Jiangxi Copper Co. LTD

Responsible Gold and Silver Supply Chain Due Diligence Management Policy

Chapter I General Provisions

Article 1 Purpose

Establish and improve the gold and silver supply chain management system to ensure that the gold and silver supply chain of Jiangxi Copper Co., LTD. (hereinafter referred to as the Company) meets the requirements of "LBMA Responsible Gold Guide" and "LBMA Responsible Silver Guide".

Article 2 Scope

1) The Policy is Applicable to the company's gold and silver supply chain due diligence management departments.

2) The Policy is applicable to the due diligence investigation of mined gold, recycled gold and other gold-containing materials purchased by the company except for mining by-products .

3) The Policy applies to due diligence of mined silver, recycled silver and other silver containing materials purchased.

Article 3 Basis for establishment

1) <London Bullion Market Association Responsible Gold Guide> (LBMA RGG)

2) <London Bullion Market Association Responsible Silver Guide> (LBMA RSG)

3) <OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas> (OECD Due Diligence Guidelines)

4) <Jiangxi Copper Co. LTD Responsible Gold and Silver Supply Chain Due Diligence Management Policy>

Article 4 Definition and interpretation of name

1) Conflict-Affected and High-Risk Areas (CAHRA): These areas are identified by the presence of armed conflict, widespread violence or other risks of harm to people.

2) Terrorist financing: Includes the financing of terrorist acts, of terrorists and of terrorist organizations.

3) Child Labor: The employment of children in a business or industry, especially in violation of regulations prohibiting the employment of children under a specified age.

4) Bribery: Refers to the behavior of individuals who take advantage of their position to extort property or illegally accept property from others, and return benefits that cannot be obtained from normal or legal means.

5) Politically Exposed Persons (PEPs): Individuals and their family members and close associates (either foreign or domestically based) who are or have been entrusted with prominent public functions by a particular country. These individuals can include heads of state or government, senior politicians and government officials, senior executives of state-owned corporations and important political party officials. The definition of PEPs is not intended to cover middle-ranking or more junior individuals in the foregoing categories.

6) Mining By-product: Gold (Silver) obtained from the mining of base metals, for example, from lead, zinc or copper ore, in which gold (silver) may be a trace constituent.

7) Mined Gold (Silver): This term means any gold(silver) or gold(silver)-bearing material produced by or at a mine, mainly in the form of placer gold (silver), gold (silver) ore and gold (silver) concentrate, etc.

8) Recycled Gold (Silver): This term traditionally encompasses anything that is gold (silver)-bearing and has not come directly from a mine in its first gold (silver) life cycle, mainly in the form of gold (silver), recovered gold (silver) jewelry, industrial by-products and mixed materials, etc.

9) Owned mine: A group of mines owned and operated by the same corporate group.

10) Money laundering: Money laundering is the practice of disguising the origins of illegally obtained money. The money involved can be generated by any number of criminal acts, including drug dealing, corruption and other types of fraud.

11) Organization for Economic Co-operation and Development (OECD): An intergovernmental international Economic Organization composed of 34 market economy countries.

12) Environmental, Social and Governance (ESG) : refers to the proactive management of environmental, social, and governance, which compliance with local environmental, health, safety and labour regulation, and implement ESG management into ethical business conducts.

13) The International Cyanide Management Code: A voluntary initiative for the gold and silver mining industries, and the producers and transporters of the cyanide used in gold and silver mining. It is intended to complement an operation’s existing regulatory requirements.

14) Minamata Convention on Mercury: A global treaty to protect human health and the environment from the adverse effects of mercury. The convention entered into force on 16 August 2017 and includes a ban on the use of mercury in new mines, the phasing-out of mercury use in existing ones, the phasing-out and phasing down of mercury use in a number of products and processes, control measures on mercury emissions to air and on releases to land and water, and the regulation of the informal sector of Artisanal and Small-Scale Mining of gold.

15) World Heritage Site: A landmark or area which is selected by the United Nations Educational, Scientific and Cultural Organization (UNESCO) as having a cultural, historical, scientific or other form of significance, and is legally protected by international treaties. The sites are judged important to the collective interests of humanity.

