EX-1.01 2 ex1_01.htm CONFLICT MINERALS REPORT
EXHIBIT 1.01
 
NU SKIN ENTERPRISES, INC.
2018 CONFLICT MINERALS REPORT
 
May 29, 2019
 
We prepared this 2018 Conflict Minerals Report (“CMR”) pursuant to Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”), which was promulgated in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to impose reporting, disclosure and other requirements on registrants that manufacture, or contract the manufacture of, products for which any of the following minerals are necessary to their functionality or production: columbite-tantalite (coltan), cassiterite, wolframite or gold, or derivatives of these minerals, which include tantalum, tin and tungsten (collectively, the “3TG Minerals”).
 
If a registrant has reason to believe that any of the 3TG Minerals necessary to the functionality or production of its products may have originated in certain “Covered Countries,” consisting of the Democratic Republic of the Congo and its adjoining countries, or if a registrant is unable to determine the country of origin of such 3TG Minerals, then the registrant must exercise due diligence on the source and chain of custody of such 3TG Minerals.
 
Products
 
We develop and distribute innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions under our two category brands: our beauty and personal care category brand known as Nu Skin® and our nutritional products category brand, Pharmanex®. We have also leveraged our scientific expertise in the area of anti-aging to develop our ageLOC® brand, which features innovative products in both of these categories. We reviewed our products in each of our product categories to identify the products for which 3TG Minerals are necessary to their functionality or production (the “Covered Products”). We determined that our Covered Products for 2018 consisted of our home-use skin care treatment devices, our Pharmanex BioPhotonic Scanner, a water purifier product that we sell in our Southeast Asia region, and certain cosmetics products that we sell in South Korea. We contracted with six suppliers to manufacture these products in 2018.
 
Results of Supplier Inquiries
 
The six suppliers of our Covered Products were asked to complete and submit the Conflict Minerals Reporting Template (the “Reporting Template”) developed by the Responsible Minerals Initiative (“RMI”). The Reporting Template is a standardized questionnaire that requests, among other things, information regarding the country of origin of the 3TG Minerals contained in the products and/or components that are supplied to us and the suppliers in our supply chain. We received responses from all six suppliers. Four of the suppliers indicated that the 3TG Minerals that they use do not originate from any of the Covered Countries. The other two suppliers indicated that they are unable to state that the 3TG Minerals they use do not originate from the Covered Countries.
 
Our suppliers source directly from smelters, refiners or other suppliers. As a result, our efforts to identify the origins of the 3TG Minerals in our supply chain were based on the information we received from the suppliers. The suppliers’ information-gathering process, in turn, consists of their own efforts to retrieve information from their smelters, refiners or other suppliers. We must rely on the suppliers to provide information regarding the origin of the 3TG Minerals that are included in the Covered Products. We recognize that this process may result in inaccurate or incomplete information.
 
1
Based on our efforts and those of our suppliers, we do not have conclusive information regarding the specific countries of origin of the 3TG Minerals in our Covered Products for 2018. However, all six suppliers of our Covered Products provided a list of the smelters and refiners supplying 3TG Minerals to their respective supply chains. Based on our review of these smelters and refiners, 129 of the 133 unique smelters and refiners identified by our suppliers were conformant with RMI’s Responsible Minerals Assurance Process (“RMAP”) assessment standards. According to RMI’s website, the RMAP program identifies, through independent, third-party audits, smelters and refiners that have systems in place to responsibly source minerals in line with current global standards.
 
A consolidated list of the smelters and refiners used by the six suppliers of our Covered Products is included in Exhibit A.
 
Due Diligence
 
We designed a program to exercise due diligence on the source and chain of custody of the 3TG Minerals that are necessary to the functionality or production of our Covered Products. We designed our due diligence program based on the internationally recognized due diligence framework set forth in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, including the related Supplement on Tin, Tantalum and Tungsten and the Supplement on Gold (the “OECD Framework”).
 
In accordance with the OECD Framework, our due diligence measures include the following steps:
 
1.
Establish strong company management systems.
 

 •
We have adopted a Conflict Minerals Policy and have communicated it to the suppliers of our Covered Products.  This policy states the following:
 
In response to violence and human rights violations related to the mining of certain minerals in the Democratic Republic of the Congo (the “DRC”), Congress enacted Section 1502 of the Dodd‐Frank Wall Street Reform and Consumer Protection Act, which directed the U.S. Securities and Exchange Commission (the “SEC”) to adopt a rule requiring reporting on “conflict minerals” (the “Conflict Minerals Rule”).  Conflict minerals include gold, tantalum, tin, and tungsten, which are used in many electronic components and computer products.  The Conflict Minerals Rule requires companies that are required to file reports with the SEC to report annually on their products that may contain conflict minerals sourced from mines in the DRC or adjoining countries.
 
