EXHIBIT 1.01
CONFLICT MINERALS REPORT FOR WEST MARINE INC.
Filed in accordance with Rule 13p-1 under the Securities and Exchange Act of 1934
This Conflict Minerals Report (“Report”) of West Marine Inc. (“West Marine”, the “Company", “we”, “us” or “our”) is filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 13p-1 under the Securities Exchange Act of 1934, as amended (“Rule 13p-1”), and prepared in accordance with the instructions to Form SD for the reporting period from January 1, 2016 to December 31, 2016 (the “Reporting Period”).
Company Overview
Founded in 1968 by a life-long sailor with a passion for boating, today West Marine is recognized as a leading Waterlife Outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company is the largest omni-channel specialty retailer exclusively offering boating supplies, accessories, gear, apparel, and footwear to customers across the U.S. and around the world. Our customers include boat owners, marine industry professionals and all those who enjoy recreating in, on or around the water.
Product and Filing Overview
The Company is filing this Conflict Minerals Report for the year ended December 31, 2016, because it has reason to believe (based on its reasonable country of origin inquiry) that certain of the products that it contracts to manufacture contain necessary Conflict Minerals that originated in the Democratic Republic of the Congo or an adjoining country.
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), the SEC adopted Rule 13p-1 in 2012, instituting reporting and disclosure requirements for SEC registrants who manufacture or contract to manufacture products containing conflict minerals (as defined below) which are necessary to the functionality or production of such products. Form SD defines “conflict minerals” as: ‘(i)(a) columbite-tantalite, (b) cassiterite, (c) gold and (d) wolframite, or their derivatives, which are currently limited to tantalum, tin and tungsten; or (ii) any other mineral or its derivatives determined by the U.S. Secretary of State to be financing conflict in the Democratic Republic of the Congo or an “adjoining country,” as such term is defined in Form SD (collectively, the “Covered Countries”)’. Pursuant to Rule 13p-1, If any conflict minerals, as defined by Form SD, are necessary to the functionality or production of a product manufactured by a registrant or contracted by the registrant to be manufactured, the registrant must conduct a good faith reasonable country of origin inquiry (“RCOI”) regarding Conflict Minerals to determine whether any of the conflict minerals originated in one of the Covered Countries.
The Company does not directly manufacture any of the products that it sells; however it does contract to manufacture products in which Conflict Minerals may be necessary to the functionality or production of those products. The Company contracts to manufacture items such as footwear, clothing, tools and light boating equipment, home products/gifts, fishing products, power sports and water accessories. The Company does not directly source any Conflict Minerals for use in the products it contracts to manufacture. The Company does not own or operate manufacturing facilities and all of its products are manufactured by independent factories, most of which are located outside of the United States.
The Company has adopted a Conflict Minerals policy and has communicated its policy to key associates and to its Tier 1 suppliers. A Tier 1 supplier is one with a direct commercial relationship to the Company for the exclusive supply or manufacture of products for West Marine. Due to consolidation and elimination of suppliers, the Company was able to reduce the number of total in scope suppliers by 33% over the previous year. A total of 103 Tier 1 suppliers (the “Suppliers”) were identified as having In Scope Products subject to the RCOI inquiry.
The Company has an established process for scoping and evaluating the lines of products from its Suppliers on a product-by-product basis to determine which may contain Conflict Minerals that are “necessary to the functionality or production” of the product (“In Scope Products”).
Reasonable Country of Origin Inquiry
Throughout 2016, the Company conducted its RCOI on the In Scope Products to determine the presence and source of any Conflict Minerals used in the In Scope Products. To implement the RCOI process, the Company conducted a supply-chain survey of its Suppliers using the Conflict-Free Sourcing Initiative’s Conflict Minerals Reporting Template (“CMRT”) of level 3.0 or higher which was introduced via direct email to each supplier using the Company’s Supplier electronic portal. The RCOI began with an introduction email from West Marine to suppliers describing the Conflict Minerals Compliance Program (CMCP) requirements. Suppliers were then offered two options to submit the required information, either by uploading the CMRT in MS Excel format or by completing an online survey version of the template. In recognition that the information requested can take time to collect and aggregate, suppliers were given a final deadline of March 31, 2017 to provide information about the metal processors present in their supply chains for the 2016 reporting year.
