UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM SD

SPECIALIZED DISCLOSURE REPORT

 

 

Ormat Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

001-32347

88-0326081

(State or other jurisdiction of

Commission file number

(IRS Employer Identification No.)

incorporation or organization)

 

 

 

 

6225 Neil Road, Reno, Nevada

89511-1136

(Address of principal executive offices)

(Zip Code)

 

Doron Blachar

(775) 356-9029

(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:

 

☒  Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2013 .

 

 
 

 

 

Introduction

 

This Specialized Disclosure Report on Form SD (this “Form SD”) of Ormat Technologies, Inc. ("Ormat", the "Company" or "we") for the year ended December 31, 2013 is presented to comply with Rule 13p-1 ("Rule 13p-1") promulgated under the Exchange Act of 1934, as amended (the "Exchange Act"). Pursuant to Rule 13p-1, every registrant that (i) files reports with the Securities and Exchange Commission ("SEC") under Sections 13(a) or 15(d) of the Exchange Act and (ii) has "conflict minerals" that are necessary to the functionality or production of a product manufactured or contracted by that registrant to be manufactured, is required to file a report on Form SD within the period specified therein. Conflict minerals are defined to include tin, tantalum, tungsten and gold ("3TG").

 

We are a Delaware corporation, whose shares of common stock are listed on the New York Stock Exchange and registered with the Securities and Exchange Commission (the "SEC").

 

We are a leading vertically integrated company primarily engaged in the geothermal and recovered energy power business. We, including through our subsidiaries, conduct business activities in the following two business segments:

 

 

Electricity Segment — in this segment, we develop, build, own and operate geothermal and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate; and

 

 

Product Segment — in this segment, we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation, remote power units and other power generating units and provide services relating to the engineering, procurement, construction, operation and maintenance of geothermal and recovered energy-based power plants.

 

In accordance with applicable SEC rules, we conducted due diligence on the source and chain of custody of those conflict minerals used in our Product Segment. We concluded that no such examination is necessary with respect to the Electricity Segment because it does not involve the sale of products by the Company.


The performance requirements of our products often require us to use advanced or sensitive components or materials, which include 3TG.

 

As more fully described below, as a company that files reports with the SEC under Sections 13(a) or 15(d) of the Exchange Act, and having 3TG necessary in the manufacture of some of our products, we are required to file this Form SD.

 

 

Section 1 – Conflict Minerals Disclosures

 

1.01 – Conflict Minerals Disclosures and Report

 

In connection with Rule 13p-1, we have adopted a policy with respect to our sourcing of conflict minerals (our "Policy" or "Conflict Minerals Policy").

 

 
 

 

 

In accordance with Rule 13p-1 and our Policy, we have concluded that during the 2013 calendar year, (i) we have manufactured and contracted to manufacture products containing conflict minerals and (ii) the use of these minerals is necessary to the functionality or production of these products.

 

Accordingly, as required by applicable SEC rules, we conducted in good faith a reasonable country of origin inquiry (“RCOI”) to determine whether any of the conflict minerals originated in the Democratic Republic of the Congo or an "adjoining country" (together, the "Covered Countries") or are from "recycled or scrap sources" (as such terms are defined in Rule 13p-1).

 

In parallel, we conducted due diligence on the source and chain of custody of those conflict minerals, as more fully described in the Conflict Minerals Report attached as Exhibit 1.01 hereto (the "Report"). We performed the RCOI simultaneously with such due diligence due to the large number of suppliers we identified as ones from whom we source materials or components that may contain 3TG, coupled with the short time frame in which we needed to complete both the RCOI and such due diligence . As such, there is significant overlap between our RCOI efforts and the due diligence measures we employed.

 

As part of o ur RCOI, we employed several methods to assess whether the necessary conflict minerals in our products originated from any of the Covered Countries, including the following:

 

 

Internal assessment and analysis of our products to determine which products contain or may contain conflict minerals that are necessary to the functionality or production of these products. To that end, we have compiled a list of suppliers based on the average costs for procurement from these suppliers in the years 2011, 2012 and 2013.

 

 

We have sent notification letters to our relevant suppliers informing them about the conflict minerals rules and asking them to complete a conflict minerals survey we compiled.

 

 

We solicited survey responses from relevant suppliers of components of these products using the standard template designed by the Electronic Industry Citizenship Coalition® (EICC®) and The Global e-Sustainability Initiative (GeSI), known as the Conflict Minerals Reporting Template. Since many of our suppliers are not subject to Rule 13p-1 nor familiar with the reporting requirements thereunder, we also offered step-by-step instructions for responding to the Conflict Minerals Reporting Template.