16) Human rights: means human rights as defined in the International Bill of Human Rights.

17) Protected areas: A Protected Area is a clearly defined geographical space, recognised, dedicated and managed, through legal or other effective means, to achieve the long-term conservation of nature with associated ecosystem services and cultural values. Protected Areas include national parks, wilderness areas, community conserved areas, nature reserves, etc.

18) Ultimate beneficiary: Refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement (defined as 10% or more ownership).

19) Chain of Custody: A record of the sequence of entities which have custody of minerals as they move through a supply chain from the mines to end consumer.

Chapter II Organization and Responsibilities

Article 5 LBMA Gold/Silver Supply Chain Compliance Team

In order to meet the requirements of LBMA RGG and LBMA RSG, the company has set up the LBMA Responsible Gold and Silver Supply Chain Compliance Team. The Manager of Planning and Production Management Department serves as the Compliance Officer to handle with daily affairs. 

Members of the compliance team:

Compliance Team leader: Deputy General Manager

Compliance Officer: Manager of Planning and Production Management Department

Team members: Related staffs coming from Planning and Production Management Department, Trade Division, Legal Affairs & Risk Control Department, and the Secretary Office of the Board

Article 6 Responsibilities of the compliance team

1) Establish and improve the company's gold and silver supply chain management according to the requirements of LBMA RGG and LBMA RSG;

2) Identify and assess risks in the gold and silver supply chain and develop appropriate control measures;

3) Establish internal and external communication mechanism;

4) To be audited by LBMA accredited external audit institutions;

5) Implement suggested improvement;

6) Complete and issue gold and silver supply chain due diligence report and other matters.

Article 7 Duties and responsibilities of compliance officer

1) Review the due diligence and risk rating results of gold and silver supply chain conducted by the Trade Division;

2) Check the risk control measures of gold and silver raw material procurement of the Trade Division;

3) Ensure the implementation of gold and silver supply chain policy;

4) Report to senior management of the company about major issues of gold and silver supply chain management;

5) Review the annual Compliance Report;

Article 8 Department responsibilities

(I) Responsibilities of the Trade Division

Be responsible for the specific implementation of due diligence of gold/silver suppliers.

1) Be responsible for the background investigation in the process of supplier selection and evaluation. The background investigation includes the evaluation of existing production and operation, and ensure the compliance of LBMA RGG and LBMA RSG;

2) According to the information and evidence obtained in the background investigation, conduct risk assessment of the counterparty according to the risk evaluation standard;

3) Further investigate the identified suppliers with potential risks, report relevant information to the compliance team and coordinate related work;

4) According to the risk assessment and the policy of gold and silver supply chain, take corresponding mitigation strategies;

5) Be responsible for organizing and coordinating supplier re-evaluation, and put forward corresponding mitigation according to the evaluation results;

6) Be responsible for communicating with gold and silver supply partners to meet the requirements of due diligence in supply chain;

7) Obtain the supplier's "Conflict-free Mineral" related Policies (if applicable), and review whether their policies conflict with the company's related policies;

8) Keep materials related to due diligence. According to LBMA requirements, the retention period of corresponding materials shall not be less than 5 years;

9) Be responsible for providing opinions on financial clauses in the contract;

10) Be responsible for supervising the transaction payment. Gold (silver) transactions must be received and paid through banking channels, and no cash transactions are allowed. The original documents of the corresponding transactions should be properly kept for not less than five years.

(II) Responsibilities of Planning and Production Management Department

1) Be responsible for formulating and updating the Policy of the company's gold and silver supply chain;

2) Be responsible for communication with LBMA, and convey LBMA's latest requirements for gold and silver supply chain to relevant parties of gold and silver supply chain;

3) Be responsible for organizing necessary training for personnel (including personnel related to procurement, production and operation, finance, etc.) who participate in due diligence and supply chain of gold and silver. The training content includes management methods, policies, processes, documentation and storage of the company's gold and silver supply chain.

(III) Responsibilities of Legal Affairs & Risk Control Department 

1) Be responsible for providing advice on relevant legal issues in the process of gold and silver supply chain management.