Suppliers were asked to provide information regarding the sourcing of their materials with the ultimate goal of identifying the 3TG SORs and associated mine countries of origin. To facilitate reporting at the product-level, the products indicated by West Marine as being sourced from a given supplier were communicated to that supplier as part of the data request. The supplier was asked to select a given product or set of products for which a CMRT was being submitted. Suppliers were able to submit multiple CMRTs as needed to address all indicated products. In cases where a supplier was unable to provide one or more product-specific CMRTs, they could select the option to provide a company level or user defined CMRT.
Suppliers were also given access to an online reference and resource center where they could review supporting regulations and frequently asked questions (FAQs) concerning 3TG mineral tracing. The Supplier Resource Center was provided as an educational tool to facilitate a deeper understanding of the program and education as to why the information is being requested. There were also opportunities to participate in webinars providing information on the Conflict Minerals Rule hosted by the Company’s third party service provider for conflict minerals.
Following the initial introduction to the program and information request, up to three reminder emails were sent to each non-responsive supplier requesting survey completion.
Suppliers who remained non-responsive to these email reminders were contacted by telephone and offered assistance. This assistance included, but was not limited to, further information about the Conflict Minerals Compliance Program, an explanation of why the information was being collected, a review of how the information would be used and clarification regarding how the requested information needed could be provided.
Supplier responses were evaluated to identify “quality control” flags based on various issues including things such as (a) listing smelters or refiners for an unused metal, (b) not providing information about the metal used, (c) inconsistent responses to the questionnaire, (d) a lack of data for sub suppliers, or (e) a response indicating 100% of the 3TG for products covered by the declaration originates from scrap/recycled sources, but one or more smelters or refiners (“SORs”) listed are not known to be exclusive recyclers.
The Company’s survey’s response rate was 73%. Of these responding, 19% indicated one or more of the regulated metals (3TG) were necessary to the functionality or production of the products they supply to West Marine. The attached 2016 Data Summary provides detailed information regarding the smelters/refiners reported to be in West Marine’s supply chain and the associated mine countries of origin.
Due Diligence
Design of Due Diligence Measures
The Company conducted a due diligence review of its supply chain as required by Rule 13p-1. In accordance with the guidance set out in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals for Conflict-Affected and High-Risk Areas, including Supplements on Tin, Tantalum and Tungsten, and the Gold Supplement
(Second Edition 2013) (the “Guidance”), the Company has established a five-step process which includes: (1) establishment of strong company management systems; (2) identification and assessment of supply chain risk; (3) development and implementation of a risk response strategy; (4) third-party audit of our due diligence practices, as may be required; and (5) preparation of an annual report on supply chain due diligence.
Due Diligence Measures Performed
The Company relied upon the following internationally accepted audit standards to determine whether the SORs in its supply chain source Conflict Minerals from the Covered Countries: the CFSI Conflict-Free Smelter Program, the London Bullion Market Association Good Delivery Program and the Responsible Jewelry Council Chain-of-Custody Certification Tungsten Industry - Conflict Minerals Council concerning their independent third-party audits of smelters and refiners. Based on the Company’s third party service provider database for SORs, and as shown in the Data Summary, there was an indication of DRC sourcing for 62 out of 233 verified SORs.
Further investigation was conducted on Suppliers perceived to be high risk. Supplier’s responses to Conflict Minerals information requests were then collated and reported to senior management. The status of responses of each Supplier are provided to the merchant team members and the Company’s Senior Management team, and include updates on monitoring and tracking corrective action and risk mitigation efforts.
For those supply chains with SORs that are known or thought to be sourcing from the DRC, additional investigation is needed to determine the source and chain-of-custody of the regulated metals. If the SOR is not certified by these internationally-recognized schemes, an attempt is made to contact the SOR to gain more information about their sourcing practices, including countries of origin and transfer, and whether there are any internal due diligence procedures in place or other processes the SORs takes to track the chain-of-custody on the source of its mineral ores. Relevant information to review includes: whether the SOR has a documented, effective and communicated conflict-free policy, an accounting system to support a mass balance of materials processed, and traceability documentation. Outside sources of information regarding the SOR’s sourcing practices were also used where available via internet searches. Additionally, up to three contact attempts were made to SORs to gather information on mine country of origin and sourcing practices.