Nu Skin Enterprises, Inc. (the “Company”) supports the goal of ending violence and human rights violations in the DRC and adjoining countries.  The Company is committed to the responsible sourcing of conflict minerals throughout its supply chain and to continuing to comply with the Conflict Minerals Rule.
 
The Company does not directly source minerals from smelters or mines.  Therefore, the Company relies on the information provided by its raw material or product suppliers regarding their sourcing of minerals.  The Company expects its suppliers to source minerals from socially responsible suppliers and to provide all necessary declarations to the Company to support the Company’s compliance with the Conflict Minerals Rule.  The Company expects suppliers to pass this requirement on to their supply chain to the extent necessary to determine the source of the specified minerals.  The Company may reconsider its relationship with suppliers that do not comply with this policy.
 
2
The Company is committed to ethical practices and compliance with applicable laws and regulations wherever it does business.  The Company will regularly survey its suppliers and will perform due diligence as appropriate to verify compliance with this policy.
 

 •
We established a diligence team to oversee and support a supply-chain survey, perform due diligence and provide periodic updates to our management.
 

 •
We sought to enhance transparency with the suppliers of our Covered Products by asking the suppliers to complete the Reporting Template.
 

 •
We have established a grievance mechanism; our whistleblower hotline and online whistleblower intake form are available for employees to report behavior that is illegal, unethical or otherwise in violation of our corporate policies, including our Conflict Minerals Policy.
 

 •
We have provided background information and training on the Rule to employees involved in our conflict minerals compliance efforts.
 
2.
Identify and assess risks in the supply chain.
 
We take the following steps to identify and assess risks in our supply chain:
 

 •
We obtain information from the suppliers of our Covered Products to seek to verify the country of origin of necessary 3TG Minerals in our supply chain by asking the suppliers to complete the Reporting Template, which requests this information, and through additional communications with the suppliers regarding the Reporting Template and the Rule.
 

 •
We also endeavor to identify the smelters and refiners in our supply chain.  We do so by asking our suppliers to complete the Reporting Template, which requests this information, and through additional communications with the suppliers as needed.  We then consider whether the smelters and refiners are in conformance with RMI’s RMAP assessment standards.
 

 •
The Reporting Template also requests information about our suppliers’ due diligence measures; the due diligence measures of our suppliers’ upstream suppliers, smelters and refiners; and the policies and standards our suppliers impose on such upstream suppliers, smelters and refiners.
 

 •
We review the information our suppliers provide in the Reporting Template and other communications, and we assess whether the responses raise any potential risks.
 
3.
Design and implement a strategy to respond to identified risks.
 
After identifying and assessing risks in our supply chain, we design and implement a strategy to respond to any identified risks.  This strategy includes the following:
 

 •
We advise the appropriate members of management of our findings in the risk assessment.  Depending on the severity of the risks, we may advise our senior management of the findings.
 

 •
As provided in our Conflict Minerals Policy, we also reconsider our relationship with suppliers that do not comply with the policy.  We assess whether to (a) continue doing business with such suppliers; (b) temporarily suspend doing business with such suppliers while pursuing ongoing measurable risk mitigation; or (c) disengage with such suppliers after failed attempts at mitigation or where we deem risk mitigation not feasible or unacceptable. In making this assessment, we consider the amount of leverage we have over upstream suppliers, the feasibility of using a different supplier, and the supplier’s values and standards.
 
3
4.
Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain.
 
We do not have direct relationships with the mines, smelters or refiners of any minerals, including 3TG Minerals, and we do not perform or direct audits of these entities within our supply chain. However, we leverage the audit work conducted by third parties to comply with the OECD Framework to conduct independent third-party audits.
 
5.
Report on supply chain due diligence.
 
We report on our efforts to understand the sourcing of the 3TG Minerals in our supply chain by annually filing a Form SD with the SEC.  We also provide a CMR, which describes our supply chain due diligence policies and practices, when required.
 