 

 

We assessed and examined the responses received and, where appropriate, identified those that require additional follow up. To that end, non-responsive suppliers were reminded periodically to respond to the survey.

 

 

Currently, we do not have sufficient information from our suppliers or other sources to determine the country of origin of the conflict minerals used in our products or the facilities used to process those conflict minerals. Therefore, Ormat is unable to exclude the possibility that some conflict minerals in its products did, or may have, originated in the Covered Countries and are not from recycled or scrap resources.

 

 
 

 

 

Conflict Minerals Disclosure

 

In accordance with Rule 13p-1, copies of this Form SD and the Conflict Minerals Report are also posted to a publically available Internet site at http://investor.ormat.com/docs.aspx?iid=4087066 . The content of any website referred to in this Form SD is included for general information only and is not incorporated by reference herein.

 

Item 1.02 – Exhibit

 

Exhibit 1.01 – Conflict Minerals Report.

 

Section 2 – Exhibits

 

Item 2.01 Exhibits

 

List below the following exhibit filed as part of this report.

 

Exhibit 1.01 – Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.

 

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 duly authorized undersigned.

 

 

 

ORMAT TECHNOLOGIES, INC.

 

       

 

By:

/s/ Doron Blachar

 

  Name: Doron Blachar  
  Title: CFO  
  Date: May 30, 2014  

 

 

Exhibit 1.01 – Conflict Minerals Report

 

Conflict Minerals Report of Ormat Technologies, Inc. 

For The Year Ended December 31, 2013

 

 

This is the Conflict Minerals Report (this "Report") of Ormat Technologies, Inc. ("Ormat", the "Company" or "we") for calendar year 2013 in accordance with Rule13p-1 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 13p-1”) and Form SD thereunder. In accordance with the instructions to Form SD, this Report has not been audited by an independent private sector auditor.

 

A copy of this Report as well as the Form SD that we filed with the SEC is available on our website at http://investor.ormat.com/docs.aspx?iid=4087066

 

Unless otherwise defined herein, defined terms used in this Report have the meaning ascribed to such terms in Rule 13p-1, Form SD, and the 1934 Act Release No. 34-67716 (August 22, 2012).

 

1.

Overview

 

Company Overview

 

Ormat and its subsidiaries conduct business activities in the following two business segments:

 

 

Electricity Segment — in this segment, we develop, build, own and operate geothermal and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate; and

 

 

Product Segment — in this segment, we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation, remote power units and other power generating units and provide services relating to the engineering, procurement, construction, operation and maintenance of geothermal and recovered energy-based power plants.

 

For more information about Ormat, please visit www.ormat.com . The content of any website referred to in this Report is included for general information only and is not incorporated by reference herein .

 

Supply Chain

 

In accordance with applicable SEC rules, we conducted due diligence on the source and chain of custody of those conflict minerals used in our Product Segment. We concluded that no such examination is necessary with respect to the Electricity Segment because this segment does not involve the sale of products by the Company. Similarly, and in accordance with applicable SEC rules, we have not attempted to examine conflict minerals that were "outside the supply chain" prior to January 31, 2013.

 

In connection with our manufacturing activities in the Product Segment, we identified certain conflict minerals that are used by us and necessary to the functionality and production of our products in the following raw materials or components used by us: steel (low grade and high grade), electronic cards and electronic cables (including tin plating). All of such raw materials are being purchased from various suppliers. We also use subcontractors to manufacture some of our products' components and for construction activities of power plants.

 

 
 

 

 

2.

Due Diligence Framework

 

 

In accordance with Rule 13p-1, we conducted due diligence in order to determine whether the conflict minerals that are necessary to the functionality or production of our products, were or were not “DRC conflict free”.

 

We designed the due diligence measures to be in conformity, in all material respects, with the internationally recognized due diligence framework as set forth in the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD, 2013) (“OECD Framework”) and related supplements for gold and for tin, tantalum and tungsten (3TG).

 

 

3.

Due Diligence Measures


Our due diligence efforts for 2013 included the following steps:

 

3.1

Establish management and control systems.

 

 

Established a cross-functional conflict minerals steering committee comprised of representatives from engineering, procurement and finance departments to direct the overall efforts of the conflict minerals compliance program.

 

 

Established a Conflict Minerals Policy with respect to sourcing of minerals from the DRC and its adjoining countries, a copy of which is available at www.ormat.com/governance .

 

 

Solicited survey responses from relevant suppliers of raw materials and components of products, using the standard template designed by the Electronic Industry Citizenship Coalition® (EICC®) and The Global e-Sustainability Initiative (GeSI), known as the Conflict Minerals Reporting Template.