The status of responses of each Supplier were provided to the Company’s merchant team and Senior Management team, and included status updates on monitoring and tracking corrective action and risk mitigation efforts. The 2016 Data Summary lists the facilities identified by our Suppliers that processed Conflict Minerals in 2016, and the country of origin for the Conflict Minerals processed by such facilities, and the conflict-free status of such facilities (if known).
Future Measures
West Marine is committed to responsible manufacturing practices and it will continue to focus on the development of long term relationships with suppliers who are similarly committed to following the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals for Conflict-Affected and High-Risk Areas, including Supplements on Tin, Tantalum and Tungsten, and the Gold Supplement.
West Marine will continue to refine its systems for identifying relevant suppliers and obtaining additional and more reliable information from each such supplier regarding such supplier’s supply chain. The Company continues to communicate its expectations and information requirements to its Suppliers and will continue to undertake additional fact and risk assessments as necessary. The Company remains committed to implementing processes to improve the quantity and quality of Supplier responses, verify Supplier responses provided, and evaluate new product lines as developed to eliminate the introduction of Conflict Minerals into the supply chain where possible to ensure compliance with the Dodd-Frank Act.
2016 Data Summary
Smelters or Processors Identified by Suppliers
|
| | |
| Metal | Official Smelter Name | Certified Smelter |
| Tin | 5NPLUS | |
| Tungsten | A.L.M.T. Corp. | * |
| Gold | Advanced Chemical Company | * |
| Gold | Aida Chemical Industries Co., Ltd. | * |
| Gold | Allgemeine Gold-und Silberscheideanstalt A.G. | * |
| Gold | Almalyk Mining and Metallurgical Complex (AMMC) | * |
| Tin | Alpha | * |
| Gold | AngloGold Ashanti | * |
| Gold | Argor-Heraeus SA | * |
| Gold | Asahi Pretec Corporation | * |
| Gold | Asahi Refining Canada Limited | * |
| Gold | Asahi Refining USA Inc. | * |
| Gold | Asaka Riken Co., Ltd. | * |
| Gold | Atasay Kuyumculuk Sanayi Ve Ticaret A.S. | |
| Gold | Aurubis AG | * |
| Gold | Bangko Sentral ng Pilipinas (Central Bank of the Philippines) | * |
| Gold | Boliden AB | * |
| Gold | C. Hafner GmbH + Co. KG | * |
| Gold | Caridad | |
| Gold | CCR Refinery - Glencore Canada Corporation | * |
| Gold | Cendres + Métaux SA | * |
| Tantalum | Changsha South Tantalum Niobium Co., Ltd. | * |
| Tungsten | Chenzhou Diamond Tungsten Products Co., Ltd. | * |
| Gold | Chimet S.p.A. | * |
| Tin | China Tin Group Co., Ltd. | * |
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | * |
| Gold | Chugai Mining | |
| Tin | CNMC (Guangxi) PGMA Co. Ltd. | |
| Tantalum | Conghua Tantalum and Niobium Smeltry | * |
| Tin | Cooperativa Metalurgica de Rondônia Ltda. | * |
| Tin | CV Gita Pesona | * |
| Tin | CV Serumpun Sebalai | * |
| Tin | CV Tiga Sekawan | * |
| Tin | CV United Smelting | * |