Risk Mitigation Efforts
 
To mitigate the risk that the 3TG Minerals that are necessary to the functionality or production of our products benefit armed groups, and to improve our due diligence, we have taken or intend to take the following steps:
 

 •
Communicate our Conflict Minerals Policy to the suppliers of our Covered Products; and
 

 •
Coordinate with our suppliers to consider alternative component sources if a current source is unable to supply components that are free of 3TG Minerals that benefit armed groups in the DRC or adjoining countries.

4
Exhibit A
Smelters and Refiners Used by Suppliers of Covered Products

 
Mineral
 
Smelter/Refiner Name
 
Smelter/Refiner
Location
RMAP
Conformant(1)
 
Gold
 
Advanced Chemical Company
 
United States
Yes
 
Gold
 
Aida Chemical Industries Co., Ltd.
 
Japan
Yes
 
Gold
 
Al Etihad Gold Refinery DMCC
 
United Arab Emirates
Yes
 
Gold
 
Allgemeine Gold-und Silberscheideanstalt A.G.
 
Germany
Yes
 
Gold
 
Almalyk Mining and Metallurgical Complex (AMMC)
 
Uzbekistan
Yes
 
Gold
 
Argor-Heraeus S.A.
 
Switzerland
Yes
 
Gold
 
Asahi Refining USA Inc.
 
United States
Yes
 
Gold
 
Asaka Riken Co., Ltd.
 
Japan
Yes
 
Gold
 
AU Traders and Refiners
 
South Africa
Yes
 
Gold
 
Bangko Sentral ng Pilipinas (Central Bank of the Philippines)
 
Philippines
Yes
 
Gold
 
Dowa
 
Japan
Yes
 
Gold
 
Eco-System Recycling Co., Ltd.
 
Japan
Yes
 
Gold
 
Heraeus Metals Hong Kong Ltd.
 
China
Yes
 
Gold
 
Heraeus Precious Metals GmbH & Co. KG
 
Germany
Yes
 
Gold
 
Inner Mongolia Qiankun Gold and Silver Refinery Share Co., Ltd.
 
China
Yes
 
Gold
 
Ishifuku Metal Industry Co., Ltd.
 
Japan
Yes
 
Gold
 
Istanbul Gold Refinery
 
Turkey
Yes
 
Gold
 
Japan Mint
 
Japan
Yes
 
Gold
 
Jiangxi Copper Co., Ltd.
 
China
Yes
 
Gold
 
JSC Uralelectromed
 
Russian Federation
Yes
 
Gold
 
JX Nippon Mining & Metals Co., Ltd.
 
Japan
Yes
 
Gold
 
Kojima Chemicals Co., Ltd.
 
Japan
Yes
 
Gold
 
Korea Zinc Co., Ltd.
 
South Korea
Yes
 
Gold
 
Kyrgyzaltyn JSC
 
Kyrgyzstan
Yes
 
Gold
 
LS-NIKKO Copper Inc.
 
South Korea
Yes
 
Gold
 
Metalor Technologies (Hong Kong) Ltd.
 
China
Yes
 
Gold
 
Metalor Technologies (Suzhou) Ltd.
 
China
Yes
 
Gold
 
Metalor Technologies S.A.
 
Switzerland
Yes
 
Gold
 
Metalor USA Refining Corporation
 
United States
Yes
 
Gold
 
Metalurgica Met-Mex Penoles S.A. De C.V.
 
Mexico
Yes
 
Gold
 
Mitsubishi Materials Corporation
 
Japan
Yes
 
Gold
 
Mitsui Mining and Smelting Co., Ltd.
 
Japan
Yes
 
Gold
 
MMTC-PAMP India Pvt., Ltd.
 
India
Yes
 
Gold
 
Nadir Metal Rafineri San. Ve Tic. A.S.
 
Turkey
Yes
 
Gold
 
OJSC “The Gulidov Krasnoyarsk Non-Ferrous Metals Plant” (OJSC Krastsvetmet)
 
Russian Federation
Yes
 
Gold
 
OJSC Novosibirsk Refinery
 
Russian Federation
Yes

5
 
Mineral
 
Smelter/Refiner Name
 
Smelter/Refiner
Location
RMAP
Conformant(1)
 
Gold
 
PAMP S.A.
 
Switzerland
Yes
 
Gold
 
PT Aneka Tambang (Persero) Tbk
 
Indonesia
Yes
 
Gold
 
PX Precinox S.A.
 
Switzerland
Yes
 
Gold
 
Republic Metals Corporation
 
United States
No
 
Gold
 
Royal Canadian Mint
 
Canada
Yes
 
Gold
 
Shandong Zhaojin Gold & Silver Refinery Co., Ltd.
 
