UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
Eni SpA
(Exact name of registrant as specified in its charter)
Republic of Italy
(State or other jurisdiction of incorporation or organization)
1-14090
Commission file number
1, piazzale Enrico Mattei – 00144 Roma - Italy
(Address of principal executive offices)
Massimo Mondazzi
Eni SpA
1, piazza Ezio Vanoni
20097 San Donato Milanese (Milan) - Italy
Tel +39 02 52041730 - Fax +39 02 52041765
(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:
X Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) chip7235 for the reporting period from January 1 to December 31, 2016.
This Specialized Disclosure Report on Form SD (Form SD) for the year ended December 31, 2016, is required by Rule 13p-1 of the Securities Exchange Act of 1934 (the "Final Rule"). The Final Rule was adopted by the Securities and Exchange Commission (SEC) to implement reporting and disclosure requirements related to conflict minerals as directed by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Section 1502"). In accordance with the Final Rule, we are required to provide annual disclosure regarding products manufactured during the year that contained "conflict minerals" that are necessary to the functionality or production of those products. The Final Rule defines conflict minerals as columbite-tantalite, cassiterite, wolframite and gold, and their derivatives, which are currently limited to tin, tungsten, tantalum and gold ("3TG").
Form SD
Where we determine that conflict minerals were necessary to the functionality or production of a product ("Necessary Conflict Minerals") that we manufactured or contracted to be manufactured, we must conduct a "Reasonable Country of Origin Inquiry" ("RCOI") regarding those conflict minerals that is reasonably designed to determine whether any of those conflict minerals originated in the Democratic Republic of the Congo or an adjoining country (the "Covered Countries"), or from recycled and scrap sources, and file a Form SD describing the RCOI completed and the results of the RCOI completed. If we conclude based on the findings of our RCOI that we have reason to believe any of our Necessary Conflict Minerals may have originated in the Covered Countries and that they may not be from recycled or scrap sources, then we must exercise due diligence on the source and chain of custody of the Necessary Conflict Minerals.
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Conflict Minerals Report
In accordance with the Final Rule, we are required annually to submit to the US SEC a report, the Conflict Minerals Report (CMR), as an exhibit to the Form SD where we have reason to believe that any of our Necessary Conflict Minerals may have originated in the Covered Countries, or where we are unable to determine the country of origin of those conflict minerals.
The CMR must include:
| • | A description of the measures we have taken to exercise due diligence on the source and chain of custody of those Necessary Conflict Minerals. | |
| • | A description of the products manufactured or contracted to be manufactured. | |
| • | The efforts to determine the mine or location of origin with the greatest possible specificity. | |
| • | The facilities used to process the Necessary Conflict Minerals in those products, if known. | |
| • | The country of origin of the Necessary Conflict Minerals in those products, if known. | |
| • | A description of the steps taken or that will be taken to improve due diligence. |
Company Overview
Eni SpA (Eni) is a publicly listed company. The Italian State is our largest shareholder with a 30.1% stake. Our common stock is listed on the New York Stock Exchange (NYSE).
Eni’s principal segments of operations are described below.
Eni’s Exploration & Production segment engages in oil and natural gas exploration and field
development and production, as well as LNG operations, in 44 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Algeria, Australia, Venezuela, Iraq, Ghana and Mozambique. In 2016, Eni average daily production amounted to 1,671 KBOE/d on an available-for-sale basis. As of December 31, 2016, Eni’s total proved reserves amounted to 7,490 mmBOE, which include subsidiary undertakings and Eni’s share of reserves of equity-accounted entities. In 2016, Eni’s Exploration & Production segment reported net sales from operations (including inter-segment sales) of €16,089 million and an operating profit of €2,567 million.
Eni’s Gas & Power segment engages in the supply, trading and marketing of gas, LNG and electricity, international gas transport activities and commodity trading and derivatives. This segment also includes the activity of electricity generation that is ancillary to the marketing of electricity. In 2016, Eni’s worldwide sales of natural gas amounted to 88.93 BCM and electricity sold totaled 37.05 TWh. In 2016, Eni’s Gas & Power segment reported net sales from operations (including inter-segment sales) of €40,961 million and an operating loss of €391 million. The Gas & Power segment comprises results of the Group activities intended to manage commodity risk and of asset-backed trading activities.
