit &Supervisory Board members). Standing Audit & Supervisory Board members belonging to the Company gather in-house information in an accurate and timely manner, and audit operations appropriately based on this information, while independent outside
Audit & Supervisory Board members conduct audits in a manner that takes advantage of knowledge of their respective specialist
fields and diverse perspectives.
In order to ensure managerial soundness and increase the corporate value of the Company, and in accordance with the audit
policies, audit plans, and other such matters prescribed by the Audit & Supervisory Board, each Audit & Supervisory Board member
will attend meetings of the Board of Directors and other important meetings, receive reports from directors, executive officers, andemployees regarding the status of the performance of their duties, and, through on-site inspection activities at domestic and overseas business sites, confirm the status of business execution, inherent issues, and the establishment and operation of internal control systems. In addition, information collected by the standing Audit & Supervisory Board members through inspection ofimportant approval and other such documents and reports from related departments is shared with the outside Audit &Supervisory Board members and discussed among all Audit & Supervisory Board members.
Main Agenda Items at Audit & Supervisory Board Meetings• Cross-shareholdings held
• Dialogue with institutional investors• Planning and results of auditing by Audit & Supervisory
Board members and internal auditing

Other reports on the progress of sustainability activities are made at least twice a year. In addition, the status of use of the
Whistle-blowing System (Speak Up System) and the status of responses are regularly reported. Also, complaints received by theJapan Center for Engagement and Remedy on Business and Human Rights (JaCER*), a contact point for receiving complaints fromsuppliers and other external parties, are also subject to reporting as a grievance (remedy) mechanism.
While any matters of critical concern that arise are required to be reported to the Board of Directors, there were no matters ofcritical concern reported in FY2022.
In stakeholder engagement conducted by the Board of Directors, authority is delegated to business divisions for customers andsuppliers, to the Human Resources Department for employees, and to the Public Relations & Investor Relations Department forshareholders and investors.
The status of dialogue with investors is reported once a year.
* JaCER

4 Governance Committee members(3 outside directors)

Role and function of outside directors

Audit & Supervisory Board

166

Chair: Taeko Ishii (Outside Director)
Meetings held in FY2022: 5 (2 nomination meetings, 2 remuneration meetings,
1 general governance meeting)

What the Board of Directors should ideally be• Audit plan of the Audit & Supervisory Board members(monthly and annually)• Results of the audit of the Audit & Supervisory Board
members (monthly and annually)• Confirmation of each agenda item of the Board of
Directors meeting• Information on the business environment• Audit report of the Audit & Supervisory Board• Results of the evaluation of the effectiveness of the Audit& Supervisory Board

Role and function of outside Audit & Supervisory Board members
In order for the Company to achieve sound management and increase its corporate value over the medium to long term, outside
Audit & Supervisory Board members are expected to conduct effective audits based on their knowledge and experience in specialized fields, including finance, accounting, and legal matters, while maintaining sufficient coordination with Standing Audit &Supervisory Board members belonging to the Company.
In addition, as part of the audit process, outside Audit & Supervisory Board members are expected to participate in key meetings,
including Board of Directors meetings, and to actively express their forthright opinions from an independent and objective standpoint during the decision-making process, including not only the legality but also the appropriateness of proposals.

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Governance GovernanceCorporate GovernanceCollaboration among the Internal Audit Department, Independent Public Accountant, and Audit &Supervisory Board Members

The Board’s Engagement in Succession Planning for the CEO and Other Top Executives

The Internal Audit Department regularly undertakes internal audits on the status of business execution across the SMM Group.
The Department provides an explanation of its audit plans to Audit & Supervisory Board members and the Audit & Supervisory
Board while passing on all relevant information. At the same time, Audit & Supervisory Board members provide details of audit
plans determined at meetings of the Audit & Supervisory Board to the Internal Audit Department, accompany staff of the Internal
Audit Department as required when conducting internal audits, and attend meetings when reports on the results of internal audits
are delivered to executive officers and the heads of operational divisions. In FY2022, Audit & Supervisory Board members attended
such meetings 19 times. KPMG AZSA LLC, an independent registered public accounting firm, audits the consolidated financial statements and the effectiveness of the internal control over financial reporting. Audit & Supervisory Board members provide details ofaudit plans to the independent public accountant. Audit & Supervisory Board members in turn receive explanations regarding audit
plans and reports on audit results and reports reviewing each quarter from the independent public accountant. In this manner,close collaboration is maintained between the independent public accountant and Audit & Supervisory Board members.

The succession planning for holders of the office of chief executive officer (president and director) is conducted and executed
appropriately on the basis of our corporate philosophy and business plans. With regard to the candidate for the successor to thepresident, the Governance Committee (Chair: Taeko Ishii, Director), composed of the chairman of the Board of Directors who is not
an executive officer and three independent outside directors, has opportunities to deliberate on the environment and methods forfostering the next president as well as concerning the candidates, etc.
Regarding the specific procedure for selecting the successor to the president, after consulting with the Governance Committee
about the candidate recommended by the president and receiving advice on whether the candidate has the qualifications, knowledge, experience, abilities, and insight worthy of a president and director, the president makes the final proposal to the Board of
Directors, which makes the final decision after due deliberation.
With regard to the selection of the candidate executive officers who will constitute the pool of candidates for future president,
the president, based on recommendations from the executive officers, consults with the Governance Committee regarding thebest lineup to resolve the issues management faces, formulates the final proposal with reference to that advice, and submits the
proposal to the Board of Directors. The Board of Directors then makes the final decision after due deliberation.

Standard for Independence
All the Company’s outside directors and outside Audit & Supervisory Board members have been declared as independent officers,
pledging that there is no conflict of interest with that of shareholders. We also publish our standards governing the independenceof outside officers on the Company website.
Standard for Independence
https://www.smm.co.jp/en/ir/management/governance_policy/#Independence

Outside Directors/Audit & Supervisory Board Members’ Liaison Committee
In FY2022, liaison meetings were held in May and December. Given the overview of reports on most recent internal audit results by
the internal audit department and department heads’ hearing results from the Audit & Supervisory Board members’ on-site audits, awide range of opinions were exchanged.

View on the Balance between Knowledge, Experience, and Skills of the Board as a whole,and Also on Diversity and Appropriate Board Size
The Board of Directors will achieve a diverse composition by including both members from within the Company who are thoroughly familiar with each area of the Company’s business as well as outside experts with knowledge, experience, ability, insight andother attributes different from that of the members from within the Company. Based on “what the Board of Directors should ideallybe,” as stated in “Reasons for selection of present corporate governance system,” the skill matrix for the Company’s directors andAudit & Supervisory Board members was created and is shown below. Each skill item has been selected through discussions by the
Board of Directors, focusing on those required to realize the Company’s long-term vision and Vision for 2030. As the knowledge,
experience, ability, insight, and other attributes required of the Company’s Board of Directors may change in response to changes
in management strategies and the external environment, the Board of Directors will continue to discuss the necessary knowledge, Skills Matrix for Board of Directors

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Category
Directors

With regard to the nomination of candidates for the Board of Directors, the president comprehensively considers the knowledge,
experience, ability, insight and other attributes of the candidates with respect to the best lineup for resolving current and future
management issues (including the positive and negative impacts on the economy, environment, and people, including humanrights, for the sustainable development of the Company), and proposes suitable candidates to the Board of Directors. The
Governance Committee, which consists of the Chairman of the Board of Directors who is not an executive officer and the independent outside directors who supervise the management team on behalf of shareholders and other stakeholders, will provide thepresident with advice. The Board of Directors makes the final decision after due deliberation.
With regard to the selection of executive officer candidates, the president, based on the recommendations of the executive officers, comprehensively considers the knowledge, experience, ability, insight and other attributes of the candidates in accordancewith the same approach as when nominating candidates for director, and the same procedures shall be used to determine thecandidates.
The Governance Committee has opportunities to deliberate on the environment and methods for fostering the next president aswell as concerning the candidates. In the event that an executive officer has rendered himself or herself markedly ineligible, forexample by having acted unlawfully, improperly, or disloyally, and a dismissal recommendation is made to the Board of Directors
after the Governance Committee gives advice on the matter, and the individual concerned may be dismissed by resolution of theBoard of Directors.
With regard to the nomination of Audit & Supervisory Board member candidates, the policy is for the president to comprehensively consider the qualifications, knowledge (including that of finance, accounting, and law), experience, ability, insight and otherattributes of the candidates and, after obtaining the prior approval of the Audit & Supervisory Board, to propose the qualified candidates to the Board of Directors, which will then determine the nominations.

