Form SD PRAXAIR INC
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM SD
Specialized Disclosure Report
___________________________________
PRAXAIR, INC. |
(Exact name of registrant as specified in its charter) |
DELAWARE | 1-11037 | 06-1249050 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation or organization) | File Number) | Identification No.) |
39 OLD RIDGEBURY ROAD, DANBURY CT | 06810-5113 |
(Address of principal executive offices) | (Zip Code) |
Elizabeth T. Hirsch (203) 837-2000 |
(Name and telephone number, including area code, of the person to contact in connection with this report.) |
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
þ Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2015.
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
Conflict Minerals Disclosure
Praxair, Inc. (“Praxair”) is filing a Conflict Minerals Report as Exhibit 1.01 to this Specialized Disclosure Form (Form SD), because, as further described in the Conflict Minerals Report, certain products manufactured by Praxair (or its consolidated subsidiaries) are required to be reported for the year ended on December 31, 2015. Refer to Exhibit 1.01, Conflict Minerals Report, for a description of Praxair’s reasonable country of origin inquiry, due diligence process and the results, which report is incorporated into this Item 1.01 by reference.
Praxair is hereby filing this Form SD, including the Conflict Minerals Report, and has also posted those documents to Praxair’s website at www.praxair.com.
Certain statements in this Form SD and the Conflict Minerals Report filed as Exhibit 1.02 may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “intends,” “expects,” “believes,” “estimates,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future plans, and any other statement that does not directly relate to any historical or current fact. These statements are based on management’s reasonable expectations and assumptions as of the date such statements are made but involve risks and uncertainties and are subject to changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from these forward-looking statements. The Company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances.
Item 1.02 Exhibit
Praxair has filed, as an exhibit to this Form SD, the Conflict Minerals Report required by Item 1.01.
Section 2 - Exhibits
Item 2.01 Exhibits
The following exhibit is filed as part of this report:
Exhibit 1.01 - Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form SD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PRAXAIR, INC. | |||
(Registrant) | |||
By: | /s/ Elizabeth T. Hirsch | Date: May 31, 2016 | |
Elizabeth T. Hirsch Vice President and Controller (On behalf of the Registrant and as Chief Accounting Officer) | |||
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Praxair, Inc.
EXHIBIT 1.01
Praxair, Inc.
Conflict Minerals Report
For The Year Ended December 31, 2015
Praxair, Inc. (together with its consolidated subsidiaries, “Praxair”, “Company”, “we” or “our”) is filing this Conflict Minerals Report (“CMR”) pursuant to Rule 13p-1 under the Securities Exchange Act of 1934.
In August 2012, the Securities and Exchange Commission (“SEC”) approved final rules to implement the requirements of Section 1502 (“Conflict Minerals Provision”) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Conflict Minerals Provision of the Dodd-Frank Act imposes certain reporting obligations on SEC registrants who manufacture or contract to manufacture products that contain “conflict minerals” which are necessary to the functionality or production of those products (“necessary conflict minerals”). Conflict minerals are generally defined under the Conflict Minerals Provision as tin, tantalum, tungsten, and gold (commonly referred to as “3TG”).
If a registrant can establish that its necessary conflict minerals originated from sources other than the Democratic Republic of the Congo (“DRC”) or an adjoining country (collectively the “Covered Country(ies)”), or from recycled or scrap sources, registrants are required to submit only a Form SD which describes the reasonable country of origin inquiry (“RCOI”) completed. The term “adjoining country” is defined to include Angola, Burundi, Central African Republic, Rwanda, South Sudan, Tanzania, Uganda, and Zambia.
Further, if a registrant has reason to believe that any of the necessary conflict minerals may have originated in the Covered Countries and did not come from recycled or scrap sources, or if they are unable to determine the country of origin of those conflict minerals, then the issuer must exercise due diligence on the source and chain of custody of its conflict minerals. In this case, the registrant must also annually submit a CMR to the SEC that includes a description of those due diligence measures, unless as a result of the due diligence, the registrant determines its conflict materials did not originate in the Covered Countries or did come from recycled or scrap sources.
On April 14, 2014, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit Court”) issued a decision holding it unconstitutional for issuers to be required to disclose whether their products are “DRC conflict free” or not having been found to be “DRC conflict free” because it would compel speech in violation of the First Amendment. On August 18, 2015, the D.C. Circuit Court upheld its prior 2014 decision.
