Form SD KEMET CORP
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
KEMET Corporation
(Exact name of the registrant as specified in its charter)
Delaware 1-15491 57-0923789
(State or other jurisdiction of Incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
2835 Kemet Way, Simpsonville, South Carolina 29681
(Address of principal executive offices) (Zip code)
R. James Assaf 954-766-2817
(Name and telephone number, including area code, of the
Person to contact in connection with this report.)
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
_√__ | Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2015. |
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
KEMET is a leading global manufacturer of a wide variety of capacitors. As used in this report, the terms “we,” “us,” “our,” “KEMET” and the “Company” refer to KEMET Corporation and its predecessors, subsidiaries and affiliates, unless the context indicates otherwise.
KEMET manufactures capacitors with different dielectrics and electrical termination configurations. These materials and configurations define the capacitor product categories. The dielectrics are tantalum, ceramic, film, aluminum, paper and electrolytic. The electrical termination configurations include surface mount capacitors, which are attached directly to the circuit board without lead wires, and non-surface mount capacitors. Non-surface mount capacitors include capacitors that are attached to the circuit board using lead wires, chassis mounts, or other pin through-hole board mounts such as screw terminal or snap-in.
Additionally, KEMET manufactures non capacitor electronic products which include:
• | Inductors |
• | Electrical Coils |
• | Electrical Chokes |
• | Electrical Magnetic Transformers |
• | Electrical Filters |
• | Electronic Control Boards |
Below is a chart illustrating each of our product categories and the conflict minerals (as defined in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) that are necessary to their functionality or production. As set forth in Section 13(p) of the Securities Exchange Act of 1934, as amended, and Rule 13p-1 thereunder (the “ Rule ”), “tantalum,” “tin,” and “tungsten” refer to the derivatives of the metal ores from which those minerals are extracted, namely, columbite-tantalite, cassiterite and wolframite, respectively.
Product Category (Dielectric and Termination Configuration) | Tantalum | Tin | Tungsten | Gold |
Tantalum Surface Mount | a | £ | × | £ |
Tantalum Polymer Surface Mount | a | £ | × | £ |
Aluminum Polymer Surface Mount | × | a | × | × |
Tantalum Non-Surface Mount | a | a | × | × |
Ceramic Surface Mount | × | £ | £ | £ |
Ceramic Non-Surface Mount | × | a | × | £ |
Film and Paper Surface Mount | × | a | × | £ |
Film and Paper Non-Surface Mount | × | a | × | × |
Electrolytic Non-Surface Mount | × | a | × | £ |
Electrical Filters | × | a | × | £ |
Electrical Magnetic Transformers | × | a | × | £ |
Electrical Chokes | × | a | × | £ |
Electrical Coils | × | a | × | £ |
Inductors | × | a | × | £ |
Electronic Control Boards | £ | a | £ | £ |
a - Product category contains specified conflict minerals
£ - Product category contains specified conflict minerals depending on specific part type
× - Product does not contain specified conflict minerals
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KEMET has concluded in good faith that during 2015:
1. | KEMET manufactured or contracted to manufacture products as to which conflict minerals are necessary to the functionality or production; |
2. | Tantalum material was sourced either directly through our Closed Pipe Supply Chain (which refers to our effort, started in fiscal year 2012, to vertically integrate our tantalum business and develop a “closed pipe” source for our conflict-free tantalum material) or through external third party suppliers. All tungsten, tin and gold material was sourced from external third party suppliers; and |
3. | Based on a reasonable country of origin inquiry, KEMET knew or had reason to believe that a portion of its necessary conflict minerals originated or may have originated in the Democratic Republic of the Congo or an adjoining country as defined in the Rule (collectively, sometimes referred to as the “Covered Countries”), and knew or had reason to believe that those necessary conflict minerals may not be from recycle or scrap sources. |
The results of our reasonable country of origin inquiry conducted on these conflict minerals were as follows:
• | For tantalum, tin, and gold, KEMET determined a portion of the material came from recycle or scrap material. |
• | For tantalum, not from recycle or scrap, we determined the country of origin for all materials and confirmed that the country of origin included a Covered Country. |
• | For tin, despite diligent efforts we were not able to determine the country of origin for all materials but did confirm the country of origin included a Covered Country. |
• | For gold, despite diligent efforts we were not able to determine the country of origin for all materials. For those materials where the country of origin was determined, the origins did not include, and KEMET has no reason to believe they were sourced from, a Covered Country. |
• | For tungsten, we were not required to determine the country of origin or otherwise provide information related to tungsten because all tungsten necessary to the functionality or production of KEMET’s products was acquired in 2011 and considered to be “outside the supply chain” (or fully smelted). |
Conflict Mineral | Countries of origin include a Covered Country? |
Tantalum | Yes |
Tin | Yes |
Tungsten | N/A (all tungsten was outside the supply chain prior to January 31, 2013) |
Gold | No reason to believe sourced in those regions |
Conflict Minerals Disclosure
In accordance with Rule 13p-1 under the Securities Exchange Act of 1934 (“Rule 13p-1”), KEMET has filed a Conflict Minerals Report as Exhibit 1.01 to this Form SD and made such report publicly available on KEMET’s Internet website at www.kemet.com/conflictfree. Information within KEMET’s website shall not constitute a part of this Form SD.