| Gold | Daejin Indus Co., Ltd. | * |
| Gold | Daye Non-Ferrous Metals Mining Ltd. | * |
| Tungsten | Dayu Weiliang Tungsten Co., Ltd. | |
| Gold | DODUCO GmbH | * |
| Gold | Dowa | * |
| Gold | DSC (Do Sung Corporation) | * |
| Tantalum | Duoluoshan | * |
| Gold | Eco-System Recycling Co., Ltd. | * |
| Gold | Elemetal Refining, LLC | * |
| Tin | EM Vinto | * |
| Tin | Estanho de Rondônia S.A. | |
| Tantalum | Exotech Inc. | * |
|
| | |
| Tantalum | F&X Electro-Materials Ltd. | * |
| Tin | Fenix Metals | * |
| Tungsten | Fujian Jinxin Tungsten Co., Ltd. | * |
| Gold | Gansu Seemine Material Hi-Tech Co Ltd | |
| Tin | Gejiu Kai Meng Industry and Trade LLC | * |
| Tantalum | Global Advanced Metals Aizu | * |
| Tungsten | Global Tungsten & Powders Corp. | * |
| Gold | Gold Refinery of Zijin Mining Group Co., Ltd | * |
| Gold | Great Wall Precious Metals Co., Ltd. of CBPM | * |
| Gold | Guangdong Jinding Gold Limited | |
| Tungsten | Guangdong Xianglu Tungsten Co., Ltd. | * |
| Gold | Guoda Safina High-Tech Environmental Refinery Co., Ltd. | |
| Tantalum | H.C. Starck Co., Ltd. | * |
| Tantalum | H.C. Starck Hermsdorf GmbH | * |
| Tantalum | H.C. Starck Inc. | * |
| Tungsten | H.C. Starck Smelting GmbH & Co. KG | * |
| Tantalum | H.C. Starck Tantalum and Niobium GmbH | * |
| Tungsten | H.C. Starck Tungsten GmbH | * |
| Gold | Hangzhou Fuchunjiang Smelting Co., Ltd. | |
| Gold | Heimerle + Meule GmbH | * |
| Tantalum | Hengyang King Xing Lifeng New Materials Co., Ltd. | * |
| Gold | Heraeus Metals Hong Kong Ltd | * |
| Tantalum | Hi-Temp Specialty Metals, Inc. | * |
| Tin | Huichang Jinshunda Tin Co. Ltd | |
| Gold | Hunan Chenzhou Mining Co., Ltd. | |
| Tungsten | Hunan Chenzhou Mining Co., Ltd. | * |
| Gold | HwaSeong CJ Co. Ltd | |
| Gold | Inner Mongolia Qiankun Gold and Silver Refinery Share Co., Ltd. | * |
| Gold | Ishifuku Metal Industry Co., Ltd. | * |
| Gold | Istanbul Gold Refinery | * |
| Gold | Japan Mint | * |
| Tungsten | Japan New Metals Co., Ltd. | * |
| Gold | Jiangxi Copper Company Limited | * |
| Tantalum | Jiangxi Dinghai Tantalum & Niobium Co., Ltd. | * |
| Tungsten | Jiangxi Gan Bei Tungsten Co., Ltd. | * |
| Tin | Jiangxi Ketai Advanced Material Co., Ltd. | * |
| Tungsten | Jiangxi Minmetals Gao'an Non-ferrous Metals Co., Ltd. | |
| Tungsten | Jiangxi Tonggu Non-ferrous Metallurgical & Chemical Co., Ltd. | * |
| Tungsten | Jiangxi Xinsheng Tungsten Industry Co., Ltd. | * |
| Tungsten | Jiangxi Yaosheng Tungsten Co., Ltd. | * |
| Tantalum | JiuJiang JinXin Nonferrous Metals Co., Ltd. | * |
| Tantalum | Jiujiang Nonferrous Metals Smelting Company Limited | * |
| Gold | JSC Ekaterinburg Non-Ferrous Metal Processing Plant | * |
| Gold | JSC Uralelectromed | * |
| Gold | JX Nippon Mining & Metals Co., Ltd. | * |
| Gold | Kazzinc | * |
| Tantalum | KEMET Blue Metals | * |
| Tungsten | Kennametal Fallon | * |
| Tungsten | Kennametal Huntsville | * |
|
| | |
| Gold | Kennecott Utah Copper LLC | * |
| Tantalum | King-Tan Tantalum Industry Ltd. | * |
| Gold | Kojima Chemicals Co., Ltd. | * |
| Gold | Kyrgyzaltyn JSC | * |