Knowledge, experience, ability, etc. possessed by directors and Audit & Supervisory Board members that theCompany believes will contribute to the effectiveness of the Board of Directors
NameGeneralCorporate
Management,
Sustainability

GlobalCapability

Business,
Marketing(International
Experience)

R&D,
Manufacturing,Engineering

Quality,
Safety,Environment

Finance,
Accounting

Yoshiaki Nakazato









Akira Nozaki









Toru Higo

Nobuhiro Matsumoto











Masaru Takebayashi











Human
Resources

Manabu KinoshitaKanji Nishiura













Koji Imai
Tsuyoshi Nozawa
Wataru Yoshida

Legal,
ComplianceTaeko Ishii

Audit & Supervisory
Board Members

Procedures in the Nomination of Director Candidates, Appointment or Dismissal of Senior
Management, and Nomination of Audit & Supervisory Board Member Candidates
GRI 2-10











Shoji Wakamatsu








Fields in which Directors and Audit & Supervisory Board Members believe that they can make a particular contribution to the effectiveness of the Board of Directors are indicated with a “”Furthermore, the Company has established the guidelines for fulfillment. For the details, please refer to the Final Page of the Corporate Governance Report(August 3, 2023)

Final Page of the Corporate Governance Report (August 3, 2023)
https://www.smm.co.jp/en/news/release/uploaded_files/230803_CGR_E.pdf

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Governance GovernanceCorporate Governanceexperience, ability, insight, and other attributes, and update the skills matrix as necessary. The size of the Board of Directors will beappropriate to conducting active discussions and ensuring the briskness of the Board. One-third or more of the Directors will be
independent outside directors in order to strive for greater managerial transparency.
 Outside Directors and Outside Audit & Supervisory Board Members

GRI 2-9

Functions and Roles in Corporate GovernanceTaeko Ishii

Outside Director
Attendance (FY2022)

Board of Directors meetings
17/17 (100%)

Manabu Kinoshita
Outside Director

Attendance (FY2022)

Board of Directors meetings
17/17 (100%)

Kanji Nishiura
Outside Director

Attendance (FY2022)

Board of Directors meetings—

Wataru Yoshida

Outside Audit & Supervisory
Board Member
Attendance (FY2022)

Board of Directors meetings
17/17 (100%)

Ms. Taeko Ishii has specialist knowledge and abundant experience as a lawyer, especially in the field of labor law. Ms. Taeko Ishii participatesin the Board decision-making, providing her advice regarding compliance and personnel/labor related fields, which is aimed toward thesustainable growth and medium- to long-term enhancement of the corporate value of the Group by utilizing her knowledge and experience. She also performs a check function on management by participating in decision-making at the Board of Directors from an independent and objective standpoint, and to oversee the management on behalf of shareholders and other stakeholders by being involved indecision-making regarding nominations and remunerations of directors and executive officers as a member of the Governance Committee.
Accordingly, she realizes the further improvement of quality of the decision-making by the Board of Directors and the enhancement of themonitoring function.
Mr. Manabu Kinoshita has a wealth of knowledge and experience in corporate management and digital business. He participates in the
Board decision-making, providing his advice regarding material business and digital fields where the business environment is changing significantly, which is aimed toward the sustainable growth and medium- to long-term enhancement of the corporate value of the Group by
utilizing his knowledge and experience. He also performs a check function on management by participating in decision-making at theBoard of Directors from an independent and objective standpoint, and to oversee the management on behalf of shareholders and otherstakeholders by being involved in decision-making regarding nominations and remunerations of directors and executive officers as a member of the Governance Committee. Accordingly, he realizes the further improvement of quality of thedecision-making by the Board of Directors and the enhancement of the monitoring function.
Mr. Kanji Nishiura has abundant knowledge and experience in corporate management, non-ferrous metal business, and various other businesses. Mr. Kanji Nishiura is expected to participate in the Board decision-making, providing his advice particularly on long-term projects
and comprehensive plans aimed toward the sustainable growth and medium- to long-term enhancement of the corporate value of theGroup by utilizing his knowledge and experience. He is also expected to perform a check function on management by participating in decision-making at the Board of Directors from an independent and objective standpoint, and to oversee the management on behalf of shareholders and other stakeholders by being involved in decision-making regarding nominations and remunerations of directors and executive
officers as a member of the Governance Committee. Accordingly, the Company expects that he will realize the further improvement ofquality of the decision-making by the Board of Directors and the enhancement of the monitoring function, and has appointed him as
Outside Director.
Mr. Wataru Yoshida has a wealth of financial institutional experience and knowledge of corporate management. He carries out effective
audits, especially regarding finance and overseas projects, based on his own knowledge and experience in order to ensure the soundness of
the Group’s management and improve its corporate value over the medium to long term, while fully coordinating with the standing Audit &Supervisory Board members. In addition, as part of the audit process, he participates in important meetings, including Board of Directors
meetings, and during the decision-making process actively expresses his frank opinions from an independent and objective standpoint,
including not only the legality but also the appropriateness of proposals.

Audit & Supervisory Board
meetings
18/18 (100%)

Shoji Wakamatsu

Outside Audit & Supervisory
Board Member
Attendance (FY2022)

Board of Directors meetings
16/17 (94%)

obtain timely and appropriate information through lectures by lawyers and other external experts and through other such means.
Additionally, the Company will provide information on other training opportunities such as external seminars.
Including the above, the Company will bear the entire amount of any expenses necessary for director, Audit & Supervisory Board
member, and executive officer training.

Mr. Shoji Wakamatsu has many years of auditing and management experience at an audit firm and a wealth of knowledge about accounting. He carries out effective audits, especially regarding accounting, based on his own knowledge and experience in order to ensure thesoundness of the Group’s management and improve its corporate value over the medium to long term, while fully coordinating with standing Audit & Supervisory Board members. In addition, as part of the audit process, he participates in important meetings, including Board of
Directors meetings, and during the decision-making process actively expresses his frank opinions from an independent and objective
standpoint, including not only the legality but also the appropriateness of proposals.

Audit & Supervisory Board
meetings
18/18 (100%)
The concurrent occupations of outside directors and outside Audit & Supervisory Board members (as of March 31, 2023) are listed in the Document of Matters
Subject to Measures for Electronic Provision Regarding the 98th Ordinary General Meeting of Shareholders

4. Matters related to corporate officers, (1) Name of Directors and Audit & Supervisory Board Members (as of March 31, 2023) on page 13 of
the Document of Matters Subject to Measures for Electronic Provision Regarding the 98th Ordinary General Meeting of Shareholders

Basic Policy and Procedures for Remuneration of Directors
Basic Policy

GRI 2-19

Remuneration for directors of SMM is linked to the business performance of the Company, and designed to motivate directors toachieve medium- to long-term goals, based on the business structure of the Company, so that it functions as a sufficient incentive
to contribute to sustainable growth, increase the corporate value of the Group over the medium to long term, and to strengthen
and maintain the management base. When determining the remuneration of individual directors, the amount of remuneration is
calculated using a predetermined formula in order to ensure fairness, and the Company maintains a basic policy of setting remuneration at an appropriate level based on the responsibilities of each director.
Specifically, the remuneration for directors (excluding the Chairman and outside directors) shall consist of basic remuneration
and bonuses. Basic remuneration shall consist of fixed remuneration (remuneration which is neither performance-based nor
non-monetary) and performance-based remuneration, etc., while bonuses shall be performance-based remuneration, etc. The
Chairman and outside directors shall receive only fixed remuneration and no bonuses.
Basic remuneration is calculated on an annual basis for each individual and paid each month in monthly installments, whilebonuses are paid once annually after approval is obtained at the Ordinary General Meeting of Shareholders.
Details are provided in the Corporate Governance Report

Corporate Governance Report (August 3, 2023)
https://www.smm.co.jp/en/news/release/uploaded_files/230803_CGR_E.pdf

Matters Related to Performance-based Remuneration

GRI 2-19

The indicators employed by the Company to determine performance-based remuneration include consolidated results (profit
attributable to owners of the parent, profit before tax), departmental results (return on capital employed [ROCE], free cash flow, andsegment income), the degree of attainment of personal targets under medium- to long-term management strategies, and safety
record (number of industrial accidents).
Reason for Selection of Above Indicators• Consolidated results (profit attributable to owners of the parent, profit before tax)
 Because these indicators are key measures of the Company’s corporate management performance, and are the profitability targets
that it aims to achieve as part of its long-term vision.
• Departmental results The three absolute values of efficiency, cash flow, and profit were selected in order to evaluate performance in a balanced manner.
• Degree of attainment of personal targets under medium- to long-term management strategies* Because the steady implementation of plans with a medium- to long-term perspective is essential in order to increase our corporate value in a sustainable manner.
• Safety record
Because we believe that securing a safe workplace is our operating foundation.
* Growth strategies, measures to strengthen competitiveness, measures to improve sustainability, etc., set forth in the 2021 3-Year Business Plan

https://www.smm.co.jp/en/ir/stock/meeting/pdf/2023/no98_houkoku.pdf

Training Policy for Directors and Audit and Supervisory Board Members

Method of Determining Amount of Performance-based Remuneration, etc.
GRI 2-17

The training of directors and Audit & Supervisory Board members is based on the self-improvement of each individual, and therefore the Company contributes to self-improvement by providing opportunities for training either directly or as an intermediary, andprovides support for the costs thereof.
Specifically, the Company will provide training on the legal liabilities of officers, compliance, and legal knowledge for newly
appointed directors, Audit & Supervisory Board members, and executive officers when assuming office. The Company will provide
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The amount of performance-based remuneration, etc. is calculated by adding an amount reflecting individual performance to an
amount of position-specific performance-based remuneration, etc. Moreover, there are no sign-on bonuses or recruitment incentive payments, termination payments, clawback systems, or retirement benefits.
The details of each calculation method are provided in “Matters related to performance-based remunerations, etc.” of theDocument of Matters Subject to Measures for Electronic Provision Regarding the 98th Ordinary General Meeting of Shareholders.
5. Matters related to remunerations of corporate officers on pages 17-23 of the Document of Matters Subject to Measures forElectronic Provision Regarding the 98th Ordinary General Meeting of Shareholders
https://www.smm.co.jp/en/ir/stock/meeting/pdf/2023/no98_houkoku.pdf

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Governance GovernanceCorporate Governance

Annual Total Compensation Ratios (FY2022)

GRI 2-21

Ratio of the average annual total compensation
for the organization’s highly-paid individuals to
the total compensation for all employees1

1,039%

Ratio of the percentage increase in averageannual total compensation for the organization’s
highly-paid individuals to that for all employees2

71%

1. Average annual total compensation for the organization’s highly-paid individuals is calculated as annual total compensation for internal directors (plus the employee salaries of any
directors concurrently serving as employees) divided by the number of internal directors
This ratio is calculated as average annual total compensation for the organization’s highly-paid individuals divided by the median annual total compensation for all employees x 100
2. Ratio of the percentage increase is calculated as the percentage increase in average annual
total compensation for the organization’s highly-paid individuals divided by the percentage
increase of the median annual total compensation of all employees x 100

1) Response to questionnaire and results of analysis and evaluation of the external evaluator

The Company’s financial results are significantly impacted by prevailing metal market conditions and exchange rates, and thus do
not necessarily correspond with the progress of management strategies and projects. Furthermore, projects related to resource
development and the construction of smelting and refining plants require extremely long time periods from start to completion,and it is not unusual for the composition of management to have changed by the time the fruits of those projects can be reaped.
Given these characteristics of its business, the Company has considered how remuneration should operate as a healthy incentive
for individual directors and managers and has consequently laid down its current remuneration system composed of performancebased remuneration and bonuses based on consolidated financial results and assessment factors such as the degree of attainmentof personal targets under medium- to long-term management strategies. At present, we do not believe that remuneration in theform of Company stock would effectively operate as a healthy incentive for management, and thus have not introduced it.