2) Review the "no conflict" clause and "compliance with laws and regulations" clause in the procurement contract.

3) Assist the Trade Division to review the "Conflict-free Mineral" related Policies of gold and silver suppliers, and give opinions on its legality, authenticity, fairness and thoroughness.

4) Incorporate the gold and silver supply chain management into internal control management according to the company's internal audit management regulations.

(IV) Responsibilities of the Secretary Office of the Board

1) Be responsible for reviewing whether the company's gold and silver supply chain meets the company's ESG requirements.

2）Report the issues of supply chain management to the board of directors when necessary.

Chapter III Work Contents

Section 1 Data Collection

Article 9 Before cooperating with suppliers, the Trade Division shall collect due diligence information. According to the types of gold-containing and silver-containing materials (mined gold, mined silver, recycled gold or recycled silver), the corresponding questionnaires and commitment letters are issued to suppliers. While collecting documents, if applicable, actively collect the following supplier information:

Article 10 The Trade Division shall check the collected information with LBMA checklist, and try to obtain the materials required in the list as much as possible.

Section 2 Risk Identification

Article 11 Trade Division shall carry out risk identification of gold and silver supply chain according to the collected supplier information. Risk identification should be considered from three aspects: country, company and commodity:

(1) Country risk

1) Whether the materials containing gold and silver come from conflict areas or high-risk areas of human rights violations or sanctions areas.

2) Whether the materials containing gold and silver come from countries with limited gold (silver) reserves, including limited gold and silver resources or limited expected production level of gold and silver; Or countries where proven reserves do not match production.

3) Whether the gold and silver-containing materials come from the world heritage area.

(2) Company risks

1) Whether the supplier or its known upstream company is located in a high-risk country related to money laundering, crime and corruption, or the supplier is mining or purchasing gold and silver in conflict areas or high-risk areas (areas with known potential or high risks);

2) Whether the supplier keeps any of the above-mentioned high-risk mined gold (silver) or recycled gold (silver) within 12 months; Or other abnormal situations are found from the collected information to prove that there may be mined gold (silver) or recycled gold (silver) supporting conflicts areas;

3) Whether the supplier, its known upstream company owners and its actual controller/shareholders operate other higher risks businesses, such as weapons, casinos, antiques, artworks and diamonds (there is money laundering risk);

4) Whether the supplier, its known upstream company owners and its actual controller/shareholders are public politicians or religious faction leaders;

5) Whether the supplier and its senior management is accused of participating in money laundering or other illegal and criminal acts (obtain information from the list of domestic and foreign official institutions and identify related allegations);

6) Whether the supplier tries to cover up the actual source of gold and silver (there is a risk of corruption);

7) Whether the supplier failed to disclose the details of relevant taxes and fees paid to the government, or whether there is an unknown amount of payment made to the government (there is a risk of corruption);

8) Whether the supplier, its known upstream company owners and its actual controller/shareholders are engaged in mining that damages the environment, such as using cyanide and mercury.

(3) Commodity risk

1) Whether the exportation, transportation or trading transit routes of gold and silver involved global conflict areas or areas with high risk of human rights violations. Whether the security logistics company directly or indirectly subsidizes non-governmental armed groups and security forces, or is illegally extorted or taxed during transportation and trading;

2) Whether the security and logistics process of gold (silver)-containing materials involved serious abuse of human rights;

3) Whether the supplier of mined and recycled gold (silver) has a third-party inventory management site, which is located in a global conflict area or a high-risk area for human rights violations. Whether there is possibility that the inventory directly or indirectly subsidizes non-governmental armed groups or security forces;

4) Whether the suppliers’ inventory management process involves serious abuse of human rights;

5) Whether the supplier is involved in environmental damage during mining, transportation and trading.

Section 3 Risk Assessment

Article 12 The Trade Division makes preliminary risk assessment based on the collected information from the national, company and commodity aspects.

Article 13 According to the results of information collection, for example, gold and silver purchased from national gold exchanges, banks or recognized and credible trading markets (institutions), can be directly identified as low-risk suppliers, since the gold and silver have been strictly identified and screened, with high traceability. There is no need to sign a letter of commitment or fill out a due diligence questionnaire. However, once the company find that the gold and silver producers are at risk, it is necessary to conduct risk assessment on their producers.