Eni’s Refining & Marketing business engages in crude oil supply and refining and petroleum products marketing in retail and wholesale markets mainly in Italy and in the rest of Europe. In 2016, processed volumes of crude oil and other feedstock amounted to 24.73 mmtonnes and sales of refined products were 33.41 mmtonnes, of which 25.6 mmtonnes in Italy.
Through its wholly-owned subsidiary Versalis, the Group engages in the production and marketing of basic petrochemical products, plastics and elastomers. Activities are concentrated in Italy and in
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Europe. The four-year industrial plan foresees the start-up of joint ventures for the production of elastomers in East Asia. In 2016, production volumes of petrochemicals amounted to 5,646 Ktonnes. The results of Versalis have been aggregated with those of R&M, in the reportable segment “R&M and Chemicals” because the two segments exhibit similar economic characteristics. In 2016, Eni’s Refining & Marketing and chemicals segment reported net sales from operations (including inter-segment sales) of €18,733 million and operating profit of €723 million.
In this report on form SD and the attached exhibit herein on the conflict minerals, the terms "Eni", the "Group", "we", "us" or the "Company" refer to the parent company Eni SpA and its consolidated subsidiaries and, unless the context otherwise requires, their respective predecessor companies.
Section 1 - Conflict Minerals Disclosure
Item 1.01 - Conflict Minerals Disclosure and Report
We have conducted an evaluation of our product portfolio and we have determined that there is only one broad product category sold to third parties which may contain conflict minerals as defined in Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1):
| • | Fuels manufactured by our Refining & Marketing segment which include gasoline, gasoil, jet fuels, heating oil, lubricants, bitumen and other products. At our refining and manufacturing plants and facilities, we employ catalysts in the production process, which contain conflict minerals and are necessary to the production of the fuels. We assume it is possible that trace amounts of catalysts may be found in the final products (because, although catalysts are washed out in the production process there is no de minimis standard in accordance with the Final Rule). In future, however, we may be able to conclude, based on appropriate testing, that no catalysts are present in our refining & marketing final products or that, in any event, our Refining & Marketing products are not covered by the Final Rule. The procurement of catalysts constitutes a very small portion of our global purchases of raw materials and other production inputs (less than 0.1% on a consolidated basis). Furthermore, the amount of conflict minerals employed in our catalysts is immaterial. |
Description of the Reasonable Country of Origin Inquiry
Overview
In accordance with the Final Rule, we have concluded that during the 2016 calendar year we manufactured products containing conflict minerals which use was necessary to the functionality or production of these products. We conducted a good faith RCOI, which we believe is reasonably designed to assess whether the Necessary Conflict Minerals in our products originated from the Covered Countries or were from recycled or scrap sources.
We directed and coordinated the execution of the RCOI at Group level. Our segment and subsidiaries which were determined to be in scope of the Final Rule were responsible for performing a risk-based analysis to identify direct suppliers to be included within the RCOI. This analysis included focusing on the suppliers presenting the highest risk of providing us with Necessary Conflict Minerals in our manufactured products and was based on segment and subsidiaries expertise and product knowledge. We intend to reassess our product portfolio and supply chain on an ongoing basis in future years.
Reasonable Country of Origin Inquiry
Our Refining & Marketing segment performed the RCOI as follows:
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| As the number of direct suppliers of catalysts used in our refining processes is limited, we inquired with each of our catalyst suppliers regarding the country of origin of the Necessary Conflict Minerals using the Conflict Minerals Reporting Template developed by the Electronic Industry Citizenship Coalition - Global e-Sustainability Initiative (EICC/GeSI). All but one of these catalyst suppliers were affiliated to US listed companies or were US filers themselves and publicly state that they have established conflict minerals programs and policies and have performed due diligence of their respective supply chains. The non-US listed supplier informed us that it has established a policy for the responsible sourcing of conflict minerals for the purpose of complying with our request of establishing a responsible supply chain. |
Results of the RCOI
As a result of the RCOI conducted as described above, 100% of the catalyst suppliers in the R&M business which were surveyed have provided a response to us. Although the responses received are not yet complete in all cases, our suppliers have identified most of the smelters where they sourced their minerals, including where relevant if the smelters are included on, and have been certified by, the Conflict-Free Sourcing Initiative. We plan to continue to work closely with our catalysts suppliers in subsequent years to determine the countries of origin of our Necessary Conflict Minerals contained in our catalysts.