Item 1.02 Exhibit
As specified in Section 2, Item 2.01 of this Form SD, KEMET is hereby filing its Conflict Minerals Report as Exhibit 1.01 to this Form SD.
Section 2 – Exhibits
Item 2.01 Exhibits
The following exhibit is filed as part of this report:
Exhibit No. Description
1.01 Conflict Minerals Report of KEMET Corporation
* * * * *
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.
KEMET Corporation
(Registrant)
By: /s/ SUSAN B. BARKAL | Date: May 26, 2016 |
Susan B. Barkal
Senior Vice President, Quality, Chief Compliance Officer and Chief of Staff
* * * * *
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EXHIBIT INDEX
Exhibit No. Description
1.01 Conflict Minerals Report of KEMET Corporation
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Exhibit 1.01
KEMET Corporation
CONFLICT MINERALS REPORT
FOR THE REPORTING PERIOD FROM
JANUARY 1 TO DECEMBER 31, 2015
JANUARY 1 TO DECEMBER 31, 2015
Report Date: May 26, 2016
INTRODUCTION
This Conflict Minerals Report for KEMET Corporation (“KEMET,” “we,” “us” or “our”) is presented to comply with Section 13(p) of the Securities Exchange Act of 1934, as amended, and Rule 13p-1 thereunder (the “Rule”) for the reporting period from January 1 to December 31, 2015.
For the reporting period from January 1 to December 31, 2015 (“Reporting Period”), KEMET conducted due diligence on the source and chain of custody of the cassiterite, columbite-tantalite, wolframite or gold, including their derivatives, which are limited to tin, tantalum, tungsten (“3TG”), that were necessary to the functionality or production of the products (“necessary conflict minerals”) that we manufactured or contracted to manufacture on or after January 1, 2015 to ascertain whether these conflict minerals originated in the Democratic Republic of Congo ("DRC")or an adjoining country as defined in the Rule (“Covered Countries”) and financed or benefited armed groups in any of these countries. It is noted that manufacturing products during a defined period of time may naturally include materials sourced prior to and during the Reporting Period. The reasonable country of origin inquiry and due diligence measures were applied to identified conflict mineral suppliers prior to and during the Reporting Period. Some conflict minerals utilized during the period were considered “outside the supply chain” under the Rule, meaning materials that were smelted (with respect to tin, tantalum or tungsten) or fully refined (with respect to gold) prior to January 31, 2013, or materials that have not been smelted or fully refined but were located outside of the Covered Countries prior to January 31, 2013. As such, conflict minerals that were considered “outside the supply chain” are exempt from reporting under the Rule. However for the purpose of this report KEMET’s due diligence measures did not exclude these materials or suppliers. For tungsten, we did not determine the country of origin because all the material was acquired in 2011 and considered outside the supply chain.
DUE DILIGENCE MEASURES
Design of Our Due Diligence Measures
Our conflict minerals due diligence measures have been designed to conform with the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition (the “OECD Guidance”), as applicable for tin, tantalum, tungsten and gold in all material respects. KEMET is both an “upstream” and “downstream” company. As an upstream company, KEMET implemented a “closed-pipe” vertically integrated conflict free tantalum supply chain. In support of sourcing conflict free material from the DRC, KEMET along with our mining partner established the Partnership for Social and Economic Sustainability in the Kisengo village in the Katanga province of the DRC. Annually, KEMET deploys company representatives to monitor the progress of the program. We designed both our upstream and downstream due diligence measures to:
1. | Establish strong company management systems for conflict minerals supply chain due diligence and reporting compliance; |
2. | Identify and assess conflict minerals risks in our supply chain; |
3. | Design and implement strategies to respond to conflict minerals risks identified; |
4. | Contribute to independent third-party audits of the due diligence practices of conflict minerals smelters and refiners by participating in industry organizations; and |
5. | Report on our conflict minerals supply chain due diligence activities, as required by the Rule. |
Description of Due Diligence Performed as an Upstream Company
Based on the OECD Guidance, “upstream” refers to the mineral supply chain from the mine to the smelters/refiners. “Upstream companies” include miners (artisanal and small-scale or large-scale producers), local traders or exporters from the country of mineral origin, international concentrate traders, mineral re-processors and smelters/refiners. In addition, KEMET deployed representatives to the DRC as part of our due diligence effort.
The source and chain of custody of tantalum materials were audited and validated Conflict-Free in accordance with the EICC/GeSI Conflict-Free Smelter Program assessment protocols. Our compliance status as well as the audit protocols and procedures are publicly available on the EICC/GeSI Conflict-Free Sourcing Initiative website. Information on such website does not constitute part of this Conflict Minerals Report.
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Description of the Due Diligence Performed as a Downstream Company
Based on the OECD Guidance, “downstream” means the minerals supply chain from smelters/refiners to retailers. “Downstream companies” include metal traders and exchanges, component manufacturers, product manufacturers, original equipment manufacturers (OEMs) and retailers. In the following chart, KEMET has described its due diligence activities that are in accordance with the five steps set forth in the OECD Guidance. These activities were performed during the Reporting Period.