Details of Procedures for Determining the Amount of Audit & Supervisory Board Member
Remuneration
The amount of basic remuneration for each individual Audit & Supervisory Board member will be determined by consultation
among the Audit & Supervisory Board members at the Audit & Supervisory Board within the total remuneration amount approvedby the General Meeting of Shareholders.

Number of Officers

Directors (excluding outside directors)¥405 million¥245 million¥160 million—

5

Audit & Supervisory Board members¥68 million¥68 million

—

—

3

(excluding outside Audit & Supervisory Board members)

2) Deliberations at the Board of Directors meeting
In response to the external evaluator’s advice, the Board of Directors conducted deliberations on each of the following matters.
(1) With respect to deliberations at Board of Directors meetings, some responses suggest that the meetings should further
extend discussions of business strategy, management issues, sustainability, etc. In response to this, the Board confirmed thatthe following would be carried out:a. C ontinuously ensure that the agenda includes business strategy and management issues.
b. Extend opportunities to discuss sustainability in addition to semiannual reports from the Sustainability Committee.
(2) With respect to initiatives related to the matters pointed out in the past fiscal years (in particular, securing human resources,etc.), the Board of Directors confirmed that they would deliberate them based on the measures of the executive side.
(3) The Board of Directors confirmed other matters, such as extending information that facilitates deliberations of the agenda andproviding the Board of Directors with more effective feedback concerning opinions on capital markets.

The Board of Directors confirmed that steps will be taken with regard to the above matters in order to improve its effectiveness inan ongoing manner.

 FY2022 Director and Audit & Supervisory Board Member Remuneration
Total amount of remuneration, etc. by remuneration type
Performance-basedNon-monetary
Fixed remuneration
remuneration, etc.
remuneration, etc.

(1) Most of the main items related to the effectiveness of the Board of Directors received a high overall rating, and the Board of
Directors can be evaluated as generally functioning effectively.
(2) In the open-ended response section of the questionnaire, many positive opinions were expressed about the current systemand operation, and many matters are pointed out as opinions to improve the current situation.
(3) It is desirable to continue to discuss how the Board of Directors should deliberate strategies and visions. Additionally, the matters pointed out in the past fiscal years (such as securing human resources) should be continuously discussed about how tomake further improvements toward implementation.

Future steps

Total Amount of Remuneration, etc. Paid to Directors and Audit & Supervisory Board
Members

Total Remuneration

The Board of Directors prepares and conducts a questionnaire based on the previous year’s issues to directors and Audit &Supervisory Board members with the assistance of an external evaluator (law firm). The Board of Directors outsources the compilation of responses and related analysis to the external evaluator. Based upon the results of the questionnaire, the evaluation by theexternal evaluator, and the confirmation of what the Board of Directors should ideally be (aim to achieve a Board of Directors
focused on decision-making function) conducted in FY2016, the Board of Directors reviewed its own effectiveness at a regular
Board of Directors meeting held in February 2023, where it confirmed its evaluation and discussed its response going forward.

Overview of analysis and evaluation results

Management Remuneration as an Incentive

Officer Classification

Analysis and evaluation process

Outside directors¥43 million¥43 million

—

—

3

Outside Audit & Supervisory Board members¥24 million¥24 million

—

—

2

Directors whose total consolidated remuneration, etc. is ¥100 million or more are disclosed individually in the Company’s Annual Securities Report.

Analysis and Evaluation of the Effectiveness of Auditing by Audit & Supervisory Board
Members and the Audit & Supervisory Board, and the Results
Purpose, etc. of the Evaluation of the Effectiveness of the Audit & Supervisory Board
In order to ensure managerial soundness and increase the corporate value of the Group, the Audit & Supervisory Board members
audit the execution of duties by directors and executive officers in accordance with the audit policies, audit plans, and other suchmatters prescribed by the Audit & Supervisory Board. Through this evaluation of effectiveness, the Audit & Supervisory Board
reviews its own audits and activities, examines issues to be improved and measures to be taken, and reflects them in the next year’s
audit plan and daily audit activities, thereby establishing a PDCA cycle.

Evaluation process

Analysis and Evaluation of the Effectiveness of the Board as a whole, and the Results

GRI 2-18

The Board of Directors analyzes and evaluates the effectiveness of its performance from the perspective of appropriate decision-making for business execution and enhancing monitoring functions. The following is a summary of the results of the analysis
and evaluation of the effectiveness of the Board of Directors in FY2022.

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In order to carry out the evaluation from an independent and objective standpoint, we requested advice on analysis and evaluationfrom Misono Sogo Advisory LLC, an outside professional organization. Based on the results, the Audit & Supervisory Board discussed the matter and conducted the evaluation. The specific evaluation process included a questionnaire of all Audit &Supervisory Board members, interviews with the chairperson of the Audit & Supervisory Board (Senior Standing Audit & Supervisory
Board member) and with the administrative office of the Audit & Supervisory Board by an outside professional, and discussions withparticipation by all Audit & Supervisory Board members (four times in total).

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Governance GovernanceCorporate Governance

Overview of evaluation results
The Audit & Supervisory Board confirmed the following points and evaluated that the audits and activities of the Audit &Supervisory Board members were functioning well and sufficiently effective.
• Through their attendance at Board of Directors meetings, discussions among Audit & Supervisory Board members, and auditing activities
by Audit & Supervisory Board members, the Audit & Supervisory Board members have conducted audits based on a perspective of
appropriateness and made necessary representations of their opinions.
• The Audit & Supervisory Board members, including outside Audit & Supervisory Board members, have attended Management Committee
meetings, Sustainability Committee meetings, Internal Control Committee meetings, and other important meetings, and checked thestatus of business execution by directors, etc. and whether the internal control system is properly maintained and operated. They havealso actively expressed their opinions based on their insight and experience.
• The Audit & Supervisory Board members have regularly conducted interviews with executives, including representative directors, haveestablished an atmosphere where they can openly exchange opinions, and have made recommendations as necessary.
• On-site audits at domestic and foreign sites, including offices, mines, plants, and affiliated companies, are conducted by a Standing Audit& Supervisory Board member and an Outside Audit & Supervisory Board member as a pair (24 sites were visited in FY2022). Throughthese site visits, Audit & Supervisory Board members have checked with their own eyes the business execution status, specific issues, andhow the internal control system is maintained and operated, and provided advice as necessary.
• At meetings of the Audit & Supervisory Board, the Standing Audit & Supervisory Board members have shared information they collected
through inspection of important approval and other such documents and reports from relevant divisions, as well as the results of theiraudit activities, with Outside Audit & Supervisory Board members, and have held discussions.
• Outside Audit & Supervisory Board members spend enough time and effort to fulfill their duties adequately, including on-site audits.
• Audit & Supervisory Board members share information and exchange opinions with Outside Directors at meetings or in other ways.

Future steps
Through discussion among all members, the Audit & Supervisory Board defined the roles of the Company’s Audit & Supervisory
Board as follows: Monitor and restrain the management, have a strong sense of involvement in corporate management under thecondition that they are non-executive, and provide the management with objective opinions as Audit & Supervisory Board members based on their professional insights and experience.
For Audit & Supervisory Board members to fulfill these roles, it is necessary to have initiatives whereby they understand the corporate management from an objective perspective and respond promptly and flexibly in light of internal and external changes.
Therefore, the Audit & Supervisory Board confirmed that as matters to be focused on this fiscal year the following actions will betaken.
• Regular reflection by the Audit & Supervisory Board to maintain an objective perspective on management and fulfill their role as Audit &Supervisory Board members• Further enhancement of on-site audit activities by improving information sharing by full-time Audit & Supervisory Board members to
outside Audit & Supervisory Board members in advance of on-site audits, etc.
• Strengthening communication with departments by clarifying our awareness of issues (topics) identified through day-to-day Audit &Supervisory Board member activities (considering topics such as the Company’s function of corporate planning)• Updating information and knowledge about corporate management and other important topics, including providing training by external instructors.

In addition to the above, the Company has confirmed that it will continue to examine specific issues identified in the process ofevaluating the effectiveness, and strive for improvement. By further improving the effectiveness of audit activities, the Audit &Supervisory Board and its members are striving to contribute to strengthening the management infrastructure and improving thecorporate value of the Group.

