Exhibit 1.01
Gates Industrial Corporation plc
Conflict Minerals Report
For the Reporting Period from January 1, 2020 to December 31, 2020
This Conflict Minerals Report (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect management’s current views with respect to future events, including evaluation of the due diligence process and risk mitigation steps. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there can be no assurance these future events will occur as anticipated. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at www.sec.gov.
This Report is presented by Gates Industrial Corporation plc (collectively with its consolidated subsidiaries, the “Company”) to comply with Rule 13p-1 under the Exchange Act (the “Rule”) for the reporting period from January 1, 2020 to December, 31, 2020 (the “Reporting Period”).
The SEC adopted the Rule to implement reporting and disclosure requirements related to conflict minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Rule imposes certain obligations on SEC registrants whose manufactured products contain conflict minerals that are necessary to the functionality or production of their products. Conflict Minerals are defined as cassiterite, columbite-tantalite (coltan), gold, wolframite, or their derivatives, which are limited to tin, tantalum, and tungsten (collectively, “3TG”).
The design of the Company’s due diligence and related results are described below. A copy of this Report for the Reporting Period is publicly available on the Company’s website at https://www.gates.com/us/en/about-us/policies. The contents of the Company’s website referred to in this Report are not incorporated by reference into this Report.
I. Company Overview
The Company manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world. The Company’s power transmission products include elastomer drive belts and related components. The Company’s fluid power products include hoses, tubing and fittings.
The Company has adopted a Conflict Minerals Policy that governs the supply of 3TG in its supply chain. The policy is publicly available on the Company’s website at https://www.gates.com/us/en/about-us/policies.
II. Reasonable Country of Origin Inquiry and Due Diligence Process
A. Design Framework
For the Reporting Period, the Company conducted a good faith, reasonable country of origin inquiry (“RCOI”) of the 3TG minerals that are necessary to the functionality or production of the products that the Company manufactured or contracted with others to manufacture during the Reporting Period. This good faith RCOI was reasonably designed to determine whether any 3TG found in the Company’s products originated in the Democratic Republic of the Congo and adjoining countries, as defined in Form SD (collectively, the “Covered Countries”), and whether any 3TG may be from recycled or scrap sources, in accordance with the Rule and related guidance provided by the SEC.
The Company’s due diligence measures are based on the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and related supplements, published by the Organization for Economic Cooperation and Development (“OECD”). The Company is a downstream company in the supply chain, and its due diligence practices were tailored accordingly. Pursuant to the OECD framework, the Company undertook to: (a) establish company management systems; (b) identify and assess risks in the supply chain; (c) design and implement a strategy to respond to identified risks; (d) carry out independent audit and due diligence practices; and (e) report on the results of the Company’s supply chain due diligence.
B. Reasonable Country of Origin Inquiry
The Company’s global supply chain is complex. The Company has a substantial number of suppliers globally from which it purchases raw materials, components, and products for its fluid power and power transmission products. Our supply chain is multi-tiered and the Company is many levels removed from the mines, smelters, and refiners. The Company does not make purchases of 3TG directly from mines, smelters, or refiners. As a result, the Company necessarily relies upon its direct suppliers to provide information on the origin of the 3TG contained in products, components, and materials supplied to the Company, including sources of 3TG that are supplied to the direct suppliers from lower tier suppliers. The Company works with its direct suppliers to identify, where possible, the smelters and/or refiners and countries of origin of the 3TG.
During the Reporting Period, the Company continued to identify direct suppliers it believed could potentially provide materials, components or products containing 3TG (the “Relevant Suppliers”) to the Company. The Relevant Suppliers received supplier surveys, asking whether the materials, components, or products supplied to the Company contained any 3TG minerals. Relevant Suppliers responding in the affirmative were then asked to use the Responsible Minerals Initiative Conflict Minerals Reporting Template (“CMRT”) to identify its 3TG smelters and refiners and associated countries of origin. For the Reporting Period, the Company obtained representations from approximately 79.5% (as it relates to tin) and 50% (as it relates to tungsten) of the Relevant Suppliers.