In light of the D.C. Circuit Court decisions, the SEC has issued a statement that a registrant is not required to disclose their conflict minerals status. If a registrant voluntarily elects to describe any of its products as “DRC conflict free” in its CMR, it would be permitted to do so, provided it has obtained an independent private sector audit (“IPSA”).
1.Business and Product Overview
Praxair is one of the largest industrial gases companies worldwide and the largest in North and South America. Praxair produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings to a diverse group of industries, including healthcare, petroleum refining, manufacturing, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment. For the year ended December 31, 2015, Praxair’s industrial gases business generated 94% of consolidated sales and its surface technologies business, operated through Praxair Surface Technologies, Inc., generated the remaining 6% of consolidated sales.
•Industrial Gases: Praxair’s primary industrial gases products are atmospheric gases (oxygen, nitrogen, argon, and rare gases) and process gases (carbon dioxide, helium, hydrogen, semiconductor process gases, and acetylene). There are no conflict minerals included in these products. Praxair also distributes hardgoods and welding equipment purchased from independent manufacturers for resale. Resale products are not within the scope of the Conflict Minerals Provision. However, Praxair sells (i) sputtering targets that are used by certain customers in the production of semiconductors which either contain or may contain tantalum, tin, tungsten and/or gold, and (ii) certain equipment related to its gases business where it has influence or control over the manufacturing or assembly process where tin and/or gold may be present in component parts used in the production of
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equipment. These products that either contain or may contain necessary conflict minerals represent approximately 2% of Praxair’s 2015 consolidated sales.
•Surface Technologies: Praxair’s surface technologies business supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders. Praxair has determined that certain coating processes use materials that either contain or may contain tantalum, tin, tungsten and/or gold.
In summary, Praxair has determined that approximately 8% of its 2015 consolidated sales relate to products that Praxair manufactures or contracts to manufacture that may contain necessary conflict minerals.
Refer to our 2015 Annual Report on Form 10-K, Part I, Item 1 Business for further details about the Company’s business.
2.Country of Origin Determination
Framework
Praxair’s process has been designed to conform, in all material respects, with the framework set forth in the Organisation for Economic Co-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance) and the related supplements for gold and for tin, tantalum and tungsten.
Management Systems
Conflict Minerals Policy
Praxair has adopted a Conflict Materials Supply Policy. This policy is available on our website at http://www.praxair.com/our-company/corporate-responsibility/policies-and-position-statements/conflict-free-materials-policy.
Internal Team
Praxair established an internal management team comprised of executive level and business unit representation. The executive members of the team are responsible for the oversight of the conflict minerals compliance strategy. The business unit representatives are responsible for implementing, improving and maintaining Praxair’s conflict minerals compliance strategy which is led by a senior manager within our procurement organization.
Control Systems
Due to the complexities of the supply chain, Praxair must rely on sourcing information provided by our suppliers. To validate this sourcing information, the Company reviews the smelters, if any, against the smelter list maintained by the Conflict Free Sourcing Initiative (“CFSI”). Praxair’s Standards of Business Integrity policy outlines expected behaviors for all directors, officers, employees and representatives of the Company; and its Supplier Expectations statement sets forth Praxair’s expectations of its suppliers. Praxair expects its business dealings with suppliers and contractors to be based on fairness, honesty, lawfulness, safety, environmental stewardship and social consciousness, including respect for human rights. New suppliers are subjected to a supplier qualification process.
Supplier Engagement
Praxair contacted suppliers whose products we purchase which may contain 3TG. These suppliers were notified that Praxair is subject to Section 1502 of the Dodd-Frank Act, and that we expect their cooperation in our RCOI process.
Grievance Mechanism
The Company’s external website allows both internal and external parties to report suspected violations of Company policies, anonymously if desired.
Maintain Records
Praxair retains conflict minerals program documentation which complies with the OECD framework.
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Carry Out Independent Third Party Audit of Smelters and Refiners Due Diligence Practices
We do not perform or direct audits of smelters and refiners that process 3TG within our supply chain. However, we support audits of smelters and refiners through the Conflict Free Smelter Program (“CFSP”) developed by the CFSI which uses an independent third-party audit to identify smelters and refiners that have systems in place to assure sourcing of only conflict-free materials.