Step 1: Establish strong company management systems. | |
A) To clearly communicate to suppliers and the public, KEMET maintained a formal company policy avoiding the use of conflict minerals which directly or indirectly finance or benefit armed groups in the DRC or an adjoining country (“Conflict Minerals Policy”). The Conflict Minerals Policy is publicly available on our website and was employed by our KEMET purchase order terms and conditions. The Policy was communicated to conflict mineral raw material suppliers during the reporting period and to new raw material suppliers during our supplier “on boarding” process. | |
B) To structure internal management and support supply chain due diligence, KEMET maintained in its internal Compliance Policy and Procedures, a conflict minerals document formally stating that KEMET’s Sustainability Council (“SC”), which is made up of a cross section of senior management, has oversight and ownership of the Conflict Minerals Policy. The SC met quarterly to address current and future sustainability objectives and concerns. In addition, KEMET maintained a specific conflict minerals team (“Conflict Minerals Team”) that met during the Reporting Period to address the implementation and progress of our due diligence efforts. | |
C) To establish a system of controls and transparency over the conflict minerals supply chain as a downstream company, KEMET maintained in our internal Supplier Quality Procedures a requirement for suppliers to provide information on the smelters or refiners in their supply chain utilizing the EICC/GeSI Conflict Mineral Reporting Template. Records of suppliers’ responses were recorded and maintained. The information was used by KEMET to determine material conflict-free status. The information was also used to provide our customers with conflict mineral smelter or refiner information. | |
D) To strengthen engagement with its suppliers, KEMET performed smelter outreach to encourage EICC/GeSI CFSP participation and participated in supply chain workshops. | |
E) KEMET had available multiple communication channels to serve as grievance mechanisms for early-warning risk awareness. Internally, KEMET offered the “Listen Up” program to its personnel to report anonymously possible violations of KEMET’s Global Code of Conduct and other policies. The “Listen Up” program was administered by an outside firm which was not connected to KEMET. Externally, contact information was made available through KEMET’s public website (www.kemet.com). KEMET also actively participated in the following industry groups which served as an early-warning risk-awareness system. • Organisation for Economic Co-Operation and Development (OECD) • EICC/GeSI Conflict Free Sourcing Initiative (EICC/GeSI CFSI) • International Tin Research Institute (ITRI) • Tantalum-Niobium International Study Center (TIC) | |
Step 2: Identify and assess risk in the supply chain. | |
A) For the purpose of identifying risks, KEMET surveyed our suppliers of raw materials containing a conflict mineral to obtain smelter or refiner information utilizing the EICC/GeSI Conflict Mineral Reporting Template. | |
B) To assess risk, KEMET reviewed the supplier responses for completeness and for reasonableness (i.e., 1. Do not contain contradictions or inconsistencies; 2. The response is consistent with KEMET’s knowledge of the supplier). KEMET followed up with suppliers who were unresponsive or required additional clarification. | |
Step 3: Design and implement a strategy to respond to identified risks. | |
A) KEMET reported findings of supply chain risk to senior management through quarterly and monthly business review meetings. | |
B) The risk management plan adopted by KEMET was in accordance with the Conflict Minerals Policy to discontinue doing business with any supplier found to be purchasing tungsten, tantalum, tin or gold material which directly or indirectly finances or benefits armed groups in the DRC or an adjoining country. KEMET understood the global supply chain of conflict minerals is complex and disclosure of mineral sources is often considered confidential. To reduce the potential supply chain risk, KEMET encouraged smelters and refiners to participate in independent assessments of their own sources through vehicles such as the EICC/GeSI Conflict-Free Smelter Program. | |
C) To monitor and track performance of risk management efforts, KEMET relied on supplier survey updates and supplier EICC/GeSI CFSP updates. The status was communicated internally in Conflict Minerals Team meetings. | |
D) To undertake additional fact and risk assessments for risks requiring mitigation or after a change of circumstances, KEMET will rely on the supplier re-approval process as governed by its Supplier Quality Procedures. |
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Step 4: Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain. | |
KEMET relied on the EICC/GeSI Conflict-Free Sourcing Program audits to validate that its due diligence is in conformance with the OECD Guidance. As an EICC/GeSI CFSI member, KEMET worked with other members to identify smelters in the supply chain, and encouraged suppliers and customers to participate in the program through direct communication and smelter outreach communication. The data on which we relied for certain statements in this declaration was obtained through our membership in the CFSI, using the Reasonable Country of Origin Inquiry report for member KMET. | |
Step 5: Report on supply chain due diligence. | |
KEMET has publicly made available the Conflict Minerals Policy outlining its due diligence objectives and documented our “closed pipe” conflict-free tantalum supply chain with our Partnership for Social and Economic Sustainability program. As required under Section 13(p) of the Securities and Exchange Act of 1934 and the Rule, and in consultation with internal and external counsel, KEMET has filed our Form SD - Special Disclosure Report, which includes this Conflict Minerals Report as Exhibit 1.01, with the Securities and Exchange Commission for the Reporting Period and made such disclosure available on its website at www.kemet.com. |
DUE DILIGENCE DETERMINATION
Summary of Due Diligence Measures Performed
KEMET’s reasonable country of origin inquiry (“RCOI”) and due diligence employed a combination of measures to determine whether the necessary conflict minerals in KEMET’s products originated from the Covered Countries. Our due diligence measures included the following activities:
1. | KEMET surveyed all identified conflict minerals suppliers to ascertain for each of these conflict minerals (a) the smelter or refiner where it was processed, (b) its country of origin and (c) its mine of origin. The survey was conducted using the EICC/GeSI Conflict Minerals Reporting Template. KEMET accepted supplier data up to March 31, 2016 for the Reporting Period. |
2. | KEMET maintained our upstream “closed pipe” vertically integrated conflict-free tantalum supply chain. All of our upstream facilities were audited and validated as EICC/GeSI CFSP compliant. In addition, KEMET only sourced its downstream externally supplied tantalum material from EICC/GeSI CFSP compliant smelters. |
3. | As a member company of the EICC/GeSI Conflict Free Sourcing Initiative (the “CFSI”), we leveraged the due diligence conducted on smelters and refiners by the CFSI’s Conflict-Free Smelter Program (the “CFSP”). The CFS Program, developed by the EICC and |
GeSI, is a voluntary initiative in which an independent third party audits smelter/refiner procurement and tolling activities and determines if the smelter or refiner demonstrated that all the minerals they processed originated from conflict-free sources.