This process revealed the presence of tin and tungsten in a limited number of the Company’s products, resulting from 3TG-containing materials, components, or products provided by a small number of suppliers. See Annex A to this Report for a summary of smelters identified by Relevant Suppliers. Verified smelters are those listed by the Responsible Minerals Initiative (“RMI”) or the U.S. Department of Commerce as known metal processors. Despite its due diligence efforts, the Company does not have sufficient information with respect to the Reporting Period to determine the country of origin of all of the 3TG that may be contained in its products. The Company notes that, upon information and belief, one or more smelters identified in Annex A (e.g. Malaysia Smelting Corporation (MSC)) does source some of its tin from the Covered Countries of Democratic Republic of the Congo, Rwanda, Burundi, and Uganda. Nevertheless, most smelters identified by the Company’s suppliers were found in RMI’s list of verified smelters and the Company has no reason to believe or evidence to suggest that any of the 3TG contained in its products finances armed conflict in the DRC region.
C. Due Diligence Measures
The Company has undertaken the following due diligence measures:
a) Establishment of company management systems
The Company has taken steps to develop a strong company management system pertaining to the use of 3TG in its products and supply chain. These steps include:
•Establishment of a Conflict Minerals Policy (publicly available at: https://www.gates.com/us/en/about-us/policies);
•Maintenance of an internal, cross-functional team to support supply chain due diligence; and
•Implementation of internal processes for drafting the supplier survey, contacting Relevant Suppliers (including follow-up procedures), managing supplier responses, identifying smelters/refiners in the supply chain, and putting together the Company’s own CMRT for its customers.
b) Identification and Assessment of Risks in the Supply Chain
As a downstream user of products, components, and materials containing 3TG, the Company is multiple levels removed from the mines from which such 3TG originated, and the smelters and refiners who processed those minerals. The Company continued to assess its supply chain risks and work with its suppliers to develop greater supply chain transparency. As discussed above, the Company solicited Relevant Suppliers using due diligence tools such as a supplier survey letter and the RMI’s CMRT. Additional due diligence steps utilized to help identify and assess risks in the supply chain include:
• Conducting an informed internal analysis with a cross-functional team regarding the types of products, components, and materials supplied to the Company, in order to identify the Relevant Suppliers that may supply products, components, and materials containing 3TG to the Company;
• Implementing internal measures to strengthen company engagement with Relevant Suppliers; and
• Implementing follow-up procedures and additional solicitation requests for suppliers that did not respond or that failed to provide sufficient information.
The Company verified the information provided by our suppliers (to the extent reasonably possible) by comparing it to the publicly-available information contained on the RMI website and in RMI’s CMRT forms.
c) Design and Implementation of a Strategy to Respond to Identified Risks
To respond to identified risks, the Company has developed due diligence procedures and a Conflict Minerals Policy, as referenced herein. The Company also requires its suppliers to perform due diligence into their respective supply chains to determine whether products sold to the Company contain 3TG, and whether such minerals are sourced from conflict-free smelters and refiners. This requirement is set forth in, among other things, the Gates Supplier Code of Conduct. The Company also uses a cross-functional team to conduct its due diligence process, which includes occasional reporting of the progress and reporting of any concerns to senior management in the procurement division.
The Company intends to continue to evaluate its due diligence program in accordance with the provisions of the Rule. This includes annual solicitation of suppliers and periodic review of the criteria used to select suppliers for solicitation. The Company will continue to engage with its suppliers to identify the 3TG used within its supply chain, as well as the origin and chain of custody of the 3TG, and will continue to work to increase the response rate for the RCOI process and the Company’s visibility into the relevant country of origin information. To the extent any supplier is found to be using non-conformant smelters or refiners within its supply chain, the Company intends to engage with that supplier and re-communicate our requirement for suppliers to commit to be conflict-free.
d) Carrying Out of Independent Audit and Due Diligence Practices
Where possible, the Company has relied on third-party assurances and certifications. For example, the Company accepted as reliable any smelter that is part of RMI’s verified smelter list. To the extent other audited supplier certifications are provided to the Company, the Company would consider reliance on a case-by-case basis.
e) Reporting of the Results of the Company’s Supply Chain Due Diligence
The Company publicly communicates its Conflict Minerals Policy, its CMRT, and this Conflict Minerals Report on its website.
D. Future Risk Mitigation Efforts
The Company intends to continue to evaluate its due diligence program in accordance with the provisions of the Rule. This includes conducting additional inquiries to improve transparency, following-up on incomplete responses or no responses from the Company’s supply chain, and evaluating and managing any related risks.
