Exhibit 1.01
Conflict (Responsible) Minerals Report of POSCO HOLDINGS INC. and its consolidated subsidiaries (the “Company”)
◾ Responsible Minerals Policy
The Company is committed to actively participating in international efforts to purchase minerals responsibly and fulfill its social responsibility to protect human right such as child labor, funding the conflict groups and environment in Conflict Affected and High Risk Area (“CAHRA”).
To ensure the management of responsible minerals, the Company has established the systematic policy and operated the standard operating procedures in accordance with the Due Diligence Guidance suggested by the OECD in 2020.
In addition, the Company has joined the Responsible Minerals Initiative (“RMI”) to focus on ethically responsible minerals procurement and strengthen supply chain management.
Regarding these procedures, the Company is providing education for executives, employees and the suppliers to raise awareness of responsible minerals policy and assist them.
The Company uses the Conflicting Minerals Reporting Template (“CMRT”) form provided by the RMI Association and conduct the Supplier Questionnaire Survey to identify red flag and mitigate the risk by operating response mechanism in supply chain for tin, tungsten, tantalum, gold and cobalt.
The Company also operates a grievance procedure to hear various opinions from stakeholders.
When signing a contract or registering a new supplier, the Company encourages a supplier to conduct due diligence by third-party organizations under the Responsible Minerals Assessment Program (“RMAP”) for smelters in the supply chain. To establish a strong internal management system for the Company itself, the Company selected the Key Performance Indicators (“KPI”) for each department to check performance and improvement progress. As a result of such efforts, the Company does not purchase conflict minerals from CAHRA. The Company purchases cobalt only from certified smelters by RMI.
Also, in order to expand our responsible minerals sourcing policy to every level of supply chain, the Company requires all suppliers to follow its responsible minerals policy and to perform the following tasks as the supplier code of conduct.
[Supplier Code of Conduct]
A supplier should establish a responsible minerals management policy and report on improvements to ensure that raw materials delivered to the Company do not include minerals from uncertified smelters or Artisanal Small Scale (“ASM”) mining in CAHRA.
A Supplier has to identify and collect the mining/smelter information, origin, location and comply with the Company’s responsible minerals policy when signing a contract with the Company.
A supplier should prepare and submit a report on the use of responsible minerals at the Company’s request in a timely manner, and participate in disseminating the responsible minerals policy to its top suppliers so that all of the Company’s supply chains can take the lead in resolving social issues.
The Company restricts transactions with suppliers who have been engaged in socially condemnable behaviors or do not take appropriate action for responsible minerals. For those suppliers, stringent disciplinary measures are taken including bidding restrictions and banning from doing business with the Company. The Company also undertakes the process of evaluation to all the suppliers in supplier relationship management system.
[Conflict(Responsible) Minerals related to the Company]
On a consolidated basis, the Company purchases tin (5,300 tons per year), tungsten (240 tons per year) and cobalt (2,700 tons per year) to prevent corrosion and to adjust ingredients for Electrical Galvanized Steel, Stainless steel product, and EV batteries.
[Conflict Affected and High Risk Area]
The Company has made CAHRA designation methodology to refer to OECD and European Conflict Minerals regulation. CAHRA are identified by the presence of armed conflict, widespread violence or other risks of harm to people (Child Labor, Human Right Violation).
| • | Africa : 111 regions in 14 countries including DR Congo, Central Africa and Burkina Faso |
| • | Asia : 11 regions in 4 countries including India and Pakistan |
| • | Middle East : 77 regions in 3 countries including Afghanistan and Libya |
| • | South America : 11 regions in 3 countries including Colombia and Mexico |
| • | Other : 1 region in Ukraine |
◾ The Process of Conflict (Responsible) Minerals (5 Steps)
| • | Step 1. Establishment of Responsible Minerals Policy |
[KPI Operation]
In 2021 and 2022, the key indicators related to responsible minerals have been set as KPIs for executives, group leaders and departments of the Purchasing and Investment Division. (Internal/External KPI : RMAP certification rate of responsible minerals, employee education session of responsible minerals, 25 improvement tasks completed)
[Employee Education Session]
In order to raise awareness of related employees, the Company has trained its employees by e-learning on ESG supply chain management in 2021. In addition, the buyer visits suppliers in-site regularly to provide direct training on the Company’s responsible mineral issues, international trends and policy implementation directions.