Article 14 Evaluation of self-produced materials containing gold and silver.

If the materials containing gold and silver come from the mines or refineries owned by the suppliers themselves, the Trade Division needs to identify all the sources of gold and silver from the suppliers according to the collected information. the Trade Division should identify whether there are medium or high risks at the national, company and commodity levels. If the supplier's self-produced gold and silver have no medium or high risks, and there is no outsourcing of gold and silver, it can be directly assessed as low risk.

Article 15 Compliance assessment of purchased gold (silver)

According to the information collected, if the gold-containing and silver-containing materials do not come from the mine (refinery) owned by the supplier, it is necessary to conduct extra due diligence on about the sources of its gold-containing and silver-containing materials. The company should request the supplier to provide certifiable materials to identify whether the sources of its gold-containing and silver-containing materials are in compliance. At the same time, the supplier should provide letter of commitment, and no further review need to be conducted at the point.

Article 16 If the supplier's self-produced and purchased gold do not involved the risks listed above, it can be assessed as low risk.

Section 4 Risk Rating

Article 17 The Trade Division shall assess the risk of suppliers according to the steps listed above, and classify suppliers into four different risk levels: low, medium, high and zero tolerance according to the following definitions:

1) Low risk suppliers: If no high-risk or no potentially high-risk matters are found, no additional due diligence is required and the risk rating of the supplier is low risk.

2) Medium risk suppliers: If the company found that the supplier may have potential non-compliance in some matters based on the due diligence, but the possibility of non-compliance is low, then the risk rating of the supplier is medium risk.

3) High-risk suppliers: If the non-compliance is found to be true after due diligence, the risk rating of the supplier is high risk.

4) Zero-tolerance suppliers: If the situation specified in Article 13 is found, the risk rating of the supplier is identified as zero tolerance.

Article 18 Enhanced due diligence

For the supply chain identified as high risk, the company shall conduct enhanced due diligence according to the sources and types of gold (silver). In case of triggering Enhanced Due Diligence (EDD), refineries must conduct on-site investigation in the gold (silver) producing areas (i.e. mining areas where gold (silver) is mined and offices of gold (silver) suppliers who recycle gold).On-site visit should take place before the transaction with suppliers or at least within six months after the transaction. On-site investigation includes but not limited to：

· On-site visits and investigations intended to further verify the due diligence information of the gold and silver supply chain. The actions mainly include verify identity and information with reliable and independent sources of documents or information, identify the actual owner, check the government watch list, etc.

· For mined gold (silver), information verification should be carried out for supply chain enterprises (including producers, middlemen, dealers, exporters and transporters) from mines to companies; For recycled gold (silver), information verification should be carried out for suppliers of recycled gold (silver) to the company's supply chain related enterprises (including transporters).

· When conducting additional investigations, the company should check whether there is any possibility the supplier is supporting conflicts and abusing human. The company should conduct such research with materials from the government, international organizations, non-governmental organizations, media, maps, United Nations reports, United Nations Security Council, gold (silver) mining industry reports, etc.

· The company should consult the local government, domestic security organizations, social networks and other suppliers about the relevant information. In additional, the company should ask the supplier to provide relevant certificates, and have third party organization to review.

· Determine whether the supplier has a compliance plan and management system consistent with LBMA requirements, and the system is effectively implemented. The methods include information research, on-site visit, sampling inspection of sales records, etc.

· If the above investigation could not eliminate the risks, we can consider setting up or hiring an on-site investigation team to conduct the investigation (if hiring out, the employee should have appropriate qualifications and maintain independence), and the investigation team is responsible for on-site investigation and interviews.

· Follow up according to the number and severity of problems identified and recorded in the improvement plan. When performing enhanced due diligence on gold (silver) indirectly from intermediate refiners (such as purchasing through trading companies), the company shall strive to identify intermediate refiners and perform corresponding due diligence to assess whether there may be a danger signal in the supply chain of the intermediate refiner.