Annex A
| | | | | | | | |
| Metal | Smelter Name | RMI Smelter ID |
| Tungsten | ACL Metais Eireli | CID002833 |
| Tungsten | Albasteel Industria e Comercio de Ligas Para Fundicao Ltd. | CID003427 |
| Tungsten | A.L.M.T. Corp. | CID000004 |
| Tungsten | Asia Tungsten Products Vietnam Ltd. | CID002502 |
| Tungsten | Chenzhou Diamond Tungsten Products Co., Ltd. | CID002513 |
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | CID000258 |
| Tungsten | China Molybdenum Co., Ltd. | CID002641 |
| Tungsten | Fujian Ganmin RareMetal Co., Ltd. | CID003401 |
| Tungsten | Fujian Jinxin Tungsten Co., Ltd. | CID000499 |
| Tungsten | Ganzhou Haichuang Tungsten Co., Ltd. | CID002645 |
| Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd. | CID000875 |
| Tungsten | Ganzhou Jiangwu Ferrotungsten Co., Ltd. | CID002315 |
| Tungsten | Ganzhou Seadragon W & Mo Co., Ltd. | CID002494 |
| Tungsten | Global Tungsten & Powders Corp. | CID000568 |
| Tungsten | Guangdong Xianglu Tungsten Co., Ltd. | CID000218 |
| Tungsten | H.C. Starck Smelting GmbH & Co. KG | CID002542 |
| Tungsten | H.C. Starck Tungsten GmbH | CID002541 |
| Tungsten | Hunan Chenzhou Mining Co., Ltd. | CID000766 |
| Tungsten | Hunan Chuangda Vanadium Tungsten Co., Ltd. Wuji | CID002579 |
| Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd. | CID000769 |
| Tungsten | Hunan Litian Tungsten Industry Co., Ltd. | CID003182 |
| Tungsten | Hydrometallurg, JSC | CID002649 |
| Tungsten | Japan New Metals Co., Ltd. | CID000825 |
| Tungsten | Jiangwu H.C. Starck Tungsten Products Co., Ltd. | CID002551 |
| Tungsten | Jiangxi Gan Bei Tungsten Co., Ltd. | CID002321 |
| Tungsten | Jiangxi Tonggu Non-ferrous Metallurgical & Chemical Co., Ltd. | CID002318 |
| Tungsten | Jiangxi Xinsheng Tungsten Industry Co., Ltd. | CID002317 |
| Tungsten | Jiangxi Yaosheng Tungsten Co., Ltd. | CID002316 |
| Tungsten | JSC “Kirovgrad Hard Alloys Plant” | CID003408 |
| Tungsten | Kennametal Fallon | CID000966 |
| Tungsten | Kennametal Huntsville | CID000105 |
| Tungsten | KGETS Co., Ltd. | CID003388 |
| Tungsten | Lianyou Metals Co., Ltd. | CID003407 |
| Tungsten | Malipo Haiyu Tungsten Co., Ltd. | CID002319 |
| Tungsten | Masan Tungsten Chemical LLC (MTC) | CID002543 |
| Tungsten | Moliren Ltd. | CID002845 |
| Tungsten | Niagara Refining LLC | CID002589 |
| Tungsten | Philippine Chuangxin Industrial Co., Inc. | CID002827 |
| Tungsten | Tejing (Vietnam) Tungsten Co., Ltd. | CID001889 |
| Tungsten | Unecha Refractory metals plant | CID002724 |
| Tungsten | Wolfram Bergbau und Hutten AG | CID002044 |
| Tungsten | Woltech Korea Co., Ltd. | CID002843 |
| Tungsten | Xiamen Tungsten Co., Ltd. | CID002082 |
| Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | CID002320 |
| Tungsten | Xinfeng Huarui Tungsten & Molybdenum New Material Co., Ltd. | CID002830 |
| | | | | | | | |
| Tin | Alpha | CID000292 |
| Tin | Chenzhou Yunxiang Mining and Metallurgy Co., Ltd. | CID000228 |
| Tin | Chifeng Dajingzi Tin Industry Co., Ltd. | CID003190 |
| Tin | China Tin Group Co., Ltd. | CID001070 |