| Gold | L'azurde Company For Jewelry | |
| Gold | Lingbao Gold Company Ltd. | |
| Gold | Lingbao Jinyuan Tonghui Refinery Co. Ltd. | |
| Tantalum | LSM Brasil S.A. | * |
| Gold | LS-NIKKO Copper Inc. | * |
| Gold | Luoyang Zijin Yinhui Gold Refinery Co., Ltd. | |
| Tin | Magnu's Minerais Metais e Ligas Ltda. | * |
| Tin | Malaysia Smelting Corporation (MSC) | * |
| Tungsten | Malipo Haiyu Tungsten Co., Ltd. | * |
| Gold | Materion | * |
| Gold | Matsuda Sangyo Co., Ltd. | * |
| Tin | Melt Metais e Ligas S.A. | * |
| Tin | Metallic Resources, Inc. | * |
| Tantalum | Metallurgical Products India Pvt., Ltd. | * |
| Gold | Metalor Technologies (Hong Kong) Ltd. | * |
| Gold | Metalor Technologies SA | * |
| Gold | Metalor USA Refining Corporation | * |
| Gold | METALÚRGICA MET-MEX PEÑOLES, S.A. DE C.V | * |
| Tin | Mineração Taboca S.A. | * |
| Tin | Minsur | * |
| Tin | Mitsubishi Materials Corporation | * |
| Gold | Mitsubishi Materials Corporation | * |
| Tantalum | Mitsui Mining and Smelting Co., Ltd. | * |
| Gold | Moscow Special Alloys Processing Plant | * |
| Gold | Nadir Metal Rafineri San. Ve Tic. A.ª. | * |
| Tin | Nankang Nanshan Tin Co., Ltd. | |
| Gold | Navoi Mining and Metallurgical Combinat | * |
| Tin | Nghe Tinh Non-Ferrous Metals Joint Stock Company | |
| Gold | Nihon Material Co., Ltd. | * |
| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd. | * |
| Tantalum | NPM Silmet AS | * |
| Tungsten | Nui Phao H.C. Starck Tungsten Chemicals Manufacturing LLC | * |
| Tin | O.M. Manufacturing (Thailand) Co., Ltd. | * |
| Gold | Ohura Precious Metal Industry Co., Ltd. | * |
| Gold | OJSC "The Gulidov Krasnoyarsk Non-Ferrous Metals Plant" (OJSC Krastsvetmet) | * |
| Gold | OJSC Novosibirsk Refinery | * |
| Tin | Operaciones Metalurgical S.A. | * |
| Gold | PAMP S.A. | * |
| Gold | Penglai Penggang Gold Industry Co Ltd | |
| Gold | Prioksky Plant of Non-Ferrous Metals | * |
| Gold | PT Aneka Tambang (Persero) Tbk | * |
| Tin | PT Aries Kencana Sejahtera | * |
| Tin | PT Artha Cipta Langgeng | * |
| Tin | PT Babel Inti Perkasa | * |
| Tin | PT Bangka Tin Industry | * |
|
| | |
| Tin | PT Belitung Industri Sejahtera | * |
| Tin | PT Bukit Timah | * |
| Tin | PT DS Jaya Abadi | * |
| Tin | PT Eunindo Usaha Mandiri | * |
| Tin | PT Inti Stania Prima | * |
| Tin | PT Justindo | |
| Tin | PT Karimun Mining | * |
| Tin | PT Mitra Stania Prima | * |
| Tin | PT Panca Mega Persada | * |
| Tin | PT Prima Timah Utama | * |
| Tin | PT Refined Bangka Tin | * |
| Tin | PT Sariwiguna Binasentosa | * |
| Tin | PT Stanindo Inti Perkasa | * |
| Tin | PT Sumber Jaya Indah | * |
| Tin | PT Timah (Persero) Tbk Kundur | * |
| Tin | PT Tinindo Inter Nusa | * |
| Tin | PT Tommy Utama | * |
| Gold | PX Precinox SA | * |
| Tantalum | QuantumClean | * |
| Gold | Rand Refinery (Pty) Ltd. | * |
| Gold | Republic Metals Corporation | * |
| Tantalum | RFH Tantalum Smeltry Co., Ltd. | * |
| Gold | Royal Canadian Mint | * |
| Tin | Rui Da Hung | * |
| Gold | Sabin Metal Corp. | |
| Gold | Samduck Precious Metals | * |
| Gold | SAMWON METALS Corp. | |
| Gold | Schone Edelmetaal B.V. | * |
