Supply Chain Management

Basic Approach

At the ENEOS Group, we work to fulfill our social responsibilities across the entire supply chain by cooperating with suppliers of raw materials, logistics companies, construction companies, sales companies and others involved in our business activities, while carrying out initiatives for compliance, environmental preservation, human rights and labor, and safety and health.
We have stated this approach in the ENEOS Group Code of Conduct, and we have also established basic procurement policies for our Group companies in accordance with their business characteristics. Based on these policies, we work toward the continuous improvement of our procurement activities.

ENEOS Group Code of Conduct (excerpt)

Applicable Scope of the Code of Conduct

In principle, this Code of Conduct is applicable to all directors, officers and employees who work at ENEOS Holdings, Inc., and its subsidiaries. We also encourage companies that are part of our value chain to comply with this Code of Conduct. These companies include, but are not limited to, suppliers of raw materials, logistics companies, construction companies, and sales companies.

ENEOS CSR Procurement Policy

  1. 1.Conduct purchasing activities based on the ENEOS Group Code of Conduct and relevant policies, and strive to gain understanding and cooperation from business partners with regard to the Code of Conduct.
  2. 2.Place emphasis on conducting transactions on an equal footing with business partners with whom a sustainable partnership is possible, and aim to establish a mutually trusting relationship.
  3. 3.Consider a wide range of potential business partners and determine their suitability from a comprehensive standpoint, taking into account factors such as quality, price, delivery, and stable supply requirements, as well as attention to the environment and greater society.

JX Nippon Mining & Metals Group Basic Procurement Policy

Basic Policy of the JX Nippon Mining & Metals Group

1. Comply with laws, regulations, and rules and engage in fair transactions.

  • Respect the letter and spirit of relevant laws and social norms in executing business operations.
  • Conduct purchasing activities based on fair evaluations.
  • Maintain appropriate relationships with business partners based on the highest ethical values.

2. Protect intellectual property rights.

  • Strictly control personal information obtained in the course of procurement activities.
  • Do not illegally obtain or illegally use intellectual property, including the patents, utility models, designs, and trademarks of third parties, and do not infringe on such rights.

3. Build relationships with business partners based on mutual understanding and trust.

  • Provide business partners with high reliability and satisfaction through accurate, fast, and highly transparent activities.
  • Endeavor to achieve robust communication with business partners and consistently promote creativity and innovation through advanced ideas.
  • Contribute to the development of a sustainable society by promoting the purchase of environmentally friendly materials and machinery.

4. Follow the principles below regarding conflict minerals.

  • Do not engage in raw materials procurement that contributes to illegal activities in conflict-affected regions or to human rights infringements through such illegal activities.
  • Respect the guidance of the Organisation for Economic Co-operation and Development related to raw materials procurement from conflict-affected areas, and control supply chains in an appropriate manner.

Policy for Selecting Procurement Partners

In all of its business activities, the JX Nippon Mining & Metals Group must fulfill its social responsibilities, including not only those in the Group but in the supply chain of its business partners as well. For this reason, the Group asks that its business partners comply with the following.

1. Comply with laws, regulations, and social norms, such as those below, and place priority on human rights and environmental impact.

  • Obey laws and regulations related to manufacturing and sales, etc.
  • Comply with labor-related laws and regulations.
  • Abide by laws and regulations related to safety and health and develop a proper labor environment.
  • Prohibit child labor and forced labor.
  • Prohibit discrimination based on race, gender, etc., and respect the human rights, personality, and individuality of employees.
  • Comply with environmental laws and regulations.
  • Prohibit bribery and other unfair conduct.
  • Do not engage in conflict minerals procurement or use that contributes to inhumane acts.
  • Shut out relations with antisocial forces.

2. Engage in sound and fair business management.

3. Based on the JX Nippon Mining & Metals Group's Green Purchasing Guidelines, build environmental management systems and properly manage specified chemical substances.

4. Offer stable supply capacity and satisfy the quality, price, delivery, and service requirements of the JX Nippon Mining & Metals Group.

5. Possess technological capabilities that meet the requirements of the JX Nippon Mining & Metals Group.

Green Procurement

The ENEOS Group practices green procurement, which prioritizes equipment and materials with lower environmental impacts. To ensure the utilization of green procurement, the Group periodically conducts surveys of its suppliers.
In fiscal 2018, surveys were sent from ENEOS to 165 suppliers, with responses received from 159 suppliers, a response rate of 96%.
In the JX Nippon Mining & Metals Group, surveys were sent to 449 suppliers in fiscal 2018, accounting for 95% of the value of items purchased and accepted by JX Nippon Mining & Metals, JX Nippon Environmental Services, and Pan Pacific Copper. Responses were received from 435 suppliers, a response rate of 97%.
The survey results are used for the selection of procurement partners as applicable.