| Tin | CV Dua Sekawan | CID002592 |
| Tin | CV Venus Inti Perkasa | CID002455 |
| Tin | Dowa | CID000402 |
| Tin | EM Vinto | CID000438 |
| Tin | Estanho de Rondonia S.A. | CID000448 |
| Tin | Fenix Metals | CID000468 |
| Tin | Gejiu Jinye Mineral Company | CID002859 |
| Tin | Gejiu Kai Meng Industry and Trade LLC | CID000942 |
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | CID000538 |
| Tin | Gejiu Yunxin Nonferrous Electrolysis Co., Ltd. | CID001908 |
| Tin | Gejiu Zili Mining and Metallurgy Co., Ltd. | CID000555 |
| Tin | Guangdong Hanhe Non-Ferrous Metal Co., Ltd. | CID003116 |
| Tin | HuiChang Hill Tin Industry Co., Ltd. | CID002844 |
| Tin | HuiChang Jinshunda Tin Co., Ltd. | CID000760 |
| Tin | Jiangxi New Nanshan Technology Ltd. | CID001231 |
| Tin | Luna Smelter, Ltd. | CID003387 |
| Tin | Magnu’s Minerais Metais e Ligas Ltda. | CID002468 |
| Tin | Malaysia Smelting Corporation (MSC) | CID001105 |
| Tin | Ma’anshan Weitai Tin Co., Ltd. | CID003379 |
| Tin | Melt Metais e Ligas S.A. | CID002500 |
| Tin | Metallic Resources, Inc. | CID001142 |
| Tin | Metallo Belgium N.V. | CID002773 |
| Tin | Metallo Spain S.L.U. | CID002774 |
| Tin | Mineracao Taboca S.A. | CID001173 |
| Tin | Minsur | CID001182 |
| Tin | Mitsubishi Materials Corporation | CID001191 |
| Tin | Modeltech Sdn Bhd | CID002858 |
| Tin | O.M. Manufacturing Philippines, Inc. | CID002517 |
| Tin | O.M. Manufacturing (Thailand) Co., Ltd. | CID001314 |
| Tin | Operaciones Metalurgical S.A. | CID001337 |
| Tin | Precious Minerals and Smelting Limited | CID003409 |
| Tin | PT Aries Kencana Sejahtera | CID000309 |
| Tin | PT Artha Cipta Langgeng | CID001399 |
| Tin | PT ATD Makmur Mandiri Jaya | CID002503 |
| Tin | PT Babel Surya Alam Lestari | CID001406 |
| Tin | PT Bangka Prima Tin | CID002776 |
| Tin | PT Bangka Tin Industry | CID001419 |
| Tin | PT Belitung Industri Sejahtera | CID001421 |
| Tin | PT DS Jaya Abadi | CID001434 |
| Tin | PT Lautan Harmonis Sejahtera | CID002870 |
| Tin | PT Menara Cipta Mulia | CID002835 |
| Tin | PT Mitra Stania Prima | CID001453 |
| Tin | PT Panca Mega Persada | CID001457 |
| Tin | PT Prima Timah Utama | CID001458 |
| | | | | | | | |
| Tin | PT Rajawalki Rimba Perkasa | CID003381 |
| Tin | PT Rajehan Ariq | CID002593 |
| Tin | PT Refined Bangka Tin | CID001460 |
| Tin | PT Stanindo Inti Perkasa | CID001468 |
| Tin | PT Timah (Persero) Tbk Kundur | CID001477 |
| Tin | PT Timah (Persero) Tbk Mentok | CID001482 |
| Tin | PT Tommy Utama | CID001493 |
| Tin | Resind Industria e Comercio Ltda. | CID002706 |
| Tin | Rui Da Hung | CID001539 |
| Tin | Soft Metais Ltda. | CID001758 |
| Tin | Thaisarco | CID001898 |
| Tin | Thai Nguyen Mining and Metallurgy Co., Ltd. | CID002834 |
| Tin | Tin Technology & Refining | CID003325 |
| Tin | White Solder Metalurgia e Mineracao Ltda. | CID002036 |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | CID002158 |
| Tin | Yunnan Tin Company, Ltd. | CID002180 |
| Tin | Yunnan Yunfan Non-ferrous Metals Co., Ltd. | CID003397 |