Conclusion
As a result of the RCOI performed, considering that we were unable to identify the Country of Origin of all of our necessary conflict minerals and that our necessary conflict minerals are not from recycled or scrap sources, we have exercised due diligence in accordance with the Final Rule. The due diligence measures are described in the Conflict Minerals Report filed as exhibit to this report.
In accordance with Rule 13p-1 under the Securities Exchange Act of 1934 ("Rule 13p-1"), this Specialized Disclosure Form (Form SD) and the associated Conflict Minerals Report are posted to our website at http://www.eni.com/en_IT/sustainability/integrity-human-rights/human-rights-in-the-supply-chain.page.
Section 2 - Exhibits
Exhibit 2.01 - Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.
Signature
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.
Eni SpA
(Registrant)
/s/ MASSIMO MONDAZZI
Massimo Mondazzi
Chief Financial Officer
Date: May 30, 2017
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Exhibit 1.01 - Conflict Minerals Report (CMR)
Conflict Minerals Report of Eni SpA
Section 1: Introduction and Company Overview
This is the Conflict Minerals Report of Eni SpA (herein referred to as "Eni", the "Company", "we", "us", or "our") for calendar year 2016 in accordance with Rule 13p-1 under the Securities and Exchange Act of 1934 ("Rule 13p-1").
Our products and business segments or subsidiaries under the scope of the statute are described in Form SD.
Section 2: Due diligence framework
In accordance with Rule 13p-1, we undertook due diligence efforts on the source and chain of custody of the Necessary Conflict Minerals in our products, as described in Form SD. We acknowledge the due diligence framework as set forth in the internationally recognized Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas ("OECD Framework") of the Organization for Economic Cooperation and Development (OECD) and we are designing and implementing our due diligence measures accordingly.
Section 3: Due diligence approach
Eni’s due diligence efforts for 2016 included the following five steps:
Step 1: Establish company management systems
| · | Conflict Minerals team |
We have established a cross functional Conflict Minerals project team comprising executive level management with coordinators from each business unit involved, to direct the overall efforts of the Conflict Minerals compliance program. The Company’s CFO (Chief Financial Officer) has sponsored this team and the compliance program has been approved by the Company’s highest management committees, which include the heads of Eni’s business units and central departments. Our only business segment involved in the program has also established a team responsible for conducting, supervising and coordinating all relevant activities at divisional level and reporting to the Group’s management team regarding the results of the activities performed. Finally, we have adopted internal, Group-level procedures and rules so as to raise awareness about our intention to establish a responsible supply chain and in order to establish Group guidelines on how to design and conduct a due diligence on conflict minerals.
| · | Conflict Minerals policy |
We have established and periodically update a policy with respect to the sourcing of minerals from the Covered Countries and published this Group policy on our external website at http://www.eni.com/en_IT/sustainability/integrity-human-rights/human-rights-in-the-supply-chain.page. In this policy we confirm our commitment to corporate sustainability and respecting and promoting human rights in our operations and the activities performed by our Business Partners. This policy is reviewed annually by our senior management team in charge of promoting the Conflict Minerals program.
| · | Supplier engagement |
Eni has in place guidelines, procedures and standard contractual terms & conditions that, among other things, require compliance with human rights framework as a prerequisite for qualification to do business with Eni and with the Eni Code of Ethics and Human Rights Guidelines as contractual obligations towards Eni. Our standard contractual terms and conditions regarding the supply of products that contain or may contain conflict minerals include binding and clear-cut requirements
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regarding conflict minerals and responsible sourcing. Our suppliers are required to maintain procedures reasonably designed to ensure that any conflict minerals sold to Eni are sourced in accordance to the principle of a responsible supply chain, and are required to promptly notify us in case of any breaches of this covenant. No such notifications have been received so far. We have increased efforts to explain to our suppliers the importance to Eni of their collaboration and commitment to our compliance program. All of our high-risk suppliers were advised on how to fill the RCOI questionnaire, which were returned to us substantially completed. We are engaging with our high-risk suppliers to promote tracing of their supply chain for the purpose of identifying the County of origin of our necessary conflict minerals and the mines where they were sourced with the greatest level of specificity.
| · | Grievance mechanism |
Eni has in place a procedure for reporting any violation of our guidelines on the respect of human rights and/or other part of our compliance program via a whistle blowing mechanism whereby alleged violations can be reported to Eni via existing grievance channels for ethics or compliance violations via our external website at http://www.eni.com/portal-forms/tools/processSegnalazione.do?locale=en_IT.