CSR Procurement

Training session for procurement partners

Further expanding its green procurement efforts, the ENEOS Group implements CSR procurement, which focuses on factors such as compliance, environmental impact reduction, human rights and labor, and health and safety.
In addition, ENEOS established the ENEOS CSR Procurement Policy in July 2018. In addition to a request for understanding of and cooperation with the ENEOS Group Code of Conduct, on which the policy is based, the company's basic purchasing contract contains provisions on legal compliance, safety and health, and attention to the environment, which are basic contractual conditions for doing business with the company.
In fiscal 2018, 413 procurement partners in Japan, accounting for 80% of the value of items purchased and accepted, attended training sessions for promoting understanding of and cooperation with this policy, and also responded to a survey for risk assessment. During the sessions, we also requested understanding of and cooperation with the ENEOS Group Code of Conduct. Based on analysis of the survey results, we will share measures to be implemented with our procurement partners and make necessary corrections and improvements through appropriate dialogue, such as interviews.
In addition, in fiscal 2019, JX Nippon Mining & Metals and JX Nippon Oil & Gas Exploration, as well as their Group companies, introduced CSR procurement, and are working to obtain the cooperation of their procurement partners.
Through CSR procurement, we will continue our efforts to identify human rights issues in the ENEOS Group supply chain.

Confronting the Issue of Conflict Minerals

Industry organizations relevant to the JX Nippon Mining & Metals Group (including the LBMA1 and RBA2) have established monitoring programs for eliminating conflict minerals. Under these programs, companies are requested to carry out surveys and undergo external audits by third-party organizations.
Accordingly, the JX Nippon Mining & Metals Group has included a clause on the exclusion of conflict minerals in its Basic Procurement Policy, and has established and operates management systems to appropriately address this issue.

  1. 1London Bullion Market Association (LBMA). An industry association composed of financial institutions and others that deal in gold and silver ingot. Inclusion on this association's Good Delivery List is viewed as a guarantee of high quality and reliability.
  2. 2Responsible Business Alliance (RBA). An industry coalition for ensuring responsible conduct in supply chains within the electronics industry.

Initiatives for the Gold and Silver Supply Chains

Pan Pacific Copper, a producer of gold ingot, and JX Nippon Mining & Metals, a producer of silver ingot, have established and operate management systems for supply chain due diligence, which includes the following requirements.

  1. 1.Performance of supply chain due diligence before the purchase of mineral raw materials (confirmation of material source origin, performance of risk assessment, item confirmation upon delivery, distribution route confirmation, retention of relevant documents, etc.)
  2. 2.Notification to suppliers of the policy on the exclusion of conflict minerals
  3. 3.Implementation of in-house training on supply chain due diligence and its background
  4. 4.Implementation of internal audits and undergoing external audits

Operation of supply chain due diligence is audited by a third-party organization specified by the LBMA, and the results are reported to the LBMA. As a result of following these procedures, the gold ingot produced at Pan Pacific Copper's Saganoseki Smelter & Refinery and silver ingot produced at the Hitachi Works of JX Nippon Mining & Metals are included on the LBMA's Good Delivery List. In addition, Saganoseki Smelter & Refinery and Hitachi Works are included on the RMAP Conformant Smelters list established by RBA and GeSI3, acknowledgement that we are taking appropriate steps to eliminate conflict minerals.

  1. 3Global e-Sustainability Initiative: An organization of European information and communication technology businesses. It has established a certification program called Responsible Minerals Assurance Process (RMAP) in collaboration with RBA, as both the electronics and telecommunication devices industries are at high risk of incorporating conflict minerals in their products.

Initiatives for the Tantalum Supply Chain

H.C. Starck Tantalum and Niobium GmbH ("HCS TaNb"), a producer of tantalum powder, implements a strict program of purchasing checks based on international standards for procuring raw materials from conflict-affected and high-risk areas. For example, HCS TaNb purchases materials with tags that the ITSCI4 distributes and tracks to guarantee non-involvement in conflicts, child labor, or other human rights violations within conflict-affected areas. HCS TaNb also performs supply chain due diligence to confirm the tags. As a result of these initiatives, HCS TaNb has been included on the RMAP Conformant Smelters list in recognition that HCS TaNb is taking proper measures to exclude conflict minerals.
In addition, in June 2019, HCS TaNb implemented a supply chain due diligence system similar to ITSCI through the Better Sourcing Program (BSP) provided by RCS Global Group, an international auditing organization for raw material supply chains.

  1. 4ITRI Tin Supply Chain Initiative. An initiative of the International Tin Research Institute (ITRI), a global industry organization. It aims to promote implementation of due diligence from mine to smelter as well as procurement of minerals from mines in conflict-affected areas that do not benefit armed groups, based on OECD guidelines.

Initiatives with Distribution Companies

ENEOS provides training and carries out activities to raise awareness among all contract transport providers responsible for transporting its products in an effort to increase awareness of safety, improve safety practices, and encourage eco-friendly driving.
At the start of every fiscal year, the company hosts a meeting between management and all contract transport providers to share the safety policy and goals for that particular fiscal year.
The company hosts a safe delivery contest intended to improve drivers' driving techniques and unloading work. It also shares good practices of transport companies at the safety manager meeting held in the autumn. Through these activities, the company is proactively working to raise awareness about safety among distribution companies.

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