[Organization of Responsible Minerals]
The Company’s responsible minerals management system is managed by the Purchasing and Investment Division under POSCO’s Steel Business Unit and the “Group Responsible Mineral TF” is operated with ESG Management Group, Legal Affairs office, Investment Planning Group and Group companies such as POSCO, POSCO International Corporation and POSCO Chemical Co., Ltd.
[Reinforcement of new supplier registration standards]
We have strengthened the registration standards for new suppliers. When registering as a supplier, it has to submit a signature that complies with our responsible minerals policy so that suppliers can participate in responsible minerals in CAHRA and add a clause that requires third-party inspections and RMAP certified smelters.
| • | Step 2. Supply Chain Information Collection/Evaluation |
[Information on Supply Chain]
We collect information by conducting the Questionnaire Survey Template for suppliers and smelters. Additionally, we use CMRT and CRT, which are provided by the RMI (origin, mine/smelter location, logistics flow, risk presence in Supply Chain, supplier’s responsible mineral policy, etc.) to verify compliance with self-collected information. After conducting a survey of tier 1 suppliers, tier 1 suppliers require additional delivery to tier 2 suppliers and tier 2 suppliers continue to expand the survey to smelters and mines at the previous stage to collect information.
Some tier 2 suppliers have low rates of survey response, but the Company tries to increase their response rates through training activities and conducting due diligence.
[The Grievance Mechanism]
The grievance process has been newly established to hear the opinions of suppliers at all times. The Company has established a procedure to receive and officially resolve the contents of grievances directly to all stakeholders in the supply chain.
[Risk Assessment]
Based on the Company’s CAHRA criteria, the Company uses the collected information to determine whether the minerals origin or transportation route is associated with CAHRA. The Company evaluates various factors such as supplier Survey response rate, intentional unverified information given and lack of awareness of responsible minerals and determine level of supplier status.
| • | Step 3-4. Risk Identification and Mitigation / Due Diligence |
[Risk Mechanism]
Based on the identified risk level of red flag, the Company implements response mechanisms such as strengthening training, direct visit in-site and conducting due diligence. The Company continually updates and utilizes the checklist for due diligence.
If repeated problems occur and improvements are not made by high-risk suppliers, the Company implements the due diligence of independent third-party institutions. The Company may stop business with any supplier intentionally providing untrue information or having no improvement effort.
| • | Step 5. Transparent Report (Communication) |
The Company has published ‘Responsible Minerals Special Report’ to strengthen communication with stakeholder from 2021. In addition, the Company discloses various ESG activities through The ‘Corporate Citizenship Report’ and its website. The Company will publish various reports in accordance with the principle of transparent disclosure and the standards endorsed by the international community.
| * | We also provide cobalt-related information with the web address below : |
https://www.posco.co.kr/homepage/docs/eng6/jsp/irinfo/irdata/s91b6000041l.jsp
Annex 1. Education Sessions : Number of Participants (Separate Basis)
(approximate number of persons)
| 2019 | 2020 | 2021 | ||||||||||
The Company | 18 | 2,000 | 4,000 | |||||||||
Annex 2. Smelters of Conflict Minerals (Separate Basis)
| 2019 | 2020 | 2021 | ||||||||||
Tin | 12 | 2 | 2 | |||||||||
Tungsten | 1 | 3 | 3 | |||||||||
Total | 13 | 5 | 5 | |||||||||
Annex 3. Certified Smelters of Conflict Minerals (Separate Basis)
| 2019 | 2020 | 2021 | ||||||||||
Certified | 13 | 5 | 5 | |||||||||
Uncertified | — | — | — | |||||||||
Annex 4. The List of Certified Smelters (Separate Basis)
No | Metal | ID | Smelter Name | Country | ||||
1 | Tin | CID001477 | PT Timah Tbk Kundur | Indonesia Kundur | ||||
2 | Tin | CID001482 | PT Timah Tbk Mentok | Indonesia Mentok | ||||
3 | Tungsten | CID002843 | Woltech Korea | Korean Ulsan | ||||
4 | Tungsten | CID002315 | Ganzhou Jiangwu Ferrotungsten Co., Ltd | China Ganzhou | ||||
5 | Tungsten | CID002724 | Unecha Refractory Mentals Plant | Russia Unecha |