 

 

Referred suppliers to training materials that included an overview of the applicable SEC rules and provided instructions on how to respond to the survey.

 

3.2

Identify and assess risks in the supply chain.

 

   To identify risks in our supply chain, we undertook the following measures:

 

 

Since it is not practicable to conduct a survey of all of our suppliers in the Product Segment, we believed a reasonable risk-based approach would be to conduct a survey of those suppliers representing approximately 90% of our 2011- 2013 average expenditures on procurement. The survey was based on the Conflict Minerals Reporting Template, with every survey response received being reviewed and logged.

 

 
 

 

 

 

We identified risks in the supply chain based on the suppliers' characteristics (such as whether the supplier is itself subject to Rule 13p-1, the supplier's geographical location, etc.) and the dependency of Ormat on the suppliers' goods (based on criteria like volume of expenditures during 2013, ease of replacement of the supplier, etc.). As a result, we divided the suppliers into three risk levels: high, medium and low, which allowed us to prioritize our communication and response validation efforts according to the supplier level of risk.

 

 

Responses received were subject to a "red flag" review. Responses that we identified as incomplete or inconsistent based on the red flag review process were identified for follow up. Smelters or refiners that were identified by our suppliers were compared against the list of facilities which have received a DRC conflict free designation from the Conflict Free Smelter Program (CFSP).

 

 

3.3

Design and implement a strategy to respond to identified risks

 

   To address the risks in the supply chain, the following actions were taken:

 

 

When the EICC/GeSI survey was sent to suppliers, information on the Conflict Free Sourcing Initiative (CFSI) trainings was also provided. The CFSI trainings include an overview of conflict minerals and how to complete the EICC/GeSI template.

 

 

Suppliers who provided incomplete or inconsistent responses were sent a follow-up corrective action letter asking for clarification.

 

 

Suppliers that did not respond to our initial survey request were sent follow up letters requesting that they provide the information requested.

 

 

Senior management was briefed about our due diligence efforts.

 

3.4

Carry out independent third-party audit of smelter/refiner due diligence practices .

 

We do not typically have a direct relationship with 3TG smelters and refiners and therefore do not perform direct audits of these entities. As a result, our due diligence efforts relied on cross-industry initiatives such as those led by the EICC and GESI, to conduct smelter and refiner due diligence.

 

3.5

Report annually on supply chain due diligence.

 

 

Our Conflict Minerals Policy states that we will comply with Section 1502 of the Dodd Frank Act which includes filing Form SD and this Report with the SEC and posting it publicly on the internet. See the following link: http://investor.ormat.com/docs.aspx?iid=4087066

 

 
 

 

 

4.   Conclusion

 

 

Our supply chain is complex and there are multiple tiers between the Company and the mine. Accordingly, we rely, to a large extent, on our suppliers to provide information on the origin of the conflict minerals contained in components which are supplied to us to be included in our products.

 

To identify and assess risk in the supply chain, we engaged those suppliers who provide the substantial majority of our components and whose products we believe are likely to contain conflict minerals. We surveyed these suppliers, which accounted for more than 91% of applicable average component costs incurred between 2011 and 2013, to determine whether the necessary conflict minerals in components contained in our products were or were not "DRC conflict free". The survey requested suppliers to provide the country of origin of any conflict minerals and the facilities used to process these minerals.

 

Despite receiving responses from suppliers listing smelter or refiner names in their supply chain, the suppliers were unable to accurately report which specific smelters were part of the supply chain of the components that were sold to Ormat in 2013. Moreover, only approximately 34% of the suppliers surveyed responded to our inquiries.

 

In light of this lack of conclusive information, we are unable to determine and to describe the full list of facilities used to process those necessary conflict minerals or their country of origin.

 

 

5.   Steps to be taken to mitigate risk

 

We intend to take the following steps to improve the due diligence conducted to further mitigate any risk that the necessary conflict minerals in our products could benefit armed groups in the DRC or adjoining countries:

 

 

Include a conflict minerals clause in new or renewed supplier contracts.

 

 

Expand the number of suppliers requested to supply information.

 

 

Direct suppliers to training resources to attempt to increase the response rate and improve the content of the supplier survey responses.

 

 

 

 

Caution Concerning Forward-Looking Statements

 

Information provided in this report may contain statements relating to current expectations and plans that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future plans and events and are based upon its management's current estimates. These statements are subject to risks and uncertainties and may not prove to be accurate. For a discussion of such risks and uncertainties, see "Risk Factors" as described in Ormat Technologies, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014 and its other filings.

These forward-looking statements are made only as of the date hereof, and, except as required by applicable law, we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.