November 17, 2023
Onahama Smelting and Refining Co., Ltd.
Onahama Smelter & Refinery

Annual Report on Responsible Mineral Sourcing (Copper)
The following is a report on the status of the Company's initiatives for responsible mineral sourcing inprocuring copper raw materials during the year from October 2022 to September 2023.
Description
1.

Overview of the copper raw materials supply chain due diligence process management system (hereinafter"Management System")
Onahama Smelting and Refining Co., Ltd. (hereinafter “the Company”) implements risk management on its
supply chains by conducting a five-step due diligence process as defined in Annex I of "OECD Due
Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk
Areas" (hereinafter “OECD Guidance”) ,on which the Company’s Responsible Minerals Sourcing
Policy for Copper and Lead (hereinafter “the Policy;” see the Company’s website
http://group.mmc.co.jp/osr/03/09.html) is based for supply chains related to the sourcing of copper raw
materials for electrolytic copper cathode that is manufactured at the Onahama Smelter & Refinery andregistered as the “OSR” brand with the London Metal Exchange (hereinafter “LME”).

2.

Persons responsible for the effectiveness of the Management System
The following are the persons responsible for the Management System in accordance with the Company's
Manual on Responsible Mineral Sourcing (copper) (hereinafter “the Manual”).
○

Supply Chain Officer: Managing Director
The Supply Chain Officer has the following major responsibilities and authorities:[1] Periodically verify the effectiveness and results of the Management System for responsible mineralsourcing[2] Take measures necessary for the improvement of the Management System for responsible mineralsourcing[3] Develop policy on responsible mineral sourcing[4] Establish and revise the Manual[5] Provide the means necessary for the supervision and execution of duties to the Compliance Officer[6] Give approval for supply chains for which risks have been identified, and make decisions onwhether to continue transactions

○Compliance Officer: Manager of Risk Management Department

The Compliance Officer has the following major responsibilities and authorities:[1] Assist the Supply Chain Officer in establishing, implementing, evaluating, and maintaining theManagement System for responsible mineral sourcing, and achieving the intended results[2] Ensure that the Management System requirements are integrated into the Company’s businessprocesses[3] Ensure the continuous improvement of the Management System[4] Evaluate the Smelter & Refinery’s activities and those of its suppliers in accordance with the Policy
using the Management System for responsible mineral sourcing[5] Give instructions to the Raw Materials Management Representative based on the results of
responsible mineral sourcing[6] Plan and implement education and training on responsible mineral sourcing[7] Internal and external communication on responsible mineral sourcing[8] Implement appropriate measures for supply chains for which risks have been identified[9] Report to the Supply Chain Officer on responsible mineral sourcing○

Raw Materials Management Representative: Section Manager of Sales and Purchasing Section of the
Administration Department.
The Raw Materials Management Representative has the following major responsibilities andauthorities:[1] Receive information from the Metals Company of Mitsubishi Materials Corporation (hereinafterreferred to as "the Metals Company"), which is necessary for this activity, as approved by theCompliance Officer of the Metals Company[2] Accept transactions with new suppliers only after receiving information on them from the Metals
Company in advance and obtaining the approval of the Supply Chain Officer[3] Report to the Compliance Officer on new transactions in which red flags have been identified or
projects in which potential risks have been identified[4] Check documents related to received raw materials and actual raw materials[5] Prepare and retain records on received raw materials

3.

Assessment of the effectiveness of the Management System and its results
The effectiveness of the Management System has been assessed based on the Manual.
- Summary of assessment
Scope of assessment: Suppliers of copper raw materials
Period of assessment: From October 2022 to September 2023
Assessment method: The Copper Mark’s Joint Due Diligence Tool (hereinafter “JDD Tool”)