Business Execution StructureManagement Committee
The membership of the Management Committee includes the president, senior managing executive officers, and other related
executive officers, and its meetings may also be attended by the chairman of the Board of Directors, outside directors, and Audit &Supervisory Board members.
The Management Committee deliberates on important matters requiring careful consideration from a wide range of perspectives prior to their submission for the Board of Directors resolutions or approval by the president, deciding whether or not mattersshould be submitted to the Board of Directors, and assisting the president’s decision-making.
When making investments or capital contributions, we use a project risk check sheet for committees, primarily the Management
Committee, to carry out deliberations regarding human rights issues such as discrimination, forced labor, and child labor, and also

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the political system, economy, law and order, locally-specific diseases, labor issues, religious restrictions, and the impact on the local
community. In FY2022, one new investment agreement was proposed to the Management Committee, which conducted screening for human rights issues and confirmed the investment to be unproblematic. We will continue to carry out regular monitoring in
the future. No projects were withdrawn.

Sustainability Committee* and Internal Control Committee
The Company has systemized its social and environmental initiatives as sustainability promotion activities and is expanding themthroughout the Group. In order to promote these activities, the Sustainability Committee (headed by the president) has been
established. 7 Sustainability Subcommittees and four Management System Working Groups have also been established under the
Sustainability Committee, and the Company has also established the Corporate Value Enhancement Strategic Committee, Digital
Transformation Committee, and Carbon Neutrality Committee.
* Sustainability Committee

P.20-23

Cross-Shareholdings
When advancing our business strategy, the Company may engage in strategic shareholdings with business partners or other companies if it is judged that doing so will contribute to strengthening our business base over the medium to long term. With regard to
existing cross-shareholdings, the Board of Directors verifies aspects such as the objectives of holdings and whether the benefits
therefrom cover the Company’s cost of capital every year. As a result of this verification, with regard to shares whose holding is
judged to have little significance, including shares considered no longer worth the cost of capital and shares judged to havebecome less relevant due to recent business changes, we will proceed with concrete consideration based on the premise of reduction. Furthermore, in cases where a company cross-holding the Company’s shares expresses a desire to sell, we will not prevent
such a sale, etc. by suggesting a reduction in the size of the transaction, or by other means.
With regard to the exercise of voting rights in cross-shareholdings, the Company determines whether to vote for or against each
proposal after giving comprehensive consideration, based on the financial results and other aspects of the financial condition ofeach of the issuing companies, to matters such as whether each proposal will contribute to increasing the corporate value of, or
enhancing shareholders’ interests in, that company over the medium to long term, and what impact it will have on the Company’s
corporate value or shareholders’ interests. In order to determine whether to approve or reject proposals, the Company will engage
in dialogue with the issuing company regarding the contents Number of Issues Reduced (stocks other than unlisted stocks)of each proposal, etc., as necessary. Decisions on voting are
made particularly cautiously in circumstances such as cases
FY2018FY2019FY2020
FY2021
FY2022Whole sale
0
4
3
2
5
of companies affected by major scandals or by persistentPartial
sale
0
1
1
3
3
losses.

Relationship with PT Vale Indonesia Tbk
SMM owns 15% of the stock of PT Vale Indonesia Tbk (PTVI), a
company in the Republic of Indonesia, and has entered ashareholder’s agreement with Vale Canada Limited and PT
Indonesia Asahan Aluminium (Persero), a state-owned
Indonesian company, to jointly manage the company. In
addition, we have also signed an agreement with these twocompanies and PTVI, which gives us the right and obligation
to purchase production from these four companies. Due tothis, SMM has the right and obligation to purchase 20% of theagreed annual production from PTVI’s Sorowako mine.
One of the conditions for obtaining the mining businesslicense required for PTVI to continue operations after 2025
was to increase the Indonesian equity stake in the company.
In FY2020, SMM sold a portion of its PTVI shares and excluded
PTVI from its equity-method affiliates.

 Investment shares held for purposes other than pureinvestment (stocks other than those unlisted stocks,
including deemed holdings”)(million yen)
400,000

61

57

55

53

(number of issues)
60

48

300,000

213,21249,706200,000

148,113251,066
85,039244,11588,37640

20

115,735

163,506

166,027

155,739

2019

2020

2021

2022

100,000

0
(FY)

2018

0

 Amount of cross-shareholdings (excluding PTVI) (left axis)
 Amount of PTVI recorded in cross-shareholdings (left axis)
Number of issues held (right axis)
For FY2020, the number of issues held increased by one due to the exclusion of PTVI
from the equity-method affiliates

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Governance GovernanceCompliance

Initiatives

Approach and Policy
Our Group seeks to contribute to society and fulfill its responsibilities to its stakeholders through the performance of sound corporate activities. Under the philosophy that compliance is fundamental to corporate activities, we have established the SMM Group Code of Conduct and the Basic Compliance
Regulations, to serve as specific guidelines for officers and employees. Further, we have established thefollowing policies and regulations regarding individual focus areas such as human rights and procurement, which is shared across the Group.

Initiatives to Take on Issues and Provide Improvements
In FY2022, the Group-wide compliance goal of “Zero compliance violations that may seriously damage business” was set. The following priority initiatives were identified as focus areas and implemented sequentially and promoted within each department: 1)
review of our compliance management system, 2) thorough line management to eradicate intentional fraudulent acts that may
result in serious damage to the business, and compliance violations that can lead to rescission of permits, and 3) departments incharge of laws and regulations gradually start to handle matters that pose a serious threat to operations or high reputation risk.

Sumitomo Metal Mining Group Policy on Human Rights

Responding to Compliance IssuesSumitomo Metal Mining Group Sustainable Procurement PolicySumitomo Metal Mining Group Basic Policy on TaxesRegulations on insider trading prevention and information managementRegulations on the safeguarding of personal information

Regulations for export control

Regulations for the prevention of bribery

Regulations for observance of competition law

Regulations on the Whistle-blowing System (Speak Up System)

If a compliance incident (including GRI 2-26, “Responsible corporate conduct in organizational business activities and business relationships”) occurs or is likely to occur in our Group, it must be promptly reported to the General Manager of the Legal Department
and other relevant departments through our organizational structure. Further, a system is in place whereby the issue is reported to
the Representative Director, standing Audit & Supervisory Board member, etc. through the General Manager of the Legal
Department, and finally to the Board of Directors. When an incident occurs, measures are taken to identify the cause of such incident, formulate measures to prevent recurrence, and if necessary deployed horizontally.
Further, the Compliance Working Group promotes compliance across the entire Group by analyzing causes of incidents, andshares information aimed at preventing recurrence.

Compliance Status

Promotion StructureWith the president bearing ultimate oversight responsibility for compliance, we strive to promote compliance through our organizational structure. The Compliance Working Group, which operates under the Sustainability Committee and is served by the Legal
Department as secretariat, regularly conducts deliberations and exchanges information on material issues related to compliance. A
system is in place whereby measures shared in the Working Group are cascaded to the necessary employees through our organizational structure and reflected in daily operations.
 Promotion Structure
Sustainability Committee
President
Compliance Working Group
Chair: Executive officer in charge of the Legal Department
Deputy Chair: General Manager of the Legal Department
Members

PolicyReport on initiatives

Department in charge(business division, etc.)

Business sites (plants, mines, Group companies, etc.)

Whistle-blowing

Speak Up System

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Response

Employee

GRI 2-16/2-25/2-26

GRI 2-27/205-3/206-1/207-2/416-2/417-2/417-3

The results of checking FY2022 compliance status show that there were no serious legal or regulatory violations, including thoserelated to the environment, products, service, marketing, tax, anti-corruption, and anti-competitive behavior. In addition, there wereno fines or penalties reported in the consolidated financial statements or in the financial information submitted to public institutions in FY2022, and there are no fines or penalties that are currently pending and could be recorded in the provisions of the balance sheet in financial statements.

Initiatives on Preventing Corruption

GRI 205-1

The SMM Group engages in initiatives to prevent corruption. These include a prior approval system based on the Basic Policies for
Anti-Bribery and regulations for the prevention of bribery, mandating prior approval by an authorized person in specified cases ofprovision of benefits to subject persons in Japan or overseas. Further, an anti-bribery manual was formulated based on the characteristics of each business and country/region, as well as legal and regulatory conditions. Each business division and the Legal
Department work together to prevent corruption under the supervision of the officer overseeing compliance.

Compliance with Competition Laws
The SMM Group has established the Basic Policy for Compliance with Competition Laws. Under this Basic Policy, we set out regulations for the observance of competition law and created a manual for compliance with competition laws, covering the content of
the Basic Policy and rules.
Operations of the prior notification system (a system that in principle requires prior notification when contacting competitors)
based on the regulations for observance of competition law came into effect on April 1, 2022.

Initiatives on Export Control
Based on the regulations for export control, the SMM Group has established the Export Control Committee and strives for compliance with the Foreign Exchange and Foreign Trade Act and other laws and regulations related to exports. Internal systems for the
management of “deemed export” was put in place by FY2021.