Results of RCOI and Due Diligence Measures
Despite recent caselaw and SEC guidance regarding the Rule, KEMET is voluntarily providing disclosure as to the conflict-free status of its products in an effort to provide greater transparency over KEMET’s products.
DRC Conflict Free Products
We have designated our products as “DRC conflict free” if we were able to reasonably determine that they do not contain conflict minerals necessary to their functionality or production that directly or indirectly finance or benefit armed groups in a Covered Country, or that are obtained from recycled or scrap sources, all as further defined by applicable SEC rules. KEMET’s products manufactured in the Reporting Period were determined to be DRC conflict free if (a) all KEMET’s external third party suppliers who contributed necessary conflict minerals to those products provided a response to the supply chain survey confirming they had identified all of the smelters or refiners in their supply chain and (b) all of those smelters/refiners were either EICC/GeSI Conflict Free Smelter Program compliant or sourced outside the Covered Countries.
As a result of the reasonable country of origin inquiry and due diligence conducted as described above and in accordance with the Rule as originally promulgated, KEMET has determined the following product categories to be “DRC conflict free” for the Reporting Period.
• | Tantalum Surface Mount Capacitors (MnO2) |
• | Tantalum Polymer Surface Mount Capacitors (KO) |
• | Ceramic Surface Mount Capacitors (MLCC) |
• | Electrolytic Non-Surface Mount Capacitors |
• | Aluminum Polymer Surface Mount Capacitors (AO) |
• | Tantalum Non-Surface Mount Capacitors |
KEMET has insufficient information from suppliers or other sources regarding all smelters and refiners that processed the necessary conflict minerals to make a determination for the other product categories set forth below and provides below the known facilities used to process the necessary conflict minerals and country of origin. The country of origin information is based on the EICC/GeSI Conflict Free Sourcing Initiative’s Reasonable Country of Origin Inquiry data as of March 31, 2016.
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List of Known Facilities processing conflict minerals for KEMET Other Product Categories: • Ceramic Non-Surface Mount Capacitors• Film and Paper Surface Mount Capacitors• Film and Paper Non-Surface Mount Capacitors• Electrical Filters• Electrical Magnetic Transformers• Electrical Chokes• Electrical Coils• Inductors• Electronic Control Boards | ||
Mineral | Smelter or Refiner Facility Name† | Location of Facility† |
Gold | Advanced Chemical Company | UNITED STATES |
Gold | Aida Chemical Industries Co., Ltd.* | JAPAN |
Gold | Allgemeine Gold-und Silberscheideanstalt A.G.* | GERMANY |
Gold | Almalyk Mining and Metallurgical Complex (AMMC) | UZBEKISTAN |
Gold | AngloGold Ashanti Córrego do Sítio Mineração* | BRAZIL |
Gold | Argor-Heraeus SA* | SWITZERLAND |
Gold | Asahi Pretec Corporation* | JAPAN |
Gold | Asaka Riken Co., Ltd.* | JAPAN |
Gold | Atasay Kuyumculuk Sanayi Ve Ticaret A.S.* | TURKEY |
Gold | Aurubis AG* | GERMANY |
Gold | Bangko Sentral ng Pilipinas (Central Bank of the Philippines)* | PHILIPPINES |
Gold | Bauer Walser AG | GERMANY |
Gold | Boliden AB* | SWEDEN |
Gold | C. Hafner GmbH + Co. KG* | GERMANY |
Gold | Caridad | MEXICO |
Gold | CCR Refinery - Glencore Canada Corporation* | CANADA |
Gold | Cendres + Métaux SA | SWITZERLAND |
Gold | Chimet S.p.A.* | ITALY |
Gold | Chugai Mining | JAPAN |
Gold | Daejin Indus Co., Ltd. | KOREA, REPUBLIC OF |
Gold | Daye Non-Ferrous Metals Mining Ltd. | CHINA |
Gold | DSC (Do Sung Corporation) | KOREA, REPUBLIC OF |
Gold | Dowa* | JAPAN |
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Gold | Eco-System Recycling Co., Ltd.* | JAPAN |