Timing of implementation: September 2023
- Results of effectiveness assessment
The Management System was working effectively and no problems were found.
- Improvement of the Management System
There were no matters to be improved because no problems were found with the Management System.
In the future, necessary measures will be taken to improve the Management System in accordance with the
Manual.
- Achievements of the Management System[1] Supply chain due diligence
The Company has developed the Policy that is consistent with the Metals Company and publishes it
on its website. Meanwhile, for the Metals Company and transactions through March 2023, the Company
has sent the Policy or the Metals Company’s policy consistent with the Company’s Policy, along with a
KYC(questionnaires)on copper raw materials, to all suppliers of copper raw materials through Dowa
Metals & Mining Co., Ltd. and Furukawa Metals & Resources Co., Ltd. (hereinafter “the Contractors”),
to seek their understanding and approval of the policy. The Policy was developed in 2023 to inform all
suppliers of the Company's stance on responsible mineral sourcing and potential risks in supply chains.
The Company requests notification through the Metals Company if a supplier disagrees with the
Policy or with the Metals Company’s policy that is consistent with the Policy. If a supplier has its own
policy that is consistent with the OECD Guidance and implements supply chain management inaccordance with that policy, the supplier is requested to disclose the policy and verify its consistency
with the OECD Guidance. If a supplier does not agree to the Company's Policy, the Metals Company’s
policy that is consistent with the Policy, or its equivalent, the Company will review the reasons therefor
and, if necessary, consider implementing risk assessment.
During the period of assessment, several suppliers indicated that they did not agree to a policy of theMetals Company’s that is consistent with the Policy. It was confirmed, however, that those suppliers had
policies consistent with the OECD Guidance and were implementing supply chain management inaccordance with those policies. Therefore, the Company concluded that there was no problem withthose suppliers. In addition, if any questions were raised about a supplier's due diligence, the Company
would have, through the Metals Company, taken specific actions to investigate, such as additionalquestionnaires, but there were no such suppliers during the period under assessment.
[2] Education and training
From October 2022 to September 2023, all staff involved in supply chains for copper raw materials

received education and training from the Metals Company on the OECD Guidance, the requirements for
LME Responsible Sourcing, The Copper Mark's Joint Due Diligence Standard for Copper, Lead,
Nickel and Zinc, the Company’s CAHRAs list, and other matters deemed necessary for responsible
mineral sourcing. There were seven trainees and the participation rate was 100%.
[3] Management review
The Compliance Officer has the authorities and responsibilities set forth in internal regulations,
including the supervision of relevant departments and the operation of the Management System. The
Compliance Officer supervises the Management System as a whole, conducts periodic management
reviews, and reports the results of these activities to the Supply Chain Officer as necessary.
The following matters were reported to the Supply Chain Officer for the period of assessment.
・ Information on high-risk supply chains・ If applying risk mitigation strategies, the status of implementation of such strategies with business
partners
・ The progress and effects of improvement plans
Based on the Red Flag Review, a red flag was raised for transactions with one copper raw material(copper concentrate) supplier, since its parent company owned copper mines in Zambia, which are on the
Company’s CAHRAs list. However, after further review the Red Flag Review did not result in a red flag
being identified on the supplier, which was reported to the Supply Chain Officer.
[4] Communication / reporting desk
In addition to existing company-wide communication mechanisms, the Company has established the
Responsible Minerals Control Hotline on its website so that internal and external stakeholders including
employees can anonymously report any concerns related to the Company's responsible sourcing ofcopper raw materials to Sales and Purchasing Section of the Administration Department and the Risk
Management Office. The Responsible Minerals Control Hotline is publicly available on the Company’s
website (http://group.mmc.co.jp/osr/03/09.html). The Compliance Officer performs risk assessment
based on the information provided and reports the results to the Supply Chain Officer. The General
Affairs Section of the Administration Department, which is not directly involved in the procurement of
raw materials, handles reports with sincerity and respect so as to prevent interference by related parties.
During the period under assessment, there were no reports regarding the supply chain for copper raw
materials.
We also confirmed that there were no reports of copper raw material supply chain issues through the
Responsible Minerals Control Hotline at the Metals Company.

[5] Storage of records
All information (documents and records) related to the responsible sourcing of copper raw materials
are stored for at least five years in accordance with the Manual. The information shall be stored inelectronic and paper format.
4.

The resources and resource handling required to implement, maintain, and continuously improve theManagement System
In accordance with the Manual, we took care of the resources and resource allocation required to
implement, maintain, and continuously improve the Management System as below.
[1] Personnel
Required personnel:
The Compliance Officer determined the number of required personnel in consultation with the Supply
Chain Officer and other department heads as deemed necessary.
Resource allocation:
The Compliance Officer determined that the number of required personnel is in place in consultation
with the Supply Chain Officer and other department heads as deemed necessary.
[2] Budget
Required budget:
We secured the necessary expenses for the improvement of the Management System.
Resource handling:
No special notes.
[3] System
Required system:
We established an operational response system with the current personnel for responsible mineralsourcing (copper).
Resource handling:
We trained the personnel involved in this operation on the due diligence management system before
assigning them to conduct the improvement of the Management System.

5.

System to collect and retain information necessary for identifying red flags
We conducted a survey of supply chains for copper raw materials in accordance with the Manual todetermine if there were any red flags in the supply chains.
The Company received copper raw materials (copper concentrate and recycled materials) for the
manufacturing of electrolytic copper cathodes from the Metallurgy Div., the Raw Materials Dept., and the
Recycling Raw Materials Dept. of the Metals Company of Mitsubishi Materials Corporation and from theContractors. The Company has not received any copper raw materials from the Contractors during the period
from April 2023 onward. Therefore the Company does not procure copper raw materials independently.