Step 2 and Step 3: Identify, assess and respond to risks in the supply chain
To identify, assess and respond to risks in the supply chain, we undertook the following measures:
| · | We conducted a supply chain survey, which involved all of our high-risk suppliers as described in Form SD. This survey was based on the Electronics Industry Citizenship Coalition/Global e-Sustainability Initiative Conflict Minerals Reporting Template. |
| · | The responses received from our suppliers about the country of origin of the Necessary Conflict Minerals provided to us were reviewed to assess their reliability. |
| · | Our segment team subjected survey responses to due diligence measures when we had reason to believe that suppliers may have provided Necessary Conflict Minerals that originated from the Covered Countries and that were not from recycled or scrap sources. All of the surveyed suppliers provided us with information about all or part of the smelters, that were used in the supply chain. We have no reasons to believe that the responses provided to us were inaccurate. |
| · | We requested suppliers who sent us incomplete or inconsistent responses to review the questionnaire providing them the necessary assistance on how to complete the questionnaire. |
| · | Our executive management team in charge of the Conflict Minerals program was informed of the nature and overall risk of supplier responses received. Management reporting materials were prepared summarizing the results of the risk assessment process. |
Step 4: Carry out independent third-party audit of smelter/refiner due diligence practices
We do not have any direct relationship with any smelter or refinery in our supply chain. Furthermore, we did not perform or direct audits of smelters and refiners in 2016. In our due diligence efforts we will consider utilizing cross-industry initiatives such as those led by the Electronics Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI) such as the Conflict Free Smelter Initiative (CFSI) to conduct smelter and refiner due diligence. In the future, we will also explore other options.
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Step 5: Report annually on supply chain due diligence
In accordance with OECD Guidance and the SEC Final Rule, this report and the associated Form SD are available online at http://www.eni.com/en_IT/sustainability/integrity-human-rights/human-rights-in-the-supply-chain.page.
Section 4: Due diligence results
As a downstream consumer of conflict minerals, we rely on our suppliers to gather information about smelters and refiners that processed the Necessary Conflict Minerals contained in the specific products or components that the suppliers provided to Eni. We believe that we made progress in our due diligence efforts in 2016 in order to trace the supply chain for our Necessary Conflict Minerals.
In the Refining & Marketing business, we surveyed all of our suppliers of Necessary Conflict Minerals and we obtained responses from each of them. All of our suppliers informed us that they have adopted company-level policies for the responsible sourcing of Conflict Minerals. The responses received from suppliers were at company level and were not specific to conflict minerals supplied to us. Our suppliers provide us with sufficient information to be able to identify almost all of the smelters where they procured conflict minerals: (i) 3 out of 4 of those suppliers represented to us that they sourced the minerals from smelters that are certified smelters with the CFSI program. One of these suppliers, who is a US filer, disclosed in its form SD report for calendar year 2016 that they have no reason to believe that their necessary conflict minerals were sourced in the Covered Countries; (ii) 1 out of 4 of our suppliers represented to us in the past that while most of the smelters where they procured tin and tungsten were certified, they were unable to trace their entire supply chain of tin and tungsten. Accordingly, at this stage, with regard to all of our suppliers of conflict minerals in the Refining & Marketing business, we are able to determine almost in full which specific smelters or refineries were part of the supply chain of the components that we used to manufacture products in 2016. However, we were not provided with a conclusive determination about the countries of origin of all of our Necessary Conflict Minerals, or whether they all originated from recycled or scrap sources.
See Annex I for a list of smelters or refiners where Necessary Conflict Minerals supplied to us in 2016 were sourced identified by our suppliers.
