Our Social Impact

Supply Chain Social and Human Rights Assessment

Understanding the Entities Upstream of Neo

1. Sources of our Chemicals & Oxides (C&O) Input Material:

The raw materials required for C&O are critical minerals that are subject to annual processing quotas in China of approximately 1,500 tonnes (REO) at Neo’s ZAMR facility and 1,100 tonnes (REO) at the Company’s JAMR facility, both of which provide a degree of vertical integration as they have the ability to purchase and separate specialty chemicals for their own internal use and/ or to sell to third parties. Also, ZAMR and JAMR sometimes use RE concentrates from outside China, which may enable them to produce more than the allotted quota limits. The balance of the material inputs needed by Neo are sometimes purchased from a number of alternative suppliers, including jurisdictions such as Australia (via Malaysia), Russia, China, and Vietnam.

2. Sources of our Magnequench (MQ) Input Material:

Magnequench’s Tianjin facility sources its Nd and Pr raw materials primarily from Chinese critical minerals processors, while its Korat, Thailand operation sources material from Silmet and third parties outside China. The main material sourced from Silmet is neodymium oxide. This oxide must be converted into metal form before it can be utilized by Magnequench. The conversion process is outsourced to a related third party pursuant to a toll processing agreement with GQD Special Material (Thailand) Co. Ltd. (“GQD”), a Thai joint venture in which Neo owns a 20% interest and which operates a production facility in Rayong, Thailand. At the Tianjin facility, much of the raw material that goes into the production of Magnequench Powders is stored at its facilities on a consignment basis and is purchased as consumed. From a supply chain perspective, Magnequench benefits from several competitive advantages that help contribute to its market leading position in bonded and hot deformed NdFeB magnets. Magnequench’s longstanding relationships with its key suppliers in China, as well as its alternative source of supply through internal procurement and outside of China, provide it with a balanced global supply chain. Magnequench also has the ability to source its supply from Neo’s C&O business unit. Customers value the security provided by this ability to source material from both inside and outside of China. In addition, the consignment agreements at Tianjin allow Magnequench to maintain a highly efficient supply chain. Volatility of input costs is managed through pricing mechanisms that allow Magnequench to pass input costs on to customers with short lag times. The Magnequench Magnet business uses Magnequench Powders as its primary raw material input.

3. Sources of our Rare Metals (RM) Input Material:

The Rare Metals segment sources its materials conflictfree from Africa, South America, and Asia. Neo’s Rare Metals plant in Estonia, Silmet, has held a conflict-free certification from the Electronic Industry Citizenship Coalition (EICC) every year since 2014, when it received official certification for the period covering 2013. This certification is an important element of customer relations, as many customers consider the certification a key criterion in determining their sourcing decisions. The certification is awarded annually and provides proof that Neo’s products do not contain “conflict minerals” from the Democratic Republic of Congo or an adjoining country

Negative Social Impacts in the Supply Chain and Actions

Neo Rare Metals at Silmet purchases beneficiated niobium and tantalum from RMAP reviewed and approved sources. In 2021, Neo developed and adopted corporate-wide Procurement and Human Rights Policies. In addition, from 2022 onwards, Neo’s procurement functions at the plantlevel will begin to gradually incorporate commitments by suppliers and vendors to comply with our human rights standards across the value chain.