Article 19 The Trade Division shall fill in the supplier evaluation form, sign and confirm it, and then submit it to the compliance officer for review. Relevant information of due diligence shall be kept by the Trade Division for more than 5 years.

Article 20 The Trade Division shall reassess the suppliers at least once every three years. During the period, the suppliers’ company nature, material source, transportation and related information should be evaluated once a year with annual supplementary evaluation form. If the information of suppliers changes greatly, due diligence should be completed within three months after being informed.

Section 5 Risk Management

Article 21 The Trade Division must evaluate the compliance of suppliers before the payment. If the supplier is identified as high-risk and the company cannot determine if the supplier has purchased conflict minerals, the transaction will continue only if the supplier actively supports and cooperates with due diligence. Relevant due diligence must be completed within half a year.

Article 22 the following controls shall be applied to the suppliers with determined the risk level based on the due diligence result:

Article 23 Before signing the contract, the Legal Affairs & Risk Control Department shall provide opinions on relevant legal issues in the management of gold and silver supply chain; Audit the "no conflict" clause and "compliance with laws and regulations" clause in the procurement contract. Legal Affairs & Risk Control Department shall assist the Trade Division to review the "Conflict-free Mineral Related Policies" of gold and silver suppliers, Put forward legal opinions on its legality, authenticity, fairness and thoroughness.

Article 24 Take different risk management measures according to different suppliers.

1) For the terminated suppliers, it should be stated in the supply chain compliance report, and appropriately inform LBMA

2) For the suspended suppliers, the cooperation can resume after obtaining necessary and effective additional information, data or responses from the suppliers. The restarted cooperation should be approved by the Compliance Officer.

3) For the continued suppliers under the improvement plan, the improvement plan shall meet the following requirements:

· The improvement plan along with the actual production situation and business needs of the company.

· The improvement plan should be complete and verifiable, including but not limited to improvement goals, quantitative and qualitative performance indicators, etc.

· Approved by the compliance officer.

4) For all high-risk and zero-tolerance suppliers, report to the board of directors on their risks, risk mitigation strategies and subsequent improvements. At the same time, information such as the identity of the supplier, risk mitigation strategy and progresses should be disclosed in the compliance report.

Section 6 Transaction Risk Monitoring

As a part of continuous due diligence, the Trade Division needs to pay attention to the transaction risks after signing the contract, including transportation, acceptance and payment.

Article 25 Information collection during the transaction process

When trading with suppliers, the Trade Division conducts continuous due diligence on the gold and silver supply chain, and establishes a risk-oriented information collection mechanism according to the nature and region of the transaction:

1) The smelter shall accept and verify the goods provided by gold and silver suppliers. The verification contents include but are not limited to the following contents: supplier name, weight, volume, type, grade and quality information, etc. and report the data to the Trade Division.

2) In addition to collecting the material data, the Trade Division should try its best to obtain the weight and grade records provided by suppliers for mined gold, mined silver, recycled silver and recycled gold; in additional with the Transport documents (if applicable); Documents for import and export in high-risk areas (if applicable); Transportation routes (if applicable), etc.

Article 26 Transaction risk assessment

The Trade Division is responsible for conducting transaction risk assessment, the following situations should be considered as a high-risk:

1) Mined gold (silver) or recycled gold (silver) has transported in conflict areas or areas with high risk of human rights violations;

2) The supplier has mining that damages the environment or world heritage;

3) The transaction information provided by suppliers is seriously inconsistent with the supply chain management.

Article 27 Transaction risk control

1) If the Trade Division learns that the existing low-risk suppliers that are existing suppliers have or may have behaviors such as money laundering, terrorist financing, instigating conflicts, violating human rights and damaging the environment, the company should immediately suspend the cooperation, report to the compliance officer and carry out relevant investigations. If there is conclusive evidence to prove that the supplier has risky behavior listed above, the company will immediately stop purchasing, and pause the partnership.

2) For suppliers who have completed risk rating and formulated risk controls in the due diligence stage, the Trade Division is responsible for supervising suppliers’ implementation of risk control. The compliance officer should regularly check the implementation of risk controls.