China
Yes
 
Gold
 
Solar Applied Materials Technology Corp.
 
Taiwan
Yes
 
Gold
 
Sumitomo Metal Mining Co., Ltd.
 
Japan
Yes
 
Gold
 
T.C.A S.p.A
 
Italy
Yes
 
Gold
 
Tanaka Kikinzoku Kogyo K.K.
 
Japan
Yes
 
Gold
 
The Refinery of Shandong Gold Mining Co., Ltd.
 
China
Yes
 
Gold
 
Umicore S.A. Business Unit Precious Metals Refining
 
Belgium
Yes
 
Gold
 
United Precious Metal Refining, Inc.
 
United States
Yes
 
Gold
 
Western Australian Mint (T/a The Perth Mint)
 
Australia
Yes
 
Gold
 
Zhongyuan Gold Smelter of Zhongjin Gold Corporation
 
China
Yes
 
Tantalum
 
Asaka Riken Co., Ltd.
 
Japan
Yes
 
Tantalum
 
Changsha South Tantalum Niobium Co., Ltd.
 
China
Yes
 
Tantalum
 
D Block Metals, LLC
 
United States
Yes
 
Tantalum
 
Exotech Inc.
 
United States
Yes
 
Tantalum
 
Global Advanced Metals Aizu
 
Japan
Yes
 
Tantalum
 
Global Advanced Metals Boyertown
 
United States
Yes
 
Tantalum
 
Guangdong Rising Rare Metals-EO Materials Ltd.
 
China
Yes
 
Tantalum
 
H.C. Starck Co., Ltd.
 
Thailand
Yes
 
Tantalum
 
H.C. Starck Hermsdorf GmbH
 
Germany
Yes
 
Tantalum
 
H.C. Starck Inc.
 
United States
Yes
 
Tantalum
 
H.C. Starck Ltd.
 
Japan
Yes
 
Tantalum
 
H.C. Starck Smelting GmbH & Co. KG
 
Germany
Yes
 
Tantalum
 
H.C. Starck Tantalum and Niobium GmbH
 
Germany
Yes
 
Tantalum
 
Hengyang King Xing Lifeng New Materials Co., Ltd.
 
China
Yes
 
Tantalum
 
Jiujiang Janny New Material Co., Ltd.
 
China
Yes
 
Tantalum
 
LSM Brasil S.A.
 
Brazil
Yes
 
Tantalum
 
Metallurgical Products India Pvt., Ltd.
 
India
Yes
 
Tantalum
 
Mitsui Mining and Smelting Co., Ltd.
 
Japan
Yes
 
Tantalum
 
Ningxia Orient Tantalum Industry Co., Ltd.
 
China
Yes
 
Tantalum
 
Solikamsk Magnesium Works OAO
 
Russian Federation
Yes
 
Tantalum
 
Taki Chemical Co., Ltd.
 
Japan
Yes
 
Tantalum
 
Ulba Metallurgical Plant JSC
 
Kazakhstan
Yes
 
Tin
 
Alpha
 
United States
Yes
 
Tin
 
Chenzhou Yunxiang Mining and Metallurgy Co., Ltd.
 
China
Yes

6
 
Mineral
 
Smelter/Refiner Name
 
Smelter/Refiner
Location
RMAP
Conformant(1)
 
Tin
 
China Tin Group Co., Ltd.
 
China
Yes
 
Tin
 
CNMC (Guangxi) PGMA Co., Ltd.
 
China
No
 
Tin
 
CV Ayi Jaya
 
Indonesia
Yes
 
Tin
 
CV United Smelting
 
Indonesia
Yes
 
Tin
 
CV Venus Inti Perkasa
 
Indonesia
Yes
 
Tin
 
Dowa
 
Japan
Yes
 
Tin
 
EM Vinto
 
Bolivia
Yes
 
Tin
 
Fenix Metals
 
Poland
Yes
 
Tin
 
Gejiu Non-Ferrous Metal Processing Co., Ltd.
 
China
Yes
 
Tin
 
Guangdong Hanhe Non-Ferrous Metal Co., Ltd.
 
China
Yes
 
Tin
 
Malaysia Smelting Corporation (MSC)
 
Malaysia
Yes
 
Tin
 
Metallo Belgium N.V.
 
Belgium
Yes
 
Tin
 
Mineracao Taboca S.A.
 
