Neo is committed to continually enhancing its environmental and social practices, and to achieve this objective, the company seeks to extend the scope of its evaluations to include upstream entities as part of its continuous improvement model. At Neo, we believe in transparency and make it a point to communicate our environmental and social requirements to both existing and potential suppliers. Neo has a procurement policy that encompasses various environmental and social concerns, such as adhering to relevant environmental laws and regulations, refraining from collaborating with suppliers involved in human rights violations, establishing standards for contractors, and considering other social and environmental factors. Several of our major facilities have proactively enhanced their procurement standards by adopting policies that prioritize suppliers with ISO-14001 certifications.
Sources of our Chemicals & Oxides (C&O) Input Material
The raw materials required for C&O are critical minerals 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 facilities provide a degree of vertical integration, as they can purchase and separate specialty chemicals for their own internal use or to sell to third parties. Additionally, ZAMR and JAMR sometimes use RE concentrates from outside China, which enable them to increase production beyond what’s possible through the allotted quota limits. The balance of the material inputs required by Neo are occasionally sourced from various alternative suppliers, including jurisdictions such as Australia (via Malaysia), Russia, China, and Vietnam.
Sources of our Magnequench (MQ)
Input Material Magnequench’s Tianjin facility sources its critical neodymium and praseodymium raw materials primarily from Chinese processors, while its Thailand operation in Korat sources materials from Sillamäe and third-party suppliers outside of China. Neodymium oxide is the primary material obtained from Silmet, which requires conversion into its metal form before it can be used by Magnequench Korat. To accomplish this, Magnequench outsources the conversion process to a related third party via a toll processing agreement with GQD Special Material (Thailand) Co. Ltd., a Thai joint venture in which Neo has a 20% stake and operates a facility in Rayong, Thailand. Much of the raw materials used in the production of Magnequench Powders at the Tianjin facility are stored on a consignment basis and purchased as consumed. Magnequench’s leading position in the market for bonded and hot deformed NdFeB magnets is supported by several competitive advantages in its supply chain. These include long-standing relationships with key suppliers in China, as well as alternative sources of supply through internal procurement and suppliers outside of China. Additionally, Magnequench also has the ability to source materials from Neo’s C&O business unit. The consignment agreements at Tianjin allow for a highly efficient supply chain, and the company manages input cost volatility through pricing mechanisms that enable it to pass on costs to customers with short lead-lag. Magnequench’s primary raw material input for its magnet business is Magnequench Powders.
Sources of our Rare Metals (RM)
Input Material Neo’s Rare Metals segment responsibly sources its materials from conflict-free locations in Africa, South America, and Asia. Its Silmet plant in Estonia has maintained a conflict-free certification from the Electronic Industry Citizenship Coalition (EICC) since 2014, when it was first certified for the 2013 period. This certification is highly valued by customers who consider it an important criterion in their sourcing decisions. The certification is renewed annually, providing assurance that Neo’s products do not contain “conflict minerals” sourced from the Democratic Republic of Congo or its neighboring countries.
Neo Rare Metals at Silmet purchases beneficiated niobium and tantalum from RMAP reviewed and approved sources.
Neo implemented corporate-wide Procurement and Human Rights Policies in 2021. As of 2022, the company’s plant-level procurement functions have begun integrating requirements for suppliers and vendors to uphold human rights standards throughout the value chain.