The Compliance Officer selected by the Supply Chain Officer has the authorities and responsibilities set
forth in internal regulations, including the supervision of relevant departments and the operation of theManagement System.
After receiving copper raw materials supplied by Contractors, the Company checks the actual raw
materials, analyzes the copper and other metal content in each lot, checks the consistency with the supplier's
information provided in advance by the Contractors, and reports the results to the Contractors.
For the purpose of tracking and controlling copper at the head office division, the Company proactively
uses the materials receipt monitoring system to prevent the mixing in of copper raw materials originatingfrom conflict-affected and high-risk areas (CAHRAs). Due diligence involves checking the countries where
copper mines are located and the countries that are located on the route of transportation of produced copper
concentrate to the Company, in addition to identifying major suppliers (copper mines), based on informationfrom the Metals Company and the Contractors.
During the period of assessment, there were no issues related to supplier identification, country of origin,or traceability.
The CAHRAs list for the relevant period is based on the following indicators. The CAHRAs list
established by the Metals Business Company is received and established as the CAHRAs list for theCompany's own standards and revised accordingly.
[1] The DRC and nine neighboring countries under the Dodd-Frank Act[2] Jurisdictions with Intensity Level 5 or higher under the Heidelberg Conflict Barometer[3] High-Risk Jurisdictions subject to a Call for Action as designated by the FATF (Financial Action Task
Force on Money Laundering)[4] Jurisdictions suspected to be at high risk based on industry information from Raw Material
departments (JOGMEC, etc.)[5] Jurisdictions subject to regulations by the Office of Foreign Asset Control (OFAC) of the U.S.
Ministry of Finance[6] The bottom 10 countries in the Cato Institute's Human Freedom Index[7] Jurisdictions where copper production involves child labor and/or forced labor in the List of Products
Produced by Child Labor or Forced Labor by the Bureau of International Labor Affairs of the U.S.
Department of Labor
6.

Due diligence process with collected information(1) Definition of risks
The company considers procurement operations relating to followings as being high risk : human rights
violations, terrorist financing, money-laundering, illegal trade, violations of legal requirements related tothe environment and sustainability, and CAHRAs defined by the Company. If any of the following items
applies, the suppler shall be regarded as high risk.

(1) Location risks
・ Raw materials originating in or transported through conflict-affected and high-risk areas(CAHRAs)・ Raw materials reasonably suspected to be derived from countries through which CAHRAproduced copper is known to pass・ Raw materials allegedly produced in countries where the known or expected production volume
is limited(2) Supplier risks
・ The interests of shareholders, the UBO, or other parties meet the high-risk location criteria
・ Organizations engaged in high-risk business activities, including arms, the casino industry, andreligion, and the leaders thereof・ Companies that are found to have procured copper raw materials from high-risk countries in thepast 12 months
・ Significant discrepancies or inconsistencies in documents provided, or refusal to submit
documents requested by the Company(3) Raw material risks
・ Copper concentrate produced from Artisanal small-scale manned mines
・ That public records or due diligence have revealed that it would cause, for example, significant
damage or extremely dangerous ESG elements
The Company's zero-tolerance supply chains are as follows:・ Copper raw materials procured in violation of international sanctions
・ Copper raw materials supplied by suppliers whose primary suppliers or their known upstream
companies have a UBO who is known to be a money launderer, fraudster, or terrorist
・ Copper raw materials involved in serious human rights violations or direct or indirect support for
non-governmental armed groups that are risks listed in ANNEX II of the OECD Guidance

For high-risk raw materials, the Raw Materials Management Representative receives the results ofenhanced due diligence, including on-site evaluations conducted by the Metals Company, and theCompliance Officer evaluates the results. If a zero-tolerance problem is identified, then the Company
must not enter into the business relationship, and the existing relationship must be terminatedimmediately.
(2) Identification of risks
The Company conducts due diligence on all suppliers related to copper concentrate and intermediatematerials, and conducts a Red Flag Review of supply chains. Supply chain risk assessment adopts arisk-based approach. With new suppliers, supply chain risk assessment is conducted before beginning atransaction. Supply chain risk assessment is also conducted annually to determine whether to continuetransactions. The Company may rescind acceptance if, as a result of risk assessment, the Compliance
Officer determines that there is a significant risk.
Specifically, the Company uses KYC and Copper Mark’s JDD Tool, through the Metals Company, toidentify supply chain risks based on the following information.
1)