Brazil
Yes
 
Tin
 
Minsur
 
Peru
Yes
 
Tin
 
Mitsubishi Materials Corporation
 
Japan
Yes
 
Tin
 
O.M. Manufacturing (Thailand) Co., Ltd.
 
Thailand
Yes
 
Tin
 
O.M. Manufacturing Philippines, Inc.
 
Philippines
Yes
 
Tin
 
Operaciones Metalurgicas S.A.
 
Bolivia
Yes
 
Tin
 
PT Artha Cipta Langgeng
 
Indonesia
Yes
 
Tin
 
PT Bangka Prima Tin
 
Indonesia
Yes
 
Tin
 
PT Bangka Tin Industry
 
Indonesia
Yes
 
Tin
 
PT Bukit Timah
 
Indonesia
Yes
 
Tin
 
PT DS Jaya Abadi
 
Indonesia
Yes
 
Tin
 
PT Eunindo Usaha Mandiri
 
Indonesia
No
 
Tin
 
PT Menara Cipta Mulia
 
Indonesia
Yes
 
Tin
 
PT Mitra Stania Prima
 
Indonesia
Yes
 
Tin
 
PT Prima Timah Utama
 
Indonesia
Yes
 
Tin
 
PT Rajehan Ariq
 
Indonesia
Yes
 
Tin
 
PT Sariwiguna Binasentosa
 
Indonesia
Yes
 
Tin
 
PT Stanindo Inti Perkasa
 
Indonesia
Yes
 
Tin
 
PT Timah Tbk Kundur
 
Indonesia
Yes
 
Tin
 
PT Timah Tbk Mentok
 
Indonesia
Yes
 
Tin
 
PT Tinindo Inter Nusa
 
Indonesia
Yes
 
Tin
 
Rui Da Hung
 
Taiwan
Yes
 
Tin
 
Thaisarco
 
Thailand
Yes
 
Tin
 
White Solder Metalurgia e Mineracao Ltda.
 
Brazil
Yes
 
Tin
 
Yunnan Chengfeng Non-ferrous Metals Co., Ltd.
 
China
Yes
 
Tin
 
Yunnan Tin Company Limited
 
China
Yes
 
Tungsten
 
A.L.M.T. Corp.
 
Japan
Yes

7
 
Mineral
 
Smelter/Refiner Name
 
Smelter/Refiner
Location
RMAP
Conformant(1)
 
Tungsten
 
ACL Metais Eireli
 
Brazil
Yes
 
Tungsten
 
Asia Tungsten Products Vietnam Ltd.
 
Vietnam
Yes
 
Tungsten
 
Chenzhou Diamond Tungsten Products Co., Ltd.
 
China
Yes
 
Tungsten
 
Chongyi Zhangyuan Tungsten Co., Ltd.
 
China
Yes
 
Tungsten
 
Ganzhou Huaxing Tungsten Products Co., Ltd.
 
China
Yes
 
Tungsten
 
Ganzhou Seadragon W & Mo Co., Ltd.
 
China
Yes
 
Tungsten
 
Global Tungsten & Powders Corp.
 
United States
Yes
 
Tungsten
 
H.C. Starck Smelting GmbH & Co. KG
 
Germany
Yes
 
Tungsten
 
H.C. Starck Tungsten GmbH
 
Germany
Yes
 
Tungsten
 
Hunan Chunchang Nonferrous Metals Co., Ltd.
 
China
Yes
 
Tungsten
 
Japan New Metals Co., Ltd.
 
Japan
Yes
 
Tungsten
 
Jiangxi Xinsheng Tungsten Industry Co., Ltd.
 
China
Yes
 
Tungsten
 
Jiangxi Yaosheng Tungsten Co., Ltd.
 
China
Yes
 
Tungsten
 
Kennametal Huntsville
 
United States
Yes
 
Tungsten
 
Masan Tungsten Chemical LLC (MTC)
 
Vietnam
Yes
 
Tungsten
 
Philippine Chuangxin Industrial Co., Inc.
 
Philippines
Yes
 
Tungsten
 
Vietnam Youngsun Tungsten Industry Co., Ltd.
 
Vietnam
No
 
Tungsten
 
Xiamen Tungsten (H.C.) Co., Ltd.
 
China
Yes
 
Tungsten
 
Xiamen Tungsten Co., Ltd.
 
China
Yes

  (1)
The entries in this column indicate whether the smelter or refiner is conformant with RMAP assessment standards, based on a list of RMAP-conformant smelters and refiners that was downloaded from RMI’s website on May 22, 2019.


8