Responsible Minerals Supply Chain Due Diligence Report

1. Company introduction

Hengyang King Xing Lifeng New Materials Co. Ltd is a high-tech private enterprise specializing in tantalum and niobium production, with 33 years of experience in the tantalum and niobium industry. As a vice-chair member of the China Nonferrous Metals Industry Association, the company possesses multiple core technologies in the production of tantalum oxide, niobium oxide, and potassium fluotantalate. Our business scope includes the production and operation of high-grade tantalum-niobium concentrates, high-purity tantalum-niobium compounds, and new chemical materials for acoustic, electromagnetic, and optical applications.

Since its establishment in December 1993, the company has accumulated extensive experience in the production of tantalum and niobium compounds and fluorides, and has introduced high-tech professionals and advanced production and testing equipment. In 2016, the company invested in the construction of the “Annual Production Project of 400 Tons of Potassium Tantalate, 200 Tons of Tantalum Oxide, and 200 Tons of Niobium Oxide” in the Hengyang Songmu Economic Development Zone. The project covers approximately 38,700 square meter, with a total investment exceeding RMB 100 million. The construction period was 18 months, and the project was completed and put into operation in December 2017.

2. Company Management System

The company implements strict management over the supply chain of tantalum and niobium raw materials and has established a comprehensive supply chain due diligence system. Through a series of measures and procedures, the company ensures that no materials from conflict-affected regions are procured or used, preventing any conflict minerals or materials of unknown origin from entering the production line and avoiding mining and trade becoming sources of conflict, human rights violations, or unsafe conditions.

2.1 The General Manager of the company is responsible for supervising the design and implementation of the due diligence system.

2.2 The company has appointed a Due Diligence Manager to coordinate the work of relevant departments, including the Operations Department, Quality and Technology Department, Safety and Environmental Protection Department, and production workshops. This ensures that each department fulfills its responsibilities, executes the due diligence plan, and reports any red flags and potential risks.

2.3 In accordance with the due diligence system, the company conducts annual training for key personnel in all relevant departments and incorporates due diligence management system reviews into routine audits to update and re-examine the due diligence management system.

Management system review meetings are held once a year, with an interval of no more than 12 months, and in principle, once per audit cycle. The specific timing is determined based on the execution of due diligence work or significant changes in the internal or external environment, but no later than 30 days prior to the implementation of the new cycle RMAP on-site audit.

During the current audit cycle, the company held the due diligence management system review meeting on March 15, 2026.

2.4 According to the company’s Supply Chain Document Management Procedure, documents related to supply chain due diligence reports must be retained and traceable for five years. Files within five years are stored by the Operations Department; files beyond five years are archived in the company’s public archives for reference.

3. Internal Control System

3.1 In accordance with the OECD Due Diligence Guidance and the new requirements of the Responsible Minerals Assurance Process (RMAP), the company has updated the due diligence management system documents to ensure compliance with OECD principles and RMAP requirements. All identified upstream suppliers have been informed of the new supply chain policy and procurement requirements.

3.2 Procurement Policy Disclosure:

1. The company has published its raw material procurement statement on its official website (http://www.hnhyhkxc.com/gylzc.html) to ensure that every supplier fully understands its procurement policy.

2. The company has internally distributed the Tantalum Raw Material Procurement Management Regulation (HKXC-JYB-RMI2025-001) and Supply Chain Policy (HKXC-JYB-RMI2025-003), and conducted training sessions to ensure that all employees understand and comply with the policies.

3.3 Procedures for Full-Process Control over Tantalum and Niobium Raw Material Procurement, Acceptance, and Production Launch:

The company has established and implemented process control documents including: CAHRAs Identification Procedure (HKXC-JYB-RMI2026-002), Supply Chain Policy (HKXC-JYB-RMI2025-003), Ore Batch Number and Product Batch Number Traceability Management Measures (HKXC/Z-001-2021 ZJ), Ore Raw Material Acceptance Management Regulation (HKXC/Z-002-2021 ZJ), Ore withdrawal Operation Procedures (HKXC/Z-003-2021 ZJ), Safety Operation Procedures (Sampling, Laboratory, Occupational Health) (HKXC-JYB-RMI2024-001), Mixed-Lot Product Operation Procedures (HKXC-ZJ-RMI2022-001), Mixed-Lot Product Analysis and Inspection Regulations (HKXC-ZJ-RMI2022-002), Product Quality Control Standards (HKXC-ZJ-RMI2022-004), and Annual Production Balance Data Calculation Method (HKXC-ZJ-RMI2022-005). These documents restrict and prevent any “conflict materials” and materials of unknown origin from entering the company’s supply chain.