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Governance GovernanceCompliance

Whistle-blowing System (Speak Up System)

GRI 2-25/2-26/406-1

In accordance with the enforcement of the amended Whistleblower Protection Act that came into effect on June 1, 2022, we haverevised our Whistle-blowing System. Provisions thereof are incorporated in the newly established Regulations on the Whistleblowing System, independent from the “Basic Compliance Regulations.” The new regulations provide detailed information on matters concerning the handling of whistleblower reports and reports to the Board of Directors, etc. of violations of laws andregulations discovered because of such reports. Employees of our Group (excluding certain affiliate employees operating their own
whistle-blowing system) can provide information directly to the internal reporting hotline, SMM Group Speak Up System (Internal:
General Managers of the Legal, Safety & Environment Control, or Internal Audit Departments; External: Attorney. However, depending on the matter, further responses may be conducted by the Audit & Supervisory Board) for not only matters that are in violationof laws and regulations, but also concerns or questions in line with the SMM Group Code of Conduct. The source of the informationis always kept secret and if, for any reason, the informant is treated unfairly, the person who initiated the unfair treatment will bepunished appropriately.
The Whistle-blowing System covers not only matters experienced by individuals, but also those that are raised for the purpose of
seeking advice regarding responsible corporate conduct within the business’ activities and transactions (including those related to
GRI 2-26).
In FY2022, a total of 11 incidents were reported across the Group, including those reported to affiliated companies’ independent
hotlines. In addition, three consultations were received by employees and others.
Further, to understand whether the Whistle-blowing System is instilled throughout the Group, an employee awareness survey
asks questions regarding whistleblowing and compliance, the results of which are analyzed. In addition, the General Manager of theLegal Department gives lectures on compliance and the Whistle-blowing System during regularly held training sessions.

 Number of reports received (FY2022)
CategoryP articipants of Compliance Education (FY2022)
NumberHuman resource systems

1

Power harassment

6

Workplace communication

2

Privacy1

Violation of employment regulation by employees

1

Relationships with business partners

1Business processing

1

Quality errors

1

Total

14

Eleven consultations were received through the Whistle-blowing System, with three
additional consultations through other means
One matter related to GRI 2-26 (systems for seeking advice and raising concerns) was
raised, which was in duplicate of the abovementioned consultation
All reports were handled appropriately

Type of seminar
Compliance seminar for general managers
Compliance seminar for officers
Introduction to import/export trade control
Briefing on the Revised Competition Law
Compliance ProgramJCO Study Center training
Training for new employees
Training for mid-career hires
Seminar for newly promoted employees(section managers)

Classification

GRI 205-2
Participants

SMM Group Code of Conduct (Revised on October 1, 2022)
All officers and employees shall act in accordance with the following Code of Conduct so as to live up to the SMM Group
Corporate Philosophy.

1. Compliance: Abidance by Laws and Rules

10. Collection, Management and Usage of Information• We will comply with foreign and domestic laws and rules, and conform to social norms.
• We will never under any circumstances commit an infraction of thelaw or act counter to social norms, even if doing so would seem to
be in the company’s interests.

• We will collect information swiftly, properly and lawfully, manage itappropriately, and use it effectively.
• We will utilize information acquired in conjunction with corporate
business expressly for that purpose only, and will not leak suchinformation to any third party.

2. Respect for Individuals

11. Handling of Intellectual Property• We will accept diversity and respect the individuality and rights ofpeople.
• We will never violate human rights, engage in discriminatory conduct, or contribute to such conduct.

• We will nurture and maintain conscious recognition of the importance of intellectual property as a vital asset of the Group, andstrive toward the creation of such property.
• We will strive to properly protect and effectively use all corporate
intellectual properties; we will also respect intellectual propertiesof other parties.

3. Assurance of Health and Safety• We will give highest priority to ensuring the physical and emotional health and safety of all persons affected by our operations.

4. Development of Human Resources• We will strive to nurture junior colleagues and successors throughsystematic training and by providing them with opportunities toplay an active role, and will take steps to help them shape theircareers.
• We will pursue self-improvement with an awareness of our own
growth.

5. Risk Management• We will strive to identify risks, prevent their occurrence, and if risks
occur, minimize the effects.

Officers25

6. Adherence to a Progressive Stance• We will approach transformation with a positive and progressive
attitude without clinging to conventions and practices.

7. A Prideworthy, Rewarding, and Joyful Workplace
Employees

1,215• We will place high value on teamwork, in the form of cooperation
both with other organizations and with fellow employees.
• We will contribute to creating a free and open-minded workplace
conducive to the smooth transfer of required information and thetimely performance of reporting, liaison and consultation.
• We will strive to foster a corporate culture in which people accept
and believe in each other and respect diverse values.

8. In Harmony with Society and Local Communities• As members of society, we will participate in social contribution
activities in accordance with our personal beliefs.
• We will strive toward a harmonious and mutually beneficial relationship with local communities.

9. Separation of Corporate Business and Personal Affairs• We will at all times conduct ourselves based on sound judgment,
and make a clear distinction between corporate business and our
personal affairs.

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12. Assurance of Quality• We will continuously improve quality management systems andprovide products and services that satisfy customers.
• We will enhance technologies and seek to engage in manufacturing that takes into account customers’ safety and theirenvironment.

13. Stance toward Performance of Sales and Purchasing• We will comply with competition laws and conduct sales and purchasing activities based on fair competition.

14. Stance toward Entertainment and Gifts• We will entertain and present gifts to others, and accept entertainment and gifts, within the proper limits of both the law and social
acceptability.
• We will comply with laws against bribery and will maintain healthy
and proper relationships with government and politicalorganizations.

15. Severance of Relationships with Socially Disruptive
Forces• We will staunchly eliminate socially disruptive forces and have no
relations whatsoever with them.

16. Concern for the Global Environment• We will act in a manner that enables us to contribute to solving
global environmental problems by reducing greenhouse gas emissions, taking biodiversity into consideration, and making effective
use of water resources so as to create a decarbonized society, anadvanced Sound Material-Cycle Society, and a society in harmony
with nature.

17. Attitude in the Performance of Global Business
Activities• We will strive to interact with people in the countries or regions
where we undertake business and engage in conduct that
respects local culture and practices as well as globally accepted
norms and their spirit.

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Governance GovernanceTax GovernanceApproach and Policy

GRI 207-1

The SMM Group comprehensively investigates and examines the relationships of its products to customers and local communities to develop business in a sustainable manner. Through sound corporate activities, we work toward the maximization of our after-tax profit and free cash flow to maximize corporate
value and achieve our long-term vision.
As part of this, we also examine matters in terms of taxation, such as the status of tax treaties with countries where mines or plants are located, areas near key customers and markets, and countries where we dobusiness. By continuing to comply with international tax standards and other related matters, and by fulfilling our tax filing and payment obligations appropriately and fairly, we will strive to coexist with local
communities and countries where we do business.
The Sumitomo Metal Mining Group’s Basic Policy on Taxes, established and announced on April 1, 2021
with the approval of our Board of Directors, is based on this approach.

Sumitomo Metal Mining Group’s Basic Policy on Taxes
Basic Policy
Sumitomo Metal Mining (SMM) will, in the conduct of tax affairs associated with business activities, define the basic policy on taxes herein,
pursuant to the SMM Group Corporate Philosophy that dictates “SMM, in accordance with the Sumitomo Business Spirit, shall, through theperformance of sound corporate activities and the promotion of sustainable co-existence with the global environment, seek to make positive contributions to society and to fulfill its responsibilities to its stakeholders, in order to win ever greater trust.”
In addition, SMM and all Group companies will make known to and instill in employees the activities that place importance on compliance focus, maximization of corporate value, and appropriateness and fairness.

1. Tax-related internal controls

4. Response to transfer pricing

At SMM and all Group companies, all persons (corporate officers including
executive officers, and employees including fixed-term and temporary
employees) engaged in considering or implementing tax-related businessprocesses or individual transactions will share this Basic Policy and ensure
tax transparency.
SMM and all Group companies will also seek to resolve tax issues for theentire Group and at each company, by maintaining a system that manages
tax risk in each country and region and by business process and that sharesinformation globally.

International transactions between SMM and all Group companies will be
performed using arm’s length pricing that is calculated based on methods
reflecting the transaction details, industry practices, or functional and risk
analysis. In conducting a functional and risk analysis of each transaction,
there will be compliance with tax-related standards and guidelines published by international institutions and others such as the OECD.

2. Compliance with tax laws, etc.
Business activities will be conducted in compliance with the tax laws, tax
conventions, and other relevant laws and regulations applicable in eachcountry and region, as well as tax-related standards and guidelines published by international institutions and others such as the Organisation for
Economic Co-operation and Development (OECD).

3. Treatment as part of business activities
SMM and all Group companies will practice the tax studies and implementation related to any business process and transaction as part of business activities, since tax-related risk and tax expenses are closely linked to businessprocesses and individual transactions arising from such business activities.
SMM and all Group companies will work to minimize global tax risk,such as double taxation related to business activities, through advancepricing arrangements with the tax authorities, consultation with outside
experts, and other means. At the same time, SMM and all Group companies will seek to maximize corporate value and achieve its long-term vision,
through proactive and constant efforts to utilize tax incentives and optimize tax expenses, tax payment periods, and other factors so that it can
maximize after-tax profit and free cash flow.
However, the following types of transactions will not be practiced:
1) Transactions aimed solely at avoiding tax, such as transactions using
tax havens; and2) Transactions that avoid tax through the transfer of income in forms
that clearly depart from the Group’s business objectives and economic realities.

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The arm’s length pricing methods primarily applied:1) Method based on market price according to an appropriate benchmark in line with industry practice; and2) Method based on appropriate allocation of profits corresponding to
the level of contribution founded on a functional and risk analysis.
5. Fair and appropriate tax

Decision-Making Concerning Taxes, Oversight by the Board of Directors,
and the Role of Audit & Supervisory Board Members

GRI 207-2

At SMM, an executive officer is responsible for the Finance & Accounting Department, which is in charge of taxes. The officer manages and oversees the daily execution of tax-related duties that are performed by the department staff.
We work to improve and operate our tax governance system, with the president and the Board of Directors playing roles as
noted below.
T he Company has established, maintains, and effectively operates an internal control system for financial closing operations that enables theGroup to conduct appropriate accounting work, reporting of results, and other tasks, including tax-related matters. The Internal Audit Department
evaluates the effectiveness of the internal control system, and reports the results to the president.
T ax filing and payment in the Group are handled at the level of individual companies, after confirmation of content by representatives of the companies. The Company files and pays income and other taxes as a company after approval by the president. When a tax audit is conducted, theexecutive officer in charge of the Finance & Accounting Department reports on the progress of the audit to the president. In cases in which additional payments or tax refunds arise due to differences with tax authorities in interpretations or opinions concerning laws and regulations, thematter is handled with the approval of the president.
 hen making decisions on matters such as investment projects, the Group conducts examinations that include tax-related matters and riskWassessments. Particularly important projects are taken up by the Board of Directors for approval.

