Background

 

There has been increased awareness regarding the human rights violations in the mining of certain minerals from an area known as the “Conflict Region”; the Democratic Republic of the Congo (DRC) and surrounding countries. Through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, publically traded companies have been chartered to practice reasonable due diligence with their supply chain to determine if “conflict minerals” used in their products are being sourced from mines controlled by non-government or unlawful military groups within the Conflict Region. The definition of “Conflict Minerals” refers to tin, tantalum, tungsten and gold (3TG).

 

Tracing materials back to their mine of origin is a complex endeavor but an important aspect of responsible sourcing. MTC Industries & Research Karmiel Ltd. (“MTC”) looks to industry guidelines to help establish its programs such as the joint Electronic Industry Citizen Coalition (EICC) and the Global e-Sustainability Initiative (GeSI) which is taking action to address responsible sourcing through the development of the Conflict-Free Smelter (CFS) program aiming to enable companies to source conflict-free minerals.

 

Commitment

 

In accordance with the law and SEC rule, but more importantly in the spirit of our Code of Conduct, MTC will work with our supply chain partners to take reasonable steps to ensure MTC’s compliance with regulations and to strive towards sourcing product which is considered “3TG Conflict Free” . If “3TG Conflict Free” status cannot be determined by a supplier, or if, after allowing the supplier a reasonable timeframe to achieve “3TG Conflict Free” status, the supplier is unable to achieve such status, MTC  will execute remediation steps to evaluate and procure, as necessary, alternate products and materials. It is the desire of MTC to eventually reach “3TG Conflict Free” status; however, due to the complexity of our supply chain and the number of suppliers involved, it is a goal we will seek to achieve over time. In the meantime, MTC will take reasonable steps working with our suppliers to map our 3TG Products back to the smelter to determine if the 3TG in our 3TG Products is coming from a smelter considered “conflict free” by a recognized organization or program.

 

Expectations of Suppliers

 

MTC expects our suppliers to partner with us to reach “3TG Conflict Free” status. We expect our suppliers, at a minimum, to:

 

• Establish a conflict mineral policy consistent with MTC’s Conflict Minerals Policy, implement management systems to support compliance with their policy and require their suppliers of any tier to take the same steps towards achieving "3TG Conflict Free" status.

 

• MTC believes in establishing and maintaining long-term relationships with suppliers whenever possible. However, if we determine that any supplier is, or a reasonable risk exists that it may be, violating this policy, then we will require the supplier to commit to devise and undertake suitable corrective action to move to a conflict free source. If suitable action is not taken, we will look to alternative sources for the product. MTC’s efforts are not to ban procurement of minerals from the DRC and adjoining countries, but to assure procurement from responsible sources in the region. If we determine that any of the components of our products contain minerals from a mine or facility that is “non-conflict free”, we will work towards transitioning to products that are “conflict free”.