3.4 Traceable Raw Material Tracking Process:

The company implements strict document management of raw material and product transportation, establishes and modifies batch number systems for tantalum raw material acceptance and finished product warehousing, ensuring traceability and control of all tantalum materials during use.

3.5 Continuous Due Diligence of Suppliers:

The company regularly conducts due diligence on raw material suppliers according to OECD guidelines and RMI audit requirements. Investigation covers direct tantalum raw material suppliers, intermediate traders, and mining rights holders. Legitimacy, source compliance, and quality assurance are verified to determine supplier eligibility. Non-compliance requires corrective action. If corrective measures fail, procurement from that supplier is immediately suspended and purchased materials returned until re-evaluation meets requirements.

3.6 Communication of Responsible Supply Chain Policy:

The company communicates its responsible supply chain policy to upstream and downstream suppliers. Upstream suppliers are informed of the OECD Due Diligence Guidance, RMI-RMAP assessment standards, and responsible tantalum supply chain transparency requirements. All suppliers sign contracts containing responsible sourcing and non-conflict minerals clauses and provide written confirmation that materials are responsibly sourced.

The company maintains regular communication with ITSCI, learning about risk reports and regional assessments to stay updated on high-risk mining areas, including the African Great Lakes Region.

3.7 Employee Training:

Through centralized training sessions and internal notices, employees, including management, are trained to understand the OECD Due Diligence Guidance and the RBA audit standards for the tantalum supply chain, as well as responsible minerals supply chain transparency requirements.

3.8 Complaint and Appeal Mechanism:

A dedicated complaint and appeal mechanism has been established. Supply chain risks can be reported via telephone (+86 734-8310516) or email (Jingyingbu1@hnhyhkxc.com), and will be handled strictly in accordance with the Appeal Mechanism (HKXC-JYB-RMI2023-002).

3.9 Social Responsibility:

The company actively fulfills its social responsibilities, linking economic development with ethical business practices, technical innovation, safe production, employee rights protection, environmental conservation, and social welfare activities, establishing a compliant and socially responsible corporate image.

4. RMAP Assessment Summary

As a responsible company, since the first certification by EICC-GeSI in 2014, the company has continuously undergone RMAP audits conducted by independent third parties commissioned by RMI for 11 consecutive years. The company successfully passed the 2025 RMI-RMAP audit, valid for one year.

Audit details are as follows:

· CID: CID002492

· Audited Metal: Tantalum

· Previous Cycle RMAP ID: G-RM-10001831

· Audit Period: May 1, 2024 – April 30, 2025

· On-Site Audit Date: May 15, 2025

· Audit Company: Greenment

· Audit Report Link: https://www.responsiblemineralsinitiative.org/media/docs/Public%20Reports/Hengyang%20King%20Public%20Report.pdf 

5. Responsible Minerals Supply Chain Policy

The company strictly adheres to and fully implements the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. To prevent the use of conflict minerals that directly or indirectly finance armed groups or contribute to serious human rights abuses in high-risk areas, the company has established its own responsible supply chain policy for tantalum raw materials in accordance with the RMAP Tin and Tantalum Audit Procedures. The policy is publicly available on the company’s website (http://www.hnhyhkxc.com/gylzc.html).

The policy covers all risks identified in Appendix II of the OECD Guidance and has been approved and endorsed by management. Relevant stakeholders have been informed, and risk-based management strategies have been developed according to different risk levels of materials sourced from various countries and regions. The company has established a dedicated due diligence team led by the General Manager, including senior management, operations managers, production managers, and other responsible staff.

6. Risk Identification

6.1 The company has developed a “Know Your Counterparty” (KYC) questionnaire covering direct tantalum suppliers, intermediate traders, and mining rights holders. The questionnaire collects information on legal status, identity, supplier analysis, and potential risks, supported by relevant documents. All completed KYC forms must be collected.

The due diligence officer reviews the information together with the procurement team and checks against relevant sanctions lists. Any discrepancies, errors, or incomplete information are corrected by the supplier.

During this reporting period, no red flags were detected in the KYC results. The company identifies risks at the source and transit locations based on risk assessment procedures and implements risk management measures accordingly.