Gold | OJSC Novosibirsk Refinery* | RUSSIAN FEDERATION |
Gold | Gansu Seemine Material Hi-Tech Co., Ltd. | CHINA |
Gold | Heimerle + Meule GmbH* | GERMANY |
Gold | Heraeus Ltd. Hong Kong* | CHINA |
Gold | Heraeus Precious Metals GmbH & Co. KG* | GERMANY |
Gold | Hwasung CJ Co., Ltd. | KOREA, REPUBLIC OF |
Gold | Ishifuku Metal Industry Co., Ltd.* | JAPAN |
Gold | Istanbul Gold Refinery* | TURKEY |
Gold | Japan Mint* | JAPAN |
Gold | Jiangxi Copper Co., Ltd.* | CHINA |
Gold | Asahi Refining USA Inc.* | UNITED STATES |
Gold | JSC Ekaterinburg Non-Ferrous Metal Processing Plant* | RUSSIAN FEDERATION |
Gold | JSC Uralelectromed* | RUSSIAN FEDERATION |
Gold | JX Nippon Mining & Metals Co., Ltd.* | JAPAN |
Gold | Kazzinc* | KAZAKHSTAN |
Gold | Kennecott Utah Copper LLC* | UNITED STATES |
Gold | Kojima Chemicals Co., Ltd.* | JAPAN |
Gold | Korea Metal Co., Ltd. | KOREA, REPUBLIC OF |
Gold | Kyrgyzaltyn JSC | KYRGYZSTAN |
Gold | L' azurde Company For Jewelry* | SAUDI ARABIA |
Gold | Lingbao Jinyuan Tonghui Refinery Co., Ltd. | CHINA |
Gold | LS-NIKKO Copper Inc.* | KOREA, REPUBLIC OF |
Gold | Luoyang Zijin Yinhui Gold Refinery Co., Ltd. | CHINA |
Gold | Materion* | UNITED STATES |
Gold | Matsuda Sangyo Co., Ltd.* | JAPAN |
Gold | Metalor Technologies (Hong Kong) Ltd.* | CHINA |
Gold | Metalor Technologies (Singapore) Pte., Ltd.* | SINGAPORE |
Gold | Metalor Technologies SA* | SWITZERLAND |
Gold | Metalor USA Refining Corporation* | UNITED STATES |
Gold | Metalúrgica Met-Mex Peñoles S.A. De C.V.* | MEXICO |
Gold | Mitsubishi Materials Corporation* | JAPAN |
Gold | Mitsui Mining and Smelting Co., Ltd.* | JAPAN |
Gold | Moscow Special Alloys Processing Plant* | RUSSIAN FEDERATION |
Gold | Nadir Metal Rafineri San. Ve Tic. A.ª.* | TURKEY |
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Gold | Navoi Mining and Metallurgical Combinat | UZBEKISTAN |
Gold | Nihon Material Co., Ltd.* | UZBEKISTAN |
Gold | Elemetal Refining, LLC* | UNITED STATES |
Gold | Ohura Precious Metal Industry Co., Ltd.* | JAPAN |
Gold | OJSC "The Gulidov Krasnoyarsk Non-Ferrous Metals Plant" (OJSC Krastsvetmet)* | RUSSIAN FEDERATION |
Gold | OJSC Kolyma Refinery | RUSSIAN FEDERATION |
Gold | PAMP SA* | SWITZERLAND |
Gold | Penglai Penggang Gold Industry Co., Ltd. | CHINA |
Gold | Prioksky Plant of Non-Ferrous Metals* | RUSSIAN FEDERATION |
Gold | PT Aneka Tambang (Persero) Tbk* | INDONESIA |
Gold | PX Précinox SA* | SWITZERLAND |
Gold | Rand Refinery (Pty) Ltd.* | SOUTH AFRICA |
Gold | Royal Canadian Mint* | CANADA |
Gold | Sabin Metal Corp. | UNITED STATES |
Gold | Samduck Precious Metals | KOREA, REPUBLIC OF |
Gold | SAMWON Metals Corp. | KOREA, REPUBLIC OF |
Gold | Schone Edelmetaal B.V.* | NETHERLANDS |
Gold | SEMPSA Joyería Platería SA* | SPAIN |
Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd.* | CHINA |
Gold | So Accurate Group, Inc. | UNITED STATES |
Gold | SOE Shyolkovsky Factory of Secondary Precious Metals* | RUSSIAN FEDERATION |
Gold | Solar Applied Materials Technology Corp.* | TAIWAN |
Gold | Sumitomo Metal Mining Co., Ltd.* | JAPAN |
Gold | Tanaka Kikinzoku Kogyo K.K.* | JAPAN |
Gold | Great Wall Precious Metals Co., Ltd. of CBPM | CHINA |
Gold | The Refinery of Shandong Gold Mining Co., Ltd.* | CHINA |
Gold | Tokuriki Honten Co., Ltd.* | JAPAN |
Gold | Tongling Nonferrous Metals Group Co., Ltd. | CHINA |
Gold | Torecom | KOREA, REPUBLIC OF |
Gold | Umicore Brasil Ltda.* | BRAZIL |
Gold | Umicore SA Business Unit Precious Metals Refining* | BELGIUM |
Gold | United Precious Metal Refining, Inc.* | UNITED STATES |
Gold | Valcambi SA* | SWITZERLAND |
Gold | Western Australian Mint trading as The Perth Mint* | AUSTRALIA |
Gold | Yamamoto Precious Metal Co., Ltd.* | JAPAN |
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Gold | Yokohama Metal Co., Ltd.* | JAPAN |
Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation* | CHINA |
Gold | Zijin Mining Group Co., Ltd. Gold Refinery* | CHINA |
Gold | Guangdong Jinding Gold Limited | CHINA |
Gold | Umicore Precious Metals Thailand* | THAILAND |
Tantalum | Duoluoshan* | CHINA |
Tantalum | F&X Electro-Materials Ltd.* | CHINA |
Tantalum | Hi-Temp Specialty Metals, Inc.* | UNITED STATES |
Tantalum | Ningxia Orient Tantalum Industry Co., Ltd.* | CHINA |
Tantalum | Ulba Metallurgical Plant JSC* | KAZAKHSTAN |
Tantalum | Zhuzhou Cemented Carbide* | CHINA |
Tantalum | FIR Metals & Resource Ltd.* | CHINA |
Tantalum | Plansee SE Liezen* | AUSTRIA |
Tantalum | H.C. Starck Co., Ltd.* | THAILAND |
Tantalum | H.C. Starck GmbH Goslar* | GERMANY |
Tantalum | H.C. Starck GmbH Laufenburg* | GERMANY |
Tantalum | H.C. Starck Hermsdorf GmbH* | GERMANY |
Tantalum | H.C. Starck Inc.* | UNITED STATES |
Tantalum | H.C. Starck Ltd.* | JAPAN |
Tantalum | H.C. Starck Smelting GmbH & Co. KG* | GERMANY |
Tantalum | Plansee SE Reutte* | AUSTRIA |
Tantalum | Global Advanced Metals Boyertown* | UNITED STATES |
Tantalum | Global Advanced Metals Aizu* | JAPAN |
Tantalum | KEMET Blue Powder* | UNITED STATES |
Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd.* | CHINA |
Tungsten | Japan New Metals Co., Ltd.* | JAPAN |
Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd.* | CHINA |
Tungsten | Xiamen Tungsten Co., Ltd.* | CHINA |
Tungsten | Xiamen Tungsten (H.C.) Co., Ltd.* | CHINA |
Tin | Jiangxi Ketai Advanced Material Co., Ltd.* | CHINA |
Tin | CNMC (Guangxi) PGMA Co., Ltd. | CHINA |
Tin | Alpha* | UNITED STATES |
Tin | Cooperativa Metalurgica de Rondônia Ltda.* | BRAZIL |
Tin | CV Gita Pesona* | INDONESIA |
Tin | PT Justindo* | INDONESIA |
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Tin | PT Aries Kencana Sejahtera* | INDONESIA |
Tin | CV Serumpun Sebalai* | INDONESIA |
Tin | CV United Smelting* | INDONESIA |
Tin | Dowa* | JAPAN |
Tin | EM Vinto* | BOLIVIA |
Tin | Estanho de Rondônia S.A. | BRAZIL |
Tin | Fenix Metals* | POLAND |
Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd.* | CHINA |
Tin | Gejiu Zili Mining And Metallurgy Co., Ltd. | CHINA |
Tin | Huichang Jinshunda Tin Co., Ltd. | CHINA |
Tin | Gejiu Kai Meng Industry and Trade LLC | CHINA |
Tin | Linwu Xianggui Ore Smelting Co., Ltd. | CHINA |
Tin | China Tin Group Co., Ltd.* | CHINA |
Tin | Malaysia Smelting Corporation (MSC)* | MALAYSIA |
Tin | Metallic Resources, Inc.* | UNITED STATES |
Tin | Metallum Group Holding NV | BELGIUM |
Tin | Mineração Taboca S.A.* | BRAZIL |
Tin | Minsur* | PERU |
Tin | Mitsubishi Materials Corporation* | JAPAN |
Tin | Nankang Nanshan Tin Manufactory Co., Ltd. | CHINA |
Tin | Novosibirsk Processing Plant Ltd. | RUSSIAN FEDERATION |
Tin | O.M. Manufacturing (Thailand) Co., Ltd.* | THAILAND |
Tin | Operaciones Metalurgical S.A.* | BOLIVIA |
Tin | PT Artha Cipta Langgeng* | INDONESIA |
Tin | PT Babel Inti Perkasa* | INDONESIA |
Tin | PT Bangka Kudai Tin | INDONESIA |
Tin | PT Bangka Putra Karya | INDONESIA |
Tin | PT Bangka Timah Utama Sejahtera | INDONESIA |
Tin | PT Bangka Tin Industry* | INDONESIA |
Tin | PT Belitung Industri Sejahtera* | INDONESIA |
Tin | PT BilliTin Makmur Lestari* | INDONESIA |
Tin | PT Bukit Timah* | INDONESIA |
Tin | PT DS Jaya Abadi* | INDONESIA |
Tin | PT Eunindo Usaha Mandiri* | INDONESIA |
Tin | PT Fang Di MulTindo | INDONESIA |
Tin | PT Karimun Mining | INDONESIA |
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Tin | PT Mitra Stania Prima* | INDONESIA |
Tin | PT Panca Mega Persada* | INDONESIA |
Tin | PT Prima Timah Utama* | INDONESIA |
Tin | PT Refined Bangka Tin* | INDONESIA |
Tin | PT Sariwiguna Binasentosa* | INDONESIA |
Tin | PT Seirama Tin Investment | INDONESIA |
Tin | PT Stanindo Inti Perkasa* | INDONESIA |
Tin | PT Supra Sukses Trinusa | INDONESIA |