Location risks
・ Identification of the place of origin
・ Whether the route of transportation from the place of departure falls under CAHRAs
・ Whether the procurement from the country of origin is subject to international sanctions2)

Supplier risks (primary suppliers)
・ Use information provided by Dow Jones and other trusted third parties to confirm the profile ofsuppliers and their directors and UBO, and confirm that they have no crime history and are notsubject to international sanctions
・ KYC's identification of UBO uses trusted, up-to-date, government-issued identity information(exempting companies that belong to a group listed on a stock exchange, or banks andgovernment agencies with appropriate AML‐CFT [Anti Money Laundering/Countering the
Financing of Terrorism] policies). If a supplier does not submit the identification of UBO and ID
evidence in response to the KYC questionnaire, or if the contents of their response areinsufficient, the UBO is identified by using Teikoku Databank, Tokyo Shoko Research, or a UBO
database, and the UBO’s ID is confirmed by obtaining a copy of a certificate of all historical
records, etc.

3)

Raw material risks(1) Mined materials (copper concentrate)・ Mine profiles
・ The statutory license required for operating the mine (if applicable)
・ The size of the mine (large-scale mines or artisanal small-scale manned mines)
・ Production items
・ Production items to be delivered to the Company
・ The place of origin of concentrate stocks received from outside at mining sites and their ancillaryfacilities, and control information for proper management(2) Intermediate materials (copper electrolytic slime)
・ Supplier profiles
・ Detailed information on the operations of the suppliers・ The status of risks related to the procurement of inputted mined materials from CAHRAs(3) Recycled materials (e-scrap and copper scrap)
・ Supplier profiles
・ Types and forms of copper raw materials procured by the suppliers・ The status of smelting, refining, and melting of delivered products

The Raw Materials Purchasing Officer, who is in charge of purchasing raw materials verifies theconsistency between information on the shipment of the raw materials (estimated shipping weight,
water content, the shipping country, transit locations, etc.) obtained from the suppliers or carriers and
KYC information on the suppliers (mining capacity and country of origin). If there are any
inconsistencies, the Metals Company confirms them with the supplier as soon as possible and, if there
are no mistakes on the supplier's part, requests that the shipment information be corrected. The Raw
Materials Management Representative confirms that the received lots of raw materials are consistent
with the information received in advance from the Metals Company in the following items.
・ Estimated weight and analysis values, including estimated metal content
・ Information on the brand names of the concentrate, the names of purchasers, etc.
・ Shipping documents
・ That the production volume of copper concentrate in its country of origin is reasonably larger
than the volume purchased by the Company
The Company records smelted raw materials for each lot of copper cathodes produced in order toensure traceability.
7.

Results of the Red Flag Review
The Red Flag Review was conducted in accordance with the Manual for the copper raw materials
received during the period under assessment. During the period, as described above, we identified one
case where the parent company of a supplier operated mines in CAHRAs, and we raised red flags.
However, as a result of verification in accordance with the Manual, it was not confirmed that the copper
concentrate produced by those mines located in CAHRAs was mixed into the copper concentratedelivered to the Company. Specifically, it was confirmed that Zambia, which is on the CAHRAs list, isgeographically separated from the country of origin and port of shipment of the copper concentratedelivered to the Company and that operational contact is unlikely, that there were no deliveries fromCAHRA countries during the period under assessment according to the confirmation of the ports ofshipment and the ports of call for each accepted main-carriage transport based on reports from the Raw
Materials Dept. of the Metals Company, and that an appropriate due diligence management system wasdeemed to be in place at each subsidiary according to the public information provided by the parent
companies. In conclusion, no red flags were identified.

The parent company as the UBO, was identified based on KYC and credit investigation informationcollected for this Red Flag Review through the Metals Company, and the checking of the businessoutlines of that parent company led to the aforementioned raising for a red flag as described earlier.
While this case did not result in the identification of a red flag, it did allow us to conduct supplier due

diligence on a deeper level. This deeper due diligence on suppliers is a clear example of the Company's
increased commitment to due diligence.
8.

Risk assessment
If a red flag is identified as a result of the Red Flag Review, it is reported to the Supply Chain Officer
and the risk assessment is conducted. In the risk assessment, the Company contacts suppliers throughthe Metals Company, uses third-party information to confirm that there are no gaps in the data, andcarries out on-site inspection as necessary.
Since no red flags were identified as a result of the Red Flag Review, we concluded that risk
assessment was not required for the Company’s supply chains for the period of assessment.

End