The company has established a CAHRAs Identification Procedure, requiring all suppliers and customers to follow this process before establishing cooperation to determine whether conflict-affected and high-risk areas exist and whether the parties meet RMAP standards.

6.2 For each transaction, suppliers are required to provide origin information and complete traceability documents, including legal transportation routes and names of direct suppliers.

6.3 For purchases involving high-risk tantalum mines in the African Great Lakes Region, the company monitors risk developments using ITSCI member monthly reports and risk notification emails.

7. Risk Assessment Method

7.1 Risk Types:

By comparing actual situations with risks in Appendix II of the OECD Due Diligence Guidance, potential risks in the supply chain are identified, including:

1. Serious human rights abuses related to mining, transport, or trade: torture, cruel, inhuman and degrading treatment, forced labor, child labor, widespread violence, war crimes, crimes against humanity, or genocide.

2. Direct or indirect support for non-state armed groups.

3. Direct or indirect support for public or private security forces.

4. Bribery, fraud, or misrepresentation of mineral origin, including money laundering or evasion of government taxes or royalties.

7.2 Risk Identification:

Material sources are classified as Conflict-Affected and High-Risk Areas (CAHRAs) and non-CAHRAs. CAHRAs are determined based on the Dodd-Frank Act, EU Conflict Minerals Regulation, UN, US, and EU sanctions lists.

Materials from CAHRAs are only accepted if verified by RMI-recognized independent third parties or upstream assurance mechanisms. Non-CAHRAs materials are assessed using tools such as the Heidelberg Conflict Barometer and Human Development Index.

8. Risk Assessment Results and Response Measures

8.1 Risk Assessment Results:

During this audit cycle, tantalum materials were sourced from China and Brazil. According to the CAHRAs Identification Procedure, and based on EITI data, China and Brazil are not EITI countries with no obligation to report mining information to EITI.

Sanctions lists and risk tools such as the Heidelberg Conflict Barometer, Fragile States Index, and Human Development Index were used to assess conflict, governance, and human rights risks.

8.1.1 Low-Risk Procurement Countries: China and Brazil, considered low-risk.
8.1.2 High-Risk Procurement Countries: None.
8.1.3 Reasonableness Assessment of Mining Rights Units: Materials were sourced from five entities: Yichun Tantalum-Niobium Mine, Xinfang Tantalum-Niobium Co., Ltd., Mineração Taboca S.A. (Pitinga), Dagang Kaolin Mine in Huaqiao Township, Yifeng County, and Qian Keng Lithium Mine in Yifeng County. Annual supply volumes were reasonable.
8.1.4 No supply chain risks were detected, and no complaints were received via the public channels (jingyingbu2@hnhyhkxc.com). Supply chains are traceable and risks are under control.

8.2 Response Measures:

8.2.1 Upon risk detection, relevant personnel report to management and provide collected information. Risk mitigation is carried out in accordance with OECD Appendix II guidance:

· Continue trade under quantifiable risk management procedures.

· Temporarily suspend trade while reducing risks.

· Terminate supplier cooperation if risks cannot be mitigated.

8.2.2 High-risk raw materials without RMI-recognized upstream mechanisms or complete traceability will not be procured. Suppliers must provide due diligence data, operational information, governance-related data, and supply chain documents for each transaction.

8.2.3 The company follows international standards for Class 7 materials in transportation and ensures compliance with laws for storage, transport, and handling of hazardous substances.

8.2.4 Feedback is continuously collected, and procurement policies are continuously improved. The company commits to UN sanctions compliance and refrains from any actions that may facilitate conflict. Procurement from suppliers is suspended if risk mitigation fails.

The company recognizes the potential negative impacts of mining, trading, processing, and exporting minerals in conflict-affected and high-risk areas and embraces its responsibilities to respect human rights and avoid contributing to conflict.

The responsible procurement policy has been implemented, incorporated into contracts with suppliers, and all tantalum raw materials received undergo due diligence in line with OECD guidelines. During the 2025-2026 RMI audit, the company applied the CAHRAs Identification Procedure to assess country- and region-specific risks using EITI, UN, US, and EU sanctions lists, as well as the Heidelberg Conflict Barometer, achieving risk identification and assessment from conflict, human rights, and governance perspectives.

No OECD Appendix II risks were detected during this audit cycle, and all tantalum materials were certified compliant and responsibly sourced.

Hengyang King Xing Lifeng New Materials Co. Ltd

Mar 1, 2026