Identify, Assess and Respond to Risks in the Supply Chain
Praxair’s first step in the RCOI process was to review its worldwide purchases to identify product lines where necessary conflict minerals may be used. After analyzing various approaches, Praxair decided to use a “parts-centric approach” to identify products that may contain necessary conflict minerals by reference to product bills of material or engineering specifications, and by engaging internal business experts. By taking this approach, we were able to target specific suppliers for further inquiry.
The Company determined the country of origin of its purchased necessary conflict minerals by conducting supply-chain surveys with suppliers we identified primarily using the Electronics Industry Citizenship Coalition-Global e-Sustainability Initiatives (“EICC/GeSI”) Conflict Minerals Reporting Template (CMRT) as a guide. This template facilitates disclosure and communication of information regarding smelters that provide material to our suppliers and includes questions regarding the origin of conflict minerals included in their products sold to Praxair, as well as supplier due diligence.
Supplier Surveys
For the sputtering target and surface technologies businesses, Praxair sent surveys to 49 suppliers, which we determined may have supplied necessary conflict minerals. All 49 suppliers responded to the surveys. The responses were reviewed for various items including inconsistencies within the data reported (“red flags”). The Company had follow-up communication with the suppliers, as appropriate, to resolve any inconsistencies and obtain adequate documentation. For suppliers that provided smelter information, the names were cross-referenced against the list of smelters in the CFSP.
Equipment sales supporting our gases business, although small, is the other area where Praxair believes products may contain 3TG. In 2015, equipment sales represented approximately 0.2% of Praxair’s consolidated sales. This equipment consists of various components and subsystems that are generally assembled by contractors local to the receiving region. These regional vendors adhere to our specifications; however, due to the complexity and turnover of their supplier base it is more difficult to trace every component to a specific smelter. We are much further removed from smelters in this supply chain than in our sputtering target and surface technologies businesses, and, many of these suppliers are not subject to the SEC’s conflict minerals reporting requirements. Therefore, to address this complex area we have identified our key components and subsystems for equipment we sell that may contain 3TG and requested our global preferred suppliers to complete the Conflict Minerals Reporting Template for the products which they supply. In 2015 we sent surveys to 56 vendors and received 49 responses. The responses were reviewed for various items including red flags. The Company had follow-up communication with the suppliers, as appropriate, to resolve any inconsistencies and obtain adequate documentation. For suppliers that provided smelter information, the names were cross referenced against the list of smelters in the Conflict Free Smelter Program. We also conducted follow ups to request responses from those suppliers that did not respond to our initial request.
3.Due Diligence
From the RCOI process, several suppliers were identified that may have provided 3TG sourced from mines within the Covered Countries. A small number of these suppliers included an identification of the specific smelters or refiners or indicated that the supplier sources 3TG product from the Covered Countries; these suppliers were unable to specify with certainty whether the 3TG supplied to Praxair came from mines within the Covered Countries. Also, many of our suppliers that identified the names of smelters/refiners and country of origin information did so only on an entity-wide basis without distinguishing between 3TG purchased for products supplied to Praxair. For the above reasons, we are unable to determine with certainty whether the 3TG in products that we purchased during 2015 are sourced from any Covered Country.
4.Continual Improvement Efforts
During 2015 we have made the following improvements in our conflict minerals processes:
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a)Praxair improved its documentation of the scoping and identification of products which may contain 3TGs. We then conducted surveys and performed appropriate review and follow ups with these suppliers.
b)Praxair has received an increased number of CMRTs from our suppliers versus the prior year. Because of more detailed information contained in supplier responses, the Company has been able to better target follow-up inquires resulting in a more rigorous RCOI process.
During 2016 we will continue our due diligence to further mitigate any risk that necessary conflict minerals in our products could benefit armed groups in the Covered Countries. These efforts include the following steps:
a)Praxair is continuously improving its processes to more fully and completely document its RCOI procedures. Increased documentation will ensure consistency of the process in future periods.
b)Praxair has updated its internal IT systems to provide enhanced reporting assisting in the identification of 3TG suppliers.
c)We will continue to expand our scoping and documentation of products containing 3TGs. Improved scoping, particularly related to our sales of equipment, will allow us to better target 3TG suppliers for RCOI procedures.
5.Independent Audit
Praxair is not required to obtain an IPSA of this CMR for 2015.
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