Responsible Minerals Sourcing

◆Basic Concept

In order to fulfill corporate social responsibility and contribute to the realization of a sustainable society, TANAKA promotes responsible minerals sourcing in accordance with TANAKA’s Code of Conduct and Standards of Conduct*1. Specifically, TANAKA endeavors to build a sustainable supply chain by avoiding sourcing that could lead to risks stipulated in Annex II of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas*2 (hereinafter, “the OECD Guidance”), such as human rights violations including forced labor, child labor, as well as direct or indirect support to non-state armed groups, bribery and fraudulent misrepresentation of the origin of minerals, money laundering, etc. Furthermore, TANAKA strives to continuously address occupational health and safety as well as environmental conservation, aiming to enhance ESG performance throughout the supply chain.

◆Regarding Tantalum, Tin, Tungsten, Gold, Cobalt, Mica, Copper, Nickel, Lithium, and Graphite

Following the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, international efforts have accelerated regarding tantalum, tin, tungsten, and gold ("3TG" or "conflict minerals"). In accordance with RMAP*3, TANAKA conducts risk assessment of the supply chain for 3TG, as well as for minerals such as cobalt, mica, copper, nickel, lithium, and graphite, and discloses measures and results of the assessment in response to customers’ requests.

◆Regarding the Five Precious Metals (Gold, Silver, Platinum, Palladium, and Rhodium)

TANAKA recognizes its social responsibility and public mission as a leading company in the precious metals industry, complies with relevant laws and regulations, and responds flexibly to changes in the social situation and risks surrounding the group. TANAKA promotes an effective management system in accordance with the LBMA*4 guidance for gold and silver, and the LPPM*5 guidance for platinum, palladium and rhodium. Furthermore, TANAKA requests its suppliers to formulate and promote their own policies and activities that are similar to, or based upon, this Policy or Annex II of the OECD Guidance.

1. Establishment of a Management System

Under the leadership of the senior management, TANAKA implements precious metals management, including countermeasures against money laundering, etc., appoints a compliance officer from among the officers as the person in charge, and establishes a centralized management system by designating a supervisory department that clarifies the roles and responsibilities of each relevant department, works on countermeasures against money laundering, etc., and implements risk assessment of the supply chain for precious metals in cooperation with relevant departments.

2. Risk Assessment of the Supply Chain

Based on the concept of a risk-based approach, TANAKA comprehensively and specifically checks the materials it sources, transaction formats, countries and regions involved in transactions, and counterparty attributes. TANAKA continuously identifies and assesses risks, such as money laundering, within the supply chain for precious metals. If the compliance officer determines that the risk is high, the risk will be reduced through appropriate organizational decisions. If the risk cannot be reduced, TANAKA will stop sourcing the precious metals immediately. TANAKA will properly record and store the results of the risk assessment.

3. Education and Training

For all company personnel involved in responsible precious metals sourcing, TANAKA provides appropriate and continuous education and training necessary for precious metals management, including countermeasures against money laundering, etc., to enhance the necessary knowledge, to maintain and improve their expertise and capability, etc.

4. Checks at the Time of Transaction, Transaction Monitoring and Recording

TANAKA appropriately implements necessary measures for checks at the time of transaction, counterparty identification, verification of persons subject to asset freeze, etc., based on transaction contents and counterparty attributes. TANAKA establishes a system that detects suspicious transactions in a timely and accurate manner and immediately notifies the authorities. In addition, TANAKA monitors whether the sourced materials are consistent with the information obtained from the counterparty, and appropriately stores and manages the related records.

5. Internal Audit and Third-party Audit

The independent internal audit department periodically audits the status of countermeasures against money laundering, etc., and TANAKA strives to further improve the management system based on the audit results. Additionally, TANAKA periodically undergoes audits by an independent third-party regarding the implementation of the responsible precious metals sourcing and risk assessment, and discloses the results on TANAKA website.

6. Response to Theft of PGM*6-Containing Materials

In view of the theft of PGM-containing materials, such as autocatalytic materials, becoming a social issue, TANAKA has established the following policy regarding the theft of such materials and takes a strong stance towards their elimination from the supply chain and from the industry：

• Undertake enhanced Due Diligence on counterparties that have not publicly committed to a responsible supply chain policy similar to, or based upon, this Policy or Annex II of the OECD Guidance.
• Investigate and consider suspension of any counterparty TANAKA suspects of handling stolen PGM, pending further Due Diligence.
• Cooperate with authorities in seeking to end the trade in stolen PGM.
• Refuse to make cash transactions for autocatalytic material and work towards the elimination of cash transactions from the industry.

◆Establishment of a Grievance Mechanism

Regarding the handling of grievances (including whistleblowing), from internal and external stakeholders, TANAKA has established a grievance mechanism in accordance with TANAKA Grievance Policy Regarding Responsible Minerals Sourcing*7, and aims to promote the early identification, prevention, and reduction of potential risks within its supply chain.