AMG Critical Materials N.V. ANNUAL

Market Risk

28. Financial risk management objectives and policies The Company’s principal financial liabilities, other than derivatives, are comprised of loans and borrowings, short-term bank debt, bank acceptance notes and trade and other payables. The main purpose of these financial instruments is to provide capital for the Company’s operations, including funding working capital, capital maintenance and expansion. The Company has various financial assets such as trade and other receivables, cash and cash equivalents and restricted cash, which arise directly from its operations. The Company enters into derivative financial instruments, primarily interest rate swaps, interest rate caps, cross-currency interest rate swaps, foreign exchange forward contracts, energy forward contracts and commodity forward contracts. The purpose of these instruments is to manage interest rate, currency, energy and commodity price risks. The Company does not enter into any contracts for speculative purposes. The Supervisory Board has overall responsibility for the establishment of the Company’s risk management framework while the Management Board is responsible for oversight and compliance within this framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The main risks arising from the Company’s financial instruments are: credit, liquidity and market risks. Credit risk The Company’s exposure to credit risk with respect to trade and other receivables is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. No single customer accounts for more than 6% of the Company’s revenue. There are no geographic concentrations of credit risk. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures which ensure their creditworthiness. In addition, receivable balances are monitored on an ongoing basis to ensure that the Company’s exposure to impairment losses is not si