Article 28 The Trade Division shall provide opinions on the relevant financial clauses in the contract, supervise the transaction payment, and properly keep the original vouchers of the related transaction documents for at least 5 years.

Section 7 information and communication

Article 29 Communication with external information

The Trade Division is responsible for communicating with the external parties of the gold and silver supply chain (such as producers, middlemen, dealers, exporters and transporters, etc.) about adopting the policies of LBMA, associated additional requirements, and the gold and silver supply chain management systems and procedures formulated by the company. The Trade Division should try to keep external parties abreast of the latest policies and procedures of London Gold and Silver Market Association on responsible gold and silver, and encourage external parties to follow relevant policies and procedures.

Article 30 Communication with internal information

Establish internal staff communication channels for gold and silver supply chain management, including:

1) The Planning and Production Management Department should acquainted with updated information and requirements of LBMA RGG and LBMA RSG, revise and publish the gold and silver supply chain Policy in time, so that managers and employees at all levels of gold and silver supply chain management can understand the relevant management methods of the company.

2) If employees have any questions or doubts about the company's implementation of Responsible Gold and Silver Chain Due Diligence Management Policy, they can contact the Planning and Production Management Department through the company's Office Automation system (OA system), published e-mail, and office number dedicated to the communication of gold and silver supply chain management.

3) The compliance officer is responsible for handling the reported misconduct and proposed suggestions, and reporting the resolving results to the compliance team leader.

4) The compliance team shall hold regular meetings at least once a year and keep the relevant meeting records.

Article 31 Disclosure and Anonymous Reporting

1）According to LBMA requirements, the company should regularly disclose the compliance condition of gold and silver supply chain in official website.

2）We encourage anonymous reporting of policy concerns and misconduct observations. Individuals may contact our Compliance Officer Mr.Zhang Bo through confidential channels:

Phone: 0791-82710610

Email: zhbo@jxcc.com

All submissions will be handled with strict confidentiality and addressed promptly. 

Section 8 Training

Article 32 The Planning and Production Management Department shall conduct internal training for relevant personnel involved in the management of gold and silver supply chain at least once a year:

1) The form can be centralized training, internal newspaper publication, OA publicity, exhibition board publicity, etc., so that relevant personnel can fully understand LBMA RGG, LBMA RSG and the company's due diligence policy on gold and silver, etc.

2) The Planning and Production Management Department keeps training records, including training materials and the sign-in form of trainers, etc.

Section 9 Other matters

Article 33 The compliance team shall review the compliance and risk assessment of suppliers, formulate the annual compliance report and improvement plan, and report to the company leaders for approval.

Article 34 In order to ensure the effective and continuous improvement of gold and silver supply chain management. Relevant contents can be included in the internal audit and second-party audit of the integrated management system according to the situation.

Article 35 The Legal Affairs & Risk Control Department shall incorporate the due diligence process of the gold and silver supply chain into the internal control management, and conduct internal audit on the management process.

Article 36 In order to ensure that the company can continuously meet the requirements of LBMA RGG and LBMA RSG, the compliance team shall have a qualified third-party independent audit institution conduct independent audit about the compliance of the company's gold and silver supply chain, and the third-party audit institution shall follow the standard of reasonable assurance.

Chapter IV Supplementary Provisions

Article 37 The Planning and Production Management Department shall be responsible for the interpretation of the Policy.

Article 38 The Policy shall come into force as of the date of promulgation, and the original Jiangxi Copper Responsible Gold and Silver Supply Chain Due Diligence Management Policy (Sisheng [2020] No.414) shall be abolished.

Article 39 Appendix

1) Flow chart of due diligence in gold and silver supply chain

2)LBMA Questionnaire-Mined Materials

3)LBMA Questionnaire-Recycled Materials

4)LBMA Investigation Checklist-Mined Materials

5)LBMA investigation Checklist-Recycled Materials

6)LBMA Field Questionnaire-Mined Materials

7) LBMA Field Questionnaire-recycled materials

8) LBMA Supplier Assessment Form

9) Annual Supplementary Evaluation Form of Suppliers

10) Letter of Commitment for Supplier Responsible Gold/Silver