| Gold | SEMPSA Joyería Platería SA | * |
| Gold | Shandong Tiancheng Biological Gold Industrial Co., Ltd. | |
| Gold | Sichuan Tianze Precious Metals Co., Ltd. | * |
| Gold | So Accurate Group, Inc. | |
| Gold | SOE Shyolkovsky Factory of Secondary Precious Metals | * |
| Tin | Soft Metais Ltda. | * |
| Gold | Solar Applied Materials Technology Corp. | * |
| Tantalum | Solikamsk Magnesium Works OAO | * |
| Gold | Sumitomo Metal Mining Co., Ltd. | * |
| Tantalum | Taki Chemical Co., Ltd. | * |
| Gold | Tanaka Kikinzoku Kogyo K.K. | * |
| Tungsten | Tejing (Vietnam) Tungsten Co., Ltd. | * |
| Tantalum | Telex Metals | * |
| Tin | Thaisarco | * |
| Gold | The Refinery of Shandong Gold Mining Co., Ltd. | * |
| Gold | Tokuriki Honten Co., Ltd. | * |
| Gold | TongLing Nonferrous Metals Group Holdings Co., Ltd. | |
| Gold | Torecom | * |
| Tantalum | Ulba Metallurgical Plant JSC | * |
| Gold | Umicore Brasil Ltda. | * |
| Gold | Umicore Precious Metals Thailand | * |
|
| | |
| Gold | Umicore SA Business Unit Precious Metals Refining | * |
| Gold | United Precious Metal Refining, Inc. | * |
| Gold | Valcambi SA | * |
| Tungsten | Vietnam Youngsun Tungsten Industry Co., Ltd. | * |
| Tin | VQB Mineral and Trading Group JSC | * |
| Gold | Western Australian Mint trading as The Perth Mint | * |
| Tin | White Solder Metalurgia e Mineração Ltda. | * |
| Tungsten | Wolfram Bergbau und Hütten AG | * |
| Tungsten | Xinhai Rendan Shaoguan Tungsten Co., Ltd. | * |
| Gold | Yamamoto Precious Metal Co., Ltd. | * |
| Tantalum | Yichun Jin Yang Rare Metal Co., Ltd. | * |
| Gold | Yokohama Metal Co., Ltd. | * |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co.,Ltd. | * |
| Gold | Yunnan Copper Industry Co Ltd | |
| Tin | Yunnan Tin Group (Holding) Company Limited | * |
| Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | * |
| Tantalum | Zhuzhou Cemented Carbide Group Co., Ltd. | * |
*Indicates the smelter or refiner has received a “conflict free” designation from an independent third party audit program.
2016 Data Summary
Country of Origin
|
| | |
| Angola | Guyana | Peru |
| Argentina | Hong Kong | Philippines |
| Australia | Hungary | Portugal |
| Austria | India | Poland |
| Belgium | Indonesia | Russian/Federation |
| Bermuda | Ireland | Rwanda |
| Bolivia | Israel | Saudi Arabia |
| Brazil | Italy | Sierra Leone |
| Burundi | Japan | Singapore |
| Cambodia | Jersey | Slovakia |
| Canada | Kazakhstan | South Africa |
| Central African Republic | Kenya | South Sudan |
| Chile | Korea, Republic of | Spain |
| China | Kyrgyzstan | Suriname |
| Columbia | Laos | Switzerland |
| Congo (Brazzaville) | Luxembourg | Taiwan |
| Czech Republic | Madagascar | Tajikistan |
| Djibouti | Malaysia | Tanzania |
| Congo (Kinshasa) | Mali | Thailand |
| Ecuador | Mexico | Turkey |
| Egypt | Mongolia | Uganda |
| Estonia | Mozambique | United Arab Emirates |
| Ethiopia | Myanmar | United Kingdom |
| Finland | Namibia | United States |
| France | Netherlands | Uzbekistan |
| Germany | Niger | Vietnam |
| Ghana | Nigeria | Zambia |
| Guinea | Papua New Guinea | Zimbabwe |