Tin | PT Timah (Persero) Tbk Kundur* | INDONESIA |
Tin | PT Timah (Persero) Tbk Mentok* | INDONESIA |
Tin | PT Pelat Timah Nusantara Tbk | INDONESIA |
Tin | PT Tinindo Inter Nusa* | INDONESIA |
Tin | Rui Da Hung* | TAIWAN |
Tin | Soft Metais Ltda.* | BRAZIL |
Tin | Thaisarco* | THAILAND |
Tin | VQB Mineral and Trading Group JSC* | VIET NAM |
Tin | White Solder Metalurgia e Mineração Ltda.* | BRAZIL |
Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | CHINA |
Tin | Yunnan Tin Company Limited* | CHINA |
Tin | CV Venus Inti Perkasa* | INDONESIA |
Tin | Magnu's Minerais Metais e Ligas Ltda.* | BRAZIL |
Tin | PT Wahana Perkit Jaya* | INDONESIA |
Tin | Melt Metais e Ligas S.A.* | BRAZIL |
Tin | PT ATD Makmur Mandiri Jaya* | INDONESIA |
Tin | Phoenix Metal Ltd. | RWANDA |
Tin | O.M. Manufacturing Philippines, Inc.* | PHILIPPINES |
Tin | PT Inti Stania Prima* | INDONESIA |
Tin | CV Ayi Jaya* | INDONESIA |
Tin | Electro-Mechanical Facility of the Cao Bang Minerals & Metallurgy Joint Stock Company | VIET NAM |
Tin | Nghe Tinh Non-Ferrous Metals Joint Stock Company | VIET NAM |
Tin | Tuyen Quang Non-Ferrous Metals Joint Stock Company | VIET NAM |
Tin | PT Cipta Persada Mulia* | INDONESIA |
Tin | An Vinh Joint Stock Mineral Processing Company | VIET NAM |
Tin | Resind Indústria e Comércio Ltda.* | BRAZIL |
Tin | Metallo-Chimique N.V.* | BELGIUM |
9
Tin | Elmet S.L.U.* | SPAIN |
Tin | PT Bangka Prima Tin* | INDONESIA |
Country of Origin May Include | Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Cambodia, Canada, Chile, China, Colombia, Côte D'Ivoire, Czech Republic, Djibouti, Ecuador, Egypt, Estonia, Ethiopia, France, Germany, Guyana, Hungary, India, Indonesia, Ireland, Israel, Japan, Kazakhstan, Laos, Luxembourg, Madagascar, Malaysia, Mongolia, Myanmar, Namibia, Netherlands, Nigeria, Peru, Portugal, Russia, Sierra Leone, Singapore, Slovakia, South Korea, Spain, Suriname, Switzerland, Taiwan, Thailand, United Kingdom, United States of America, Vietnam, Zimbabwe, Kenya, Mozambique, South Africa, Angola, Burundi, Central African Republic, Republic of Congo, Rwanda, South Sudan, Tanzania, Uganda, Zambia, The Democratic Republic of Congo (DRC) |
*Smelters/refiners which have been found CFSP-compliant as of March 31, 2016.
†Smelter/refiner facility names/locations as reported by EICC CFSI as of March 31, 2016.
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Future Steps to Mitigate Risks
The due diligence steps previously described for both an upstream and downstream company will be used for future reporting periods to mitigate risk and improve our due diligence. KEMET will continue:
• | Engaging suppliers of 3TG to improve the content of their responses. This includes a conflict-minerals flow down clause as well as new supplier or new material conflict minerals provisions as part of our “on boarding process.” |
• | Working through the EICC CFSI to expand the smelters and refiners participating in the EICC Conflict Free Smelter Program. |
• | Working with the OECD and relevant trade associations to define and improve best practices. |
• | Sourcing our upstream materials from conflict free validated mines which utilize traceability schemes to ensure complete chain of custody and maintain our EICC CFSP. |
KEMET believes these supply chain exercises in concert with synergy and momentum created during the Reporting Period, as well as the Conflict Minerals Policy, will mitigate the risk that the necessary conflict minerals benefit armed groups and will improve our due diligence.
INDEPENDENT PRIVATE SECTOR AUDIT
Our due diligence processes and certain descriptions in this Conflict Minerals Report were audited by Douglas Hileman Consulting LLC, as our independent private sector auditor. The auditor’s report can be found as Appendix A to this Conflict Minerals Report.