The Audit & Supervisory Board members ensure the appropriateness of tax-related practices and policies through the following
roles.


 udit & Supervisory Board members verify the appropriateness of financial closing operations, including tax calculations and tax effect accountA
ing, through audits conducted by the independent public accountant. In addition, when necessary, they pose questions to the independent public accountant to clarify tax-related issues.
 udit & Supervisory Board members receive reports from the internal audit department and the independent public accountant regarding theA
results of their evaluation of the effectiveness of the development and operation of the internal control system for financial closing operations,
including tax-related matters, and subsequently review the contents of the reports.
 hen the president approves the filing and payment of income or other taxes on behalf of the Company, the Audit & Supervisory Board members
Wreview the documentation to confirm that filings and payments are properly managed within the Company.
 hen the president approves the development of a tax policy, the Audit & Supervisory Board members review the documentation and confirm
W
that the tax policy is properly developed within the Company.

Initiatives for Tax-Related Compliance

GRI 207-1/207-2

SMM and all Group companies will appropriately fulfill its tax payment
obligations in compliance with applicable tax laws and other legal requirements at business activities in each country and region. In addition, SMM
and all Group companies will seek to increase tax transparency and tobuild a constructive and fair relationship with the national or regional tax
authorities.

Compliance* is the cornerstone of the Group’s corporate activities. In accordance with the Sumitomo Metal Mining Group’s Basic
Policy on Taxes, the SMM Group endeavors to adhere to tax laws, tax treaties, and other relevant laws and regulations applicable inthe countries and regions where its mines or plants are located. Additionally, the Group follows tax-related standards published byinternational organizations such as the Organisation for Economic Co-operation and Development (OECD). As part of these efforts,
we not only ensure our operations comply with laws and regulations, but also provide education and training to our staff.

6. Tax-related responsibilities and structure* Compliance

SMM and all Group companies’ tax activities will manage tax risks on a
global basis and implement appropriate and fair tax treatments, subject tooversight by the executive officer in charge of SMM’s Finance & Accounting
Department, through the employees in charge of tax matters in the
Finance & Accounting Department and the Group companies of relevant
divisions operating in their respective countries and regions.
Moreover, employees with tax expertise will be assigned as necessary;and education and opportunities to increase tax knowledge will be provided to employees involved in tax considerations and implementation forbusiness processes and individual transactions.

P.176-179

Tax-Related Information Collection and Initiatives Involving Government, etc.

GRI 207-3

Through our activities as a member of the Japan Mining Industry Association, we make inquiries, collect information on, andexpress opinions to governmental agencies with regard to matters such as industrial policy and tax reform.
When the Group encounters issues involving interpretations of laws and regulations or specific procedural matters, we work toproperly carry out tax-related matters through prior inquiries and consultations with tax authorities and outside experts.
Income Tax by Country or Region

P.160

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Governance GovernanceRisk Management

Review of Company-wide Risk Management

Approach and Policy
PolicyThe SMM Group engages in risk management (RM) under the following Six Principles established toachieve our long-term vision in becoming the world leader in the non-ferrous metals industry.
1. The organizational leader confronting the risk is the responsible party
2. Compliance is the foundation
3. Recognize that potential risks can materialize and take necessary risk countermeasures
4. Risks recognized as a result of change are shared among all parties involved
5. I mplement RM in daily operations, considering the organization’s hierarchy, size, role, and maturity,
regional and cultural factors, and the knowledge, views, and values of stakeholders

In reflecting on the JCO criticality accident that occurred in 1999, our RM system (RMS) was established with the president bearing
ultimate oversight responsibility, focusing mainly on the prevention of serious accidents at our sites, and has been effective in preventing industrial accidents and other accidents that have a large societal impact. On the other hand, in response to the changing
demands from the business environment and society, as well as increasing complexity and sophistication of risks associated withgrowth and business strategies, we have repositioned RM from the prevention of major accidents at business sites to the creationand protection of the organization’s value. We have reviewed and updated Group-wide RMS based on three frameworks (see diagram below). Further, we have established a system to address the risks and changes surrounding our Group through the Risk
Management Working Group, which promotes and monitors Group-wide policies and priority measures.

6. Conduct ongoing reviews and improvements of management framework and initiatives

Business risk

Business risk management
Operational risk management

Corrective action

The definition of risk at our Group includes both that which is beneficial to our goals and that which is detrimental to them. We see risk as something that will have an effect on the achievement of business andorganizational goals and that makes the protection or creation of value uncertain. Through risk management, we are able to revise goals and measures to maximize those risks which are beneficial, and inspect
and improve processes to minimize those risks which are detrimental. This helps us achieve our 3-YearBusiness Plan, and ties into further ensuring the realization of our Vision for 2030 and our long-term vision.

Prior consideration
Prevention measures

Approach

Crisismanagement(risk accompanying growth and business strategy)

Site-specific risk
(risk of undermining the stability of management)

Promotion Structure

Framework

RM will be promoted through the efforts of the president, who bears ultimate oversight responsibility for RM, and the head of eachbusiness division and business site as the person responsible for RM within their unit.
The Risk Management Working Group, operating under the Sustainability Committee and is served by the Safety & Environment
Control Department as secretariat, has a system in place to respond to risks and changes in the Group’s business environment bypromoting and monitoring Group-wide policies and priority measures.
In addition, the Risk Management Promotion Meeting serves to promote and monitor the Group’s risk reduction and operationand improvement of RM.
 Promotion Structure

Regarding management and business risks associated with our Group’s growth and business strategies, we have a mechanism toaddress critical Group-wide risks, deemed particularly important for the achievement of not only initiatives such as management
meetings, various committee meetings, medium-term plans, budgets, settlements and monthly activities, but also for the achievement of strategic goals (3-Year Business Plan). The critical Group-wide risks are discussed in management meetings attended byexecutive officers, including the president, and deliberated by the Board of Directors. Response policies are established, and eachdepartment’s initiatives are monitored and promoted through the Risk Management Working Group.

Operational Risk Management
Sustainability Committee
President
Risk Management Working Group
Chair: Executive officer in charge of the Corporate
Planning Department
Deputy Chair: Executive officer in charge of the Safety &Environment Control Department
Members

PolicyReport on initiatives

Department in charge(business division, etc.)

Business sites (plants, mines, Group companies, etc.)
Risk Management Promotion Committee

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Business Risk Management

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At each business site, in addition to focusing on specific risks addressed annually, risks inherent in regular operations are also identified and assessed based on internal and external conditions, and are managed as individual risks (see table below). There are over
1,400 individual risks, and as a means of reducing risks daily, when there are any changes to environments and conditions that serve
as prerequisites for identified risks (business environments, work environments, people, equipment, work procedures, quality standards, etc.), these risks are reviewed and updated, or handled as new risks. A periodical risk review is also undertaken during the RM
Promotion Campaign every September.
Serious risk categories• Explosions and fires• Environmental pollution• Natural disasters• Legal violations• Quality failure• Occupational accidents• Terrorism / abduction• Pandemics• Supply chain disruptions• Information leaks• Damage from harmful rumors• Violation of intellectual property
rights• Other risks include those originating from moral misconduct, suchas fraudulent accounting, humanrights issues, and malfeasance

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Governance GovernanceRisk Management

Crisis Management
In preparation for crises beyond assumed scenarios of management and site-risk management, as well as instances where on-site
handling is challenging, a standing Crisis Management Committee chaired by the officer responsible for crisis management wasestablished. The committee works toward the sharing of crisis information, the formulation and improvement of proactive measures, and the maintenance and strengthening of crisis management functions through training. It also deliberates on initial
response to emergencies, and transition into Group-wide response headquarters which takes appropriate actions and provides
support based on the level of crisis. The president has ultimate responsibility for crisis management as a whole.
At every business site, we are advancing measures to address earthquakes, tsunamis, flooding, soil liquefaction, landslides, volcanic eruptions, and other natural disasters, in line with the hazard level. We are undertaking seismic reinforcement of buildings,
improvement of seawalls, strengthening of wastewater treatment capacity, expansion of water storage tanks, stockpiling of foodand drinks, and enhancement of emergency supplies, among other measures. We also conduct training for earthquakes, fires, environmental accidents, and overseas terrorism, riots, and kidnappings, among other scenarios. In addition, we are working to address
issues such as unfamiliarity with materials and equipment, insufficient understanding of rules and procedures, and inadequate
manuals, and to improve the decision-making capabilities of local task force members.