Section 5: Continuous improvement efforts to mitigate risk
We intend to take the following steps to improve the number and quality of supplier responses in the near future and to mitigate any risk that the Necessary Conflict Minerals used in our products may benefit armed groups:
| · | strengthen engagement with our high-risk suppliers in order to obtain conclusive information about the countries of origin of our Necessary Conflict Minerals. We made progress in engaging with these suppliers in 2016 and we intend to increase our collaboration with them going forward by continuously sharing information and by tracing the supply chain; |
| · | work with suppliers who provided responses containing red flags, including non-responsive suppliers, by helping them understand the importance of this initiative to Eni and by encouraging their participation also by providing them explanatory materials. We will also evaluate disengaging consistently reticent and non-collaborative suppliers; |
| · | continue to train our suppliers of conflict minerals providing them written explanations, reports, instructions and engaging in training sessions that cover the legal background for this matter and the importance of ethical sourcing to us; |
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| · | continue to raise awareness both internally and with our high-risk suppliers about Eni’s commitment to fully trace the entire supply chain back to the countries of origin of our Necessary Conflict Minerals; |
| · | continue to support responsible in-region mineral sourcing from the Covered Countries in order to not negatively affect the economies of such countries. We will seek not to eliminate conflict minerals originating in the Covered Countries but rather to obtain conflict minerals from sources that do not benefit armed groups in the region; |
| · | evaluate collaboration with other operators and industry working groups in order to share information, processes and methodologies for tracing the supply chain; |
| · | evaluate participation in other joint initiatives based on the literature produced by the Electronics Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI), which supports the responsible sourcing of minerals through the development of a Conflict-Free Smelter (CFS) program; |
| · | consider performing a due diligence of any given smelter should our supply chain findings lead to a non-certified smelter or refiner; and |
| · | reiterate assessment process of our product portfolio and suppliers to obtain a complete map of Eni’s areas of risks. |
Section 6: Independent audit
In accordance with the requirements of Form SD, as currently modified by the guidance set forth in the Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule issued by the Division of Corporation Finance of the Securities and Exchange Commission on April 7, 2017, Eni has not obtained an independent private sector audit of its due diligence process.
Safe harbor statement
Certain disclosures contained herein contain forward-looking statements regarding future events and the future results of Eni that are based on current expectations, plans, forecasts, and projections about Eni’s future due diligence steps and procedures. Words such as "expects", "anticipates", "targets", "goals", "projects", "intends", "plans", "believes", "seeks", "estimates", "evaluates" variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future.
Therefore, Eni’s actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Any forward-looking statements made by or on behalf of Eni speak only as of the date they are made. Eni does not undertake to update forward-looking statements to reflect any changes in Eni’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Eni may make in documents it files with the US SEC.
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Annex 1
| Subject Mineral | Smelter or Refiner Name | Country location of Smelter or Refiner |
Comment |
| Tin | EM Vinto | Bolivia | CFSI Certified |
| Tin | Metallo Chimique | Belgium | CFSI Certified |
| Tin | Mineração Taboca SA | Brazil | CFSI Certified |
| Tin | Minsur | Peru | CFSI Certified |
| Tin | PT Timah | Indonesia | CFSI Certified |
| Tin | PT Timah (Persero) Tbk Kundur | Indonesia | CFSI Certified |
| Tin | White Solder Metalurgia e Mineração Ltda | Brazil | CFSI Certified |
| Tin | Yunnan Tin Group (Holding) Co Ltd | China | CFSI Certified |
| Tungsten | Fujian Jinxin Tungsten Co, Ltd | China | CFSI Certified |
| Tungsten | Ganzhou Huaxing Tungsten Products Co, Ltd | China | CFSI Certified |
| Tungsten | Ganzhou Seadragon W & Mo Co, Ltd | China | CFSI Certified |
| Tungsten | Global Tungsten & Powders Corp | United States | CFSI Certified |
| Tungsten | H.C. Starck GmbH | Germany | CFSI Certified |
| Tungsten | H.C. Starck Smelting GmbH & Co KG | Germany | CFSI Certified |
| Tungsten | Jiangwu H.C. Starck Tungsten Products Co, Ltd | China | CFSI Certified |
| Tungsten | Jiangxi Gan Bei Tungsten Co, Ltd | China | CFSI Certified |
| Tungsten | Jangxi Tonggu Non-ferrous Metallurgical & Chemical Co, Ltd | China | CFSI Certified |
| Tungsten | Nui Phao H.C. Starck Tungsten Chemicals Manufacturing Llc | Vietnam | CFSI Certified |
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