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Appendix A to Conflict Minerals Report of KEMET Corporation
REPORT OF INDEPENDENT PRIVATE SECTOR AUDITOR
[Letterhead of Douglas Hileman Consulting LLC]
INDEPENDENT AUDITOR’S REPORT
To: Senior Vice President, Chief of Staff, Quality & Chief Compliance Officer
Douglas Hileman Consulting LLC (“DHC”) understands that KEMET Corporation (“the Company”) is subject to reporting under Section 13(p) of the Securities Exchange Act (17 CFR 240.13p-1), which pertains to conflict minerals. The Securities and Exchange Commission (SEC) Release No. 34-67716 (final rule on Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to the use of conflict minerals), or “the Rule”, released August 22, 2012, includes a provision for an Independent Private Sector Audit (“IPSA”). DHC conducted an IPSA of the Company’s Conflict Minerals Report for the reporting period from January 1 to December 31, 2015 (“KEMET 2015 Conflict Minerals Report”).
We have examined:
• | whether the design of the Company’s due diligence framework as set forth in the Conflict Minerals Report for the reporting period from January 1 to December 31, 2015, is in conformity with, in all material respects, the criteria set forth in the Organisation of Economic Co-Operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition 2013 (“OECD Due Diligence Guidance”) (“Objective #1”), and |
• | whether the Company’s description of the due diligence measures it performed, as set forth in the “Due Diligence Measures” section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2015, is consistent with the due diligence process that the Company undertook (“Objective #2”). |
Management is responsible for the design of the Company’s due diligence framework and the description of the Company’s due diligence measures set forth in the Conflict Minerals Report, and performance of the due diligence measures. Our responsibility is to express an opinion on the design of the Company’s due diligence framework and on the description of the due diligence measures the Company performed, based on our examination.
We conducted this audit in accordance with performance standards of Government Auditing Standards (2011 Revision), published by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Our examination was not conducted for the purpose of evaluating:
• | the completeness, accuracy, or support of the process the Company uses to determine the scope of what products they manufacture or contract to manufacture are subject to the SEC Rule, or to due diligence; |
• | the consistency of the due diligence measures that the Company performed with either the design of the Company’s due diligence framework or the OECD Due Diligence Guidance, other than as required to fulfill a stated audit objective; |
• | the completeness of the Company’s description of the due diligence measures performed; |
• | the suitability of the design or operating effectiveness of the Company’s due diligence process, |
• | whether a third party can determine from the Conflict Minerals Report if the due diligence measures the Company performed are consistent with the OECD Due Diligence Guidance; |
• | the Company’s reasonable country of origin inquiry (“RCOI”), including the suitability of the design of the RCOI, its operating effectiveness, or the results thereof; or |
• | the Company’s conclusions about the source or chain of custody of its conflict minerals, those products subject to due diligence, or the DRC Conflict Free status of its products. |
Our IPSA would not necessarily disclose all weaknesses in the design of due diligence or all instances of steps taken to implement the due diligence because we based our review on selective tests. Accordingly, we do not express an opinion or any other form of assurance on the aforementioned matters or any other matters included in any section of the Conflict Minerals Report other than section(s) within the scope of this audit.
SCOPE AND METHODOLOGY
Scope
We performed this audit from February 4, 2016 to May 20, 2016 using standards and guidelines established by the Government Accountability Office for Government Auditing Standards (2011 Revision) (commonly referred to Generally Accepted Government Auditing Standards (GAGAS)) for Performance Audits.
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The IPSA reviewed contents of the “Conflict Minerals Report for the Reporting Period from January 1 to December 31, 2015” (“Conflict Minerals Report”). The Company provided a draft report at project initiation, enabling us to begin our procedures. The Company provided a final report on May 26, 2016 included as Exhibit 1.01 in the Company’s Form SD, Specialized Disclosure Report.
The Rule specifies the two IPSA objectives, as noted above.
Methodology
For Objective #1, we confirmed that the Issuer used the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition (“OECD DD Guidance”) as the basis for the design of their 3TG due diligence. We used the OECD DD Guidance as the criteria for evaluating the Company’s design of its due diligence framework. We gathered evidence in the form of documents, records, and interviews with individuals with roles and responsibilities for applicable elements of the due diligence. We compared the evidence with the criteria as stated in OECD DD Guidance steps and sub-steps. If we identified gaps, we considered if the gap would be “material.”
For Objective #2, we used the “Description of Due Diligence Performed as a Downstream Company” section of Conflict Minerals Report as the criteria for Objective #2. We determined applicable sections to be those that described due diligence steps the Company took during the reporting period. We did not include conclusions, claims, or forward-looking statements.
We included steps that were described and occurred before the reporting period, if we felt it was reasonable that these steps formed the basis for steps described during the reporting period, or if was implied that those steps continued during the reporting period.
We assessed risks on the Company’s description of due diligence steps taken. Based on our risk assessment, we selected statements and:
• | reviewed documents and records provided by the Company in response to our requests; |
• | interviewed individuals involved in the due diligence steps described in the Conflict Minerals Report; and |
• | tested selected steps. |
CONCLUSIONS AND RECOMMENDATIONS
In our opinion,
• | the design of the Company’s due diligence framework for the reporting period from January 1 to December 31, 2015, as set forth in the Due Diligence Measures section of the Conflict Minerals Report is in conformity, in all material respects, with the OECD Due Diligence Guidance, and |
• | the Company’s description of the due diligence measures it performed as set forth in the “Due Diligence Measures” section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2015, is consistent with the due diligence process that the Company undertook. |
We make no recommendations.
Douglas Hileman, CRMA, CPEA
Van Nuys, California
May 26, 2016
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