Future Initiatives
For FY2023, we will continue with the FY2022 RM policy of “Assess and respond to changes in risks caused by changes inside andoutside the Company,” and based on revisions to Group-wide RM, will focus on reassessing risks and reviewing crisis measures,
including major Group-wide risks and disasters as priority initiatives.
Revisions to Group-wide RM in FY2022 primarily focused on system aspects, and in FY2023 we are in the execution phase of
these measures. In doing so, the entire Group will reassess risks and review crisis countermeasures to improve and streamline
activities.
Further, events such as Russia’s invasion of Ukraine and the U.S. Speaker of the House’s visit to Taiwan have escalated tensions
between Western countries and China-Russia. In Japan, we have seen instances of attacks during election campaign speeches, targeting both former and current prime ministers. Considering the heightened risks toward national security, we will focus on
enhancing overseas crisis management, with emphasis on preparedness for a Taiwan contingency, and prevention of and response
to unlawful detention in China, etc. With regard to natural disasters, in light of ongoing threats with earthquakes on the Noto
Peninsula in June 2022 and May 2023, with a seismic intensity of under 6 and over 6, respectively, and the “Damage Estimation inTokyo resulting from a Tokyo Inland Earthquake (May 2022)” released by the Tokyo Metropolitan Government, we will work towardenhancing the Group-wide disaster preparedness measure based on the diversification of work styles, changes in values and social
norms, and advancements in equipment and materials.
In tandem with these efforts, our top management continues to lead activities to prevent issues such as compliance breaches,
environmental accidents, occupational accidents, and quality issues, to ensure success in new business and projects, and achievement of business goals.

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Governance Governance

Quality Assurance

SMM Quality Objectives

The SMM Group has established and operates a business model based on 3-business collaboration
between the Mineral Resources, Smelting & Refining, and Materials Businesses. Through this businessmodel, we endeavor to continuously improve products and respond to changing customer needs in orderto deliver quality that satisfies customers.
To provide quality that satisfies customers, the president has established a Company-Wide Quality
Policy and sets SMM Quality Objectives every year. Based on these standards, each business division sets
forth and implements division-specific quality targets and conducts quality activities that are aligned
across the entire SMM Group.
Provide quality to satisfy our customers through continual improvements of quality
assurance and control systems.

Company-Wide
Quality Policy• Pursue quality levels that stand out from the trends of the time• Abide by laws and rules and strive to create products incorporating safety and environmental
considerations

Quality Assurance Promotion Framework
With the president bearing ultimate oversight responsibility, we have appointed an executive officer in charge of the Quality
Assurance Department to drive quality assurance initiatives. Each business division develops and maintains their own quality assurance framework, while the Quality Assurance Department manages quality across the entire Group and ensures a Group-wide unified approach.
Additionally, not only does the Quality Assurance Working Group—which comes under the Sustainability Committee—deliberate key measures for promoting quality assurance activities, it works to improve the Group’s quality management systems (QMS)
through the sharing of information on progress toward departmental targets and quality control status including the reduction of
the number of complaints against the Company.
In addition, quality assurance managers from the various business divisions and business sites, along with members of the head
office’s Quality Assurance Department hold an annual quality meeting to share the quality management status of each businesssite and quality issues common across the entire Group.
 Promotion Structure
Sustainability Committee
President
Functional instructions
Comprehensive management and support

Quality Assurance
Working Group
Chair: General Manager of Quality
Assurance Department
Members

PolicyReport on initiatives

Department in charge(business division, etc.)

Quality Assurance
Department
Quality meeting

Quality assurance managers,
department in charge
Share information

Business sites (plants, mines, Group companies, etc.)
Quality assurance managers,
business site

FY2023 Company-Wide Quality Policy
Drive QMS improvements to achieve zero major quality complaints and create a structure that earns customer trust.
• Zero major quality complaints. Prevent complaints on quality that could jeopardize our business foundation• Zero occurrences of quality misconduct• Achieve complaint goals within business divisions

Quality Complaints
The chart to the right illustrates the trend of quality claims
since FY2014 for the entire Group.
Quality complaints declined gradually from FY2014
onwards, and in FY2022, the number of complaints had
reduced to approximately one-third of that of FY2014. We
believe that this is due to the effective implementation ofquality improvement initiatives at each business division andbusiness site, and the impact of QMS.

 Quality complaints (with FY2014 data as 100)
120
Ratio of the number of complaints

Approach and Policy

100
80
60
40
20
0
(FY)

2014

2015

2016

2017

2018

2019

2020

2021

2022

Quality Improvement Initiatives
Improving Effectiveness of Quality Management Systems PDCA cycle for QMS improvement in SMM Quality Standards
The SMM Group has established and operates QMS at its
business divisions and business sites. For such QMS to funcBased on SMM Quality Standards
Self-assessment
tion effectively, we have been conducting improvement
Identify weaknesses and strengths of
one’s own organization
activities based on the SMM Quality Standards, which constiGoal setting
Evaluation and revision oftute a summary of the ideal form of QMS at our Company.
P
Goal setting to improve on
improvement details
Every fiscal year, each business site sets a target level for the
weaknesses
Corrections based on
Focus-oriented goal setting
audit results
SMM Quality Standards prior to engaging in improvement
Improving
Corrections based
activities, and—while assessing these activities through interEffectivenesson assessments ofinitiativesof Quality
nal quality audits and quality audits by the Quality AssuranceA
D
Management
Department—undertakes self-assessments of its level of
Systems
quality achieved as of the end of the fiscal year. The effectiveInitiatives towardachieving goals
ness of QMS at business sites is continually being improved
Executing improvement
C
Quality audits by the Quality
by setting new targets for the next fiscal year based on themeasures
Assurance Department
Monitoring and assessing
results of these assessments and then conducting improveInternal quality audits at
improvements
ment activities.
business sites
Evaluation of initiatives at business
The SMM Quality Standards categorizes requirements into
sites
eight sections, with content based on prior incidents, allowing us to identify strengths and weaknesses of each businesssite, and to focus on improving such weaknesses.
The SMM Quality Standards are revised each year to raise QMS to the level required by the Group so that we can deliver qualitythat satisfies customers.

Business site division(s)(department(s), section(s), etc.)

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Governance Governance

Quality Assurance Overall picture of QMS and applicable items in SMM Quality Standards
Corporate Philosophy
Business Strategy

Chapter 5

Chapter 6

Chapter 8

Equipment and measurement instruments

Management of external
provisions

Knowledge, awareness,and competence

Needs and expectations of stakeholders

Chapter 2

Internal andexternal issues

Internal audit and management review

Leadership and customer focus

Chapter 1

Expansion of Group-Wide Education on Quality

Resources

Competence andawareness
Control managers

Input

Process

OutputWe provide training on quality based on our education system that aims to equip each level of employee, from new employees tomanagers, with necessary quality-related knowledge and management ability. With the aim to acquire wide-ranging quality-related
knowledge and enhance awareness, SMM Hinkaku,* an e-learning program for all employees launched in FY2019, with approximately 5,900 employees taking the course in FY2021. SMM Hinkaku will be used for the education of new employees andtransferees.
As a shortage is expected of human resources capable of assuming responsibility for quality in the future, training is conductedGroup-wide to nurture people responsible for quality. Four practical training sessions a year are conducted to improve the effectiveness of the QMS by rolling out SMM Quality Standards to the business divisions. After completion, the trainees will determine
issues to be addressed at their own business sites and aim to accomplish these issues by utilizing what they have learned in the
training program. The Quality Assurance Department also follows up on the progress of the initiatives. The training was completed
by roughly 25 employees in FY2022 and is currently participated by 20 employees in FY2023.
* Trainees learn the minimum level of knowledge and awareness regarding quality required for manufacturing and then their proficiency is graded through a test

Methods (monitoring andmeasuring)

Intended resultsof QMS

Chapter 3

Key Performance
Indicators (KPIs)

Chapter 4

Determination ofrequirements
Policies andobjectives

Chapter 7

Change management andinitial flow management

Corrective action andfraud prevention

Improvements

Disclosure of Information on Products and Services

GRI 416-1

Most items in the SMM Group product lineup are supplied as raw or processed materials for use by customers for manufacturing.
Information that customers require to handle our Group’s products properly from safety and environmental perspectives, as well as
information needed to enable them to supply products, is communicated in product specifications at the time of contracting,during technical discussions, and via product inspection certificates and safety data sheets (SDS),1 based on prior and the latest
information, our Group’s proprietary knowledge, and necessary studies. SMM products supplied to customers are carefully
designed, incorporating considerations toward safety and environmental compatibility, and are only delivered after thorough trials
and inspections carried out during their manufacture2. We make sure that information utilized for the above is always appropriate
through quality management systems, reviewing it based upon the latest technology, laws and regulations and demands from
customers.
1. SDS (Safety Data Sheet): A document listing information on a chemical product, including the chemical substance, the product name, the supplier, hazards, safety precautions andemergency procedures
2. We also conduct surveys linked to life cycle assessments (LCA) for copper, nickel, and zinc through associations related to each metal

Strengthening of Our Internal Quality Audits

Communication with Customers

Based on the SMM Quality Standards, we currently aim to carry out activities to achieve internal quality audits which work with athird-party-like perspective to identify potential internal issues from problems that have been found, and relay these findings to top
management. We hold training to cultivate internal quality auditors at business sites in Japan, turning out roughly 450 internal
quality auditors from FY2019 to FY2022. We operate a PDCA cycle to develop these internal auditors, and confirm their effectiveness through supervised audits by trained internal auditors.
To prevent quality-related misconduct such as falsification of inspection or testing data, we provide Group-wide quality fraud
prevention training opportunities using e-learning. In addition, Group-wide efforts are made to deter misconduct, including internal quality audits to guarantee product quality and to confirm the reliability of inspection or testing data, automated transfer
thereof to avoid human intervention, and if such automation is difficult, administrative measures are enhanced.

Business divisions and business sites take the initiative in conducting customer satisfaction surveys. The results are fed back to thesales and development divisions. To enhance customer satisfaction, we are constantly improving our methods of measuring andassessing customer satisfaction, accurately identify issues through precise and sufficient communication with our customers, andexecute effective measures. Through quality improvement activities, we contribute to resource and energy conservation by improving product yield.

Business sites
Quality management systems

AuditsAudits•P rocess operations, and conformance effectiveness•P revention of quality fraud, and data reliability

Sustainability Report 2023

Quality audits
QMS mechanisms and effectiveness across business sites

Reports on
audit results

Internal quality audits

SUMITOMO METAL MINING CO., LTD.

Quality that earns customers’ trust is achieved only when all employees align their goals and directions and actively engage inactivities to achieve targets. To enable this, we clarify issues based on facts obtained through communication inside and outside
the Group, set targets, and work to achieve these through active participation by all employees in quality improvement activities
based on our SMM Quality Standards.

Quality Assurance Department

Deployment of SMM quality standards

188

Initiatives to Take on Issues and Provide Improvements

Reports on
audit results

Identify, analyze, and manage audit results
ReportingDirectives

Reporting to heads of business divisions and business sites

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Governance Governance

Quality Assurance

Information on SMM Products Requiring Disclosure by Labeling and Applicable Products/
ServicesGRI 417-1
Information requiring disclosure

Applicable products/services

The sourcing of components of the product or service

All products/services containing substances requiring
management under legislation
Requirement is not applicable to our main products (rawmaterials and internally processed materials)

Content, particularly with regard to substances that might produce environmental orsocial harm

All products/services containing substances requiring
management under legislation

Safe use of the product or service

All products/services containing substances requiring
management under legislation

Environmental/social harm from disposal of the products

All products/services containing substances requiring
management under legislation

Methods for Providing Information
Provision of Information Relating to Specifications
We indicate product specifications requested by the customers on the order received sheet to provide necessary information tothem.

Provision of Information Relating to Chemicals
The SMM Group uses SDS, etc. to provide information on chemical substances contained in products, complying with regulations
for chemical substances and usage, regarding health and safety.

Other Initiatives
The SMM Group also engages in transactions such as the sale of different types of lubricants to general consumers. In line withrelated laws and regulations, we provide information on products and services in this area through labeling, advertisements, andexplanations to ensure correct understanding.

Responding to Product Quality Issues as They Arise
If a quality issue arises in relation to the Group’s products or services, the necessary action will be taken in accordance with the
Quality Assurance Regulations. The business divisions and business sites will immediately check facts, report results of root-cause
analysis and verification to the customer, and agree on the necessary corrective actions and recurrence prevention measures.
In the unlikely event that a serious quality issue occurs, the business division will promptly report the problem to management
and the General Manager of the Quality Assurance Department, who in order to resolve quality issues immediately, will check the
progress of necessary response measures, and confirm the effectiveness of corrective actions and measures to prevent recurrence.

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Governance Governance

Information Security

Response to Information Security Risks

Approach and Policy
FY2023 information security policy: strengthening responses to changing information security threats e will strengthen measures against ransomware, which has been causing numerous incidents in
W
Japan and overseas.
We will work to strengthen the security of control system equipment and systems.

Promotion Structure
To promote information security management throughout the SMM Group, we have established and implemented a security policy consisting of the Information Security Regulations and Group-wide Standards for Information Security.
The Information Security Committee regularly deliberates Group-wide strategies and basic policies regarding information security, as well as Group-wide measures for information security. The Information Security Committee consists of the executive officer
in charge of the Information Systems Department as the Chair, the General Manager of the Information Systems Department as the
Deputy Chair, the general managers of divisions, the General Manager of the Technology Division, the General Manager of theEngineering Division, and the heads of operational divisions in the Head office as committee members, and the secretariat is set up
as the Information Systems Department.
Measures to improve the level of information security are led by the Information Systems Department, and are specifically promoted with the cooperation of the information security promotion managers, who are the heads of the organizational units (plant,
division, branch, etc.) positioned as subordinate structures of the Information Security Committee, and the information security personnel at each site.
In order to facilitate promotion and follow up of the measures, the Information Systems Department serves as the secretariat forthe meetings of personnel in charge of information security, which are held regularly.
The status of implementation of the measures is fed back to the Information Security Committee and actions are taken asnecessary.
 Promotion Structure

To ensure the safety of in-house information assets fromincreasingly sophisticated cyber security attacks, we are taking countermeasures on both a system and human level.
For threats such as cyber-attacks from outside, the SOC,1 towhich we are outsourced, monitors newly detected malware,
targeted e-mails, and other threats 24 hours a day, 365 days ayear. When an abnormality is detected, we have a system inplace where the Information Systems Department is
promptly contacted and, together with the SMM-CSIRT2
quickly implements an appropriate response.
We also educate and train employees through e-learningand targeted e-mail drills to prevent damage fromcyber-attacks.
1. Security Operation Center (SOC): An organization specializing in monitoring andanalyzing information from security devices, taking countermeasures, etc.
2. Computer Security Incident Response Team (CSIRT): The generic name for theorganization that analyzes the causes of computer security problems, investigatesthe scope of impact, and responds

SOC (outsourced)
24/7/365 monitoring &notifications
Internet

Security devices
E-mail, web communications, etc.

Users

Information Systems
Department
SMM-CSIRT
Response and follow-up

Main System Countermeasures• Critical information is stored on servers in an external data center with advanced accident countermeasures, and the data center isprotected by a special security system.
• Internal and external networks are separated by a firewall to protect against cyber-attacks from the outside (Internet).
• For work-from-home and other remote connections, we use a cloud security gateway with a high level of security, rendering thirdparty connections or unauthorized entries impossible.
• All servers and PCs are equipped with EDR* software in addition to anti-virus software. We have a system where EDR software logs
are monitored 24 hours a day, 365 days a year by an external SOC to promptly detect and respond to malware infection.
• We have introduced e-mail and web filters to ensure safe use of e-mail and the Internet by our employees.
• Of the above countermeasure systems, important ones are outsourced to an external SOC that operates 24 hours a day, 365 days ayear to promptly detect and respond to any anomalies.
* EDR: endpoint detection and response

President
Information Systems
Department

Collaborate
and cooperate

Information Security Committee
Chair: Executive officer in charge of the Information Systems Department
Deputy Chair: General Manager of the Information Systems Department
Members: General managers of divisions, General Manager of the Technology
Division, General Manager of the Engineering Division, heads ofoperational divisions in the Head Office

Meetings of personnel in charge of
information security

Support andcollaborate

Main Human Countermeasures• We conduct annual information security education using an e-learning service specialized in the field of cyber security, which isavailable in various languages, for the purpose of deepening employees’ understanding of ever-changing cyber-attack methods
and enhancing security awareness, including staff at our overseas sites.
• To prevent targeted attacks, which can easily lead to malware infection, we conduct targeted attack e-mail drills, in which users aresent simulated e-mails that look like actual attack e-mails, to increase their security sensitivity through first-hand experience.
Results of the above measures are analyzed and fed back to each division and management, and are reflected in the next plan.

Department in charge (business division, etc.)
Business sites (plants, mines, Group companies, etc.)
Information security promotion managers
Personnel in charge of information security

Business site division(s)(department(s), section(s), etc.)

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Governance Governance

Information Security

Response to Security Incidents

FY2022 Results and FY2023 Plan

The SMM-CSIRT, consisting of the Information Systems Department and representatives from user departments, has been established to respond promptly and prevent the spread of damage in the unlikely event of a serious security incident despite the security measures taken.
The Information Systems Department and the user departments work together to respond to incidents and bring them to an
early end, while also working along with external responses.
SMM-CSIRT is a member of the Nippon CSIRT Association (NCA) and cooperates with external organizations.

In FY2022, we introduced EDR software to PCs and servers connected to the SMM Group network, and also deployed it to our overseas sites. For overseas sites, we individually surveyed the operational status of cyber security measures and provided guidance for
improvement. To strengthen human countermeasures, we introduced a multilingual cyber security training system and combined
it with training about suspicious emails to improve users’ security awareness and skills.
In FY2023, we will switch our anti-virus software to deep learning software with high detection capability against unknown malware in order to strengthen endpoint security. In addition, to create a zero-trust network, we will introduce a globally compatible
authentication infrastructure to strengthen the authentication function for users in Japan and overseas.

Key

Information security managers  

CSIRT members

In-house

Management
ReportCollaborate

Safety & Environment
Control Department

Collaborate

General Affairs Department
and Legal Department

Collaborate

Collaborate

Public Relations & Investor
Relations Department

RespondSecurity vendors
External security agencies

Information Systems Department

Collaborate

Information system vendors
Supportresponse

Supportresponse
ReportEngineering
Division

Competent
authorities
News organs

Supportresponse
ReportReportTechnology
Division
Head Office divisions

Respond

RespondBusiness site(s) andbusiness division(s)Respond

Respond

Respond

Customers and business partners

Information Leakage Countermeasures
To ensure the security of customer information, including personal information, and confidential in-house information, the following countermeasures are taken in addition to the above to protect electronic data.
• In principle, the use of USB memory devices is prohibited, but working environments have been designed to permit use whennecessary, under systemic control and upon notification.
• Mobile PCs and other devices that may be taken outside the Company have their disks encrypted so that even if they are stolen or
lost, a third party cannot view the data.
• We use a dedicated file server and an external cloud storage service to store in-house data, and strictly control rights to access.
• Our system monitors communication path logs to promptly detect and respond to unauthorized communications.
• Our system is designed to prevent malware infections from suspicious e-mails by sharing information about suspicious e-mails
that slip through the filtering system with users.

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SUMITOMO METAL MINING CO., LTD.

Sustainability Report 2023

SUMITOMO METAL MINING CO., LTD.

Sustainability Report 2023

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