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Illusions of ‘Conflict-Free’ Minerals

The hubris over “conflict minerals” has resumed again. Several high-tech companies are being hailed as heroes that are “pioneering progress toward wiping out the use of conflict minerals,” according to a Reuters report. The Enough Project's annual score card for electronics companies trying to cut out conflict minerals from the supply chain showed many Western manufacturers are getting top ratings from the industry body.

Perfect, clean, and 100 percent legally mined mineral materials from the Democratic Republic of Congo? That would be the day. Selfless electronics industry executives, sleeves rolled up, swatting away illegally sourced raw materials with the singular goal of saving the harried people of the Congo and its neighboring countries from horrible warlords? The tittering you hear is coming from a corner office somewhere in Silicon Valley, Tokyo, Shanghai, or Seoul — but likely not from a tin-roofed shack in Goma.

Let's make one fact clear. There are too many realities and illusions surrounding the subject of conflict minerals depending upon where you sit in the electronics supply chain, in Congress, or on the ground in the Congo. These minerals include items like columbite-tantalite (used in making tantalum powder for capacitors), wolframite, and cassiterite; and a huge chunk of global demand for these products is supplied by the Congo, where most of the mines are either owned by or “taxed” by local warlords.

The US Congress included the matter of “conflict minerals” in the Dodd-Frank Wall Street Reform and Consumer Protection Act because it wanted to end the long-running wars that have ravaged the Congo region and resulted in the savage treatment of children, especially. However good its intentions, Congress has only waded chest-deep into an issue it barely understands and passed laws that, while looking good on paper, constitute a nightmare for folks on the ground mining the minerals as well as company executives trying to avoid a legal and public relations nightmare.

What has resulted is the farce of the Enough Project and other well intended but misguided efforts to either help the people of the Congo curb their decades-long civil war or keep Western companies' supply chains and consumer electronic products scrupulously clean of blood-tainted components. The report issued today by the Enough Project makes it clear that, while “leading electronic companies are making progress in eliminating conflict minerals from their supply chains [they] still cannot label their products as being conflict free.”

Yet, the Enough Project gave at least four companies — {complink 2657|Intel Corp.}, {complink 12926|Motorola Solutions Inc.}, {complink 2376|Hewlett-Packard Co.}, and {complink 379|Apple Inc.} — high marks for being “pioneers of progress” and said these companies “have moved forward to develop solutions despite delays in the legislative rule-making process by the US Securities and Exchange Commission.” It also identified electronics manufacturers described as “laggards” that are “standing out due to lack of progress and communication.”

Before you tar and feather the companies proclaimed “laggards” by the Enough Project, understand this: You are most likely yourself an unwitting accomplice in whatever crimes are being committed in the Congo that propelled the US Congress to pass a law on the mining of the minerals. Furthermore, you may be as limited in what you can do to effect change as the companies that have been criticized sharply by everyone. You may be a laggard, yourself.

The conflict minerals are in our phones, tablet PCs, computers, and much other high-tech equipment. They haven't disappeared and won't, simply because Congress passed one law or a thousand laws. The companies that are described as being “in compliance” may have achieved the status as a result of several reasons, including that they no longer buy parts anymore from certain suppliers. They probably get certification from current suppliers who promise and “demonstrate” they are not buying raw materials from the “conflict region.” But how deep into the supply chain can any company really go?

Here's why Intel and Hewlett-Packard received their hugely positive endorsement from the Enough Project:

    Intel was the first company to publicly commit to making a fully conflict-free product within a deadline — a conflict-free microprocessing chip by 2013. It has taken several other major steps under the leadership of Chief Operating Officer Brian Krzanich. Intel chairs the review committee for the smelter audit program, co-chairs the industry association work group on conflict minerals, has visited 50 smelters, co-founded a program with HP and GE to pay for smelter audits, and has visited eastern Congo to better understand how the company can have a positive impact.

    HP has been active at multiple levels. When enough smelters are available it will require its suppliers to use only audited, conflict-free smelters. HP also co-founded the smelters incentive program. HP has been active by helping Congo develop a clean minerals trade, serving on the governance committee of the PPA, purchasing minerals from Congo, traveling to eastern Congo to see local systems firsthand, and being the most active corporate participant in a diplomacy work group on Congo. It also signed onto the multi-stakeholder group on strong SEC regulations.

These sound very good. In fact, it might work handsomely — in the West. Think about how difficult it has been to get {complink 2125|Foxconn Electronics Inc.} to abide by Western labor regulations in China, and then multiply the problem a thousand times to get an idea of what is happening in the Congo. But let's make it even more graphical.

This is how the system works in the Congo and why getting 100 percent conflict-free minerals is impossible, impracticable, and delusional. Only certain areas in the Congo are designated “conflict zones.” It's not the entire country. So, some companies operating in the same region are not conflict minerals producers. These might have been certified legal producers and freely supply the minerals to certified smelters. These are the ones Western companies patronize.

But this is in the heart of Africa where the impossible happens each day. The minerals produced in known conflict zones don't stay in the conflict zone; they can't be used there. They need to be turned into cash by the warlords who use the proceeds to finance their atrocities. These have developed and perfected backdoor smuggling channels to get their conflict minerals to the “certified zone” where they can get scrubbed and certified. Try identifying them after they've been processed into powdered form. It's not totally impossible, but who's going to pay the extra charges?

When integrating smuggled conflict minerals becomes too difficult or expensive, they are simply shipped to China, where they get certified, losing their trace to the conflict zone. So, Western manufacturers satisfy legal requirements, and the warlords get paid. Meanwhile, the mom-and-pop miners in the conflict zone get screwed because they don't have smuggling channels to get their tainted minerals to certified smelters.

They can't rely on Western inspectors either. No matter how many inspectors Intel and HP employ, locals know they can't rely upon them for protection. The inspectors don't live in the Congo, where the punishments for being a snitch were imagined and perfected in the reddest corner of hell.

Congress is the bumbler here. They never really understood what they were getting into. In the meantime, they've passed the Dodd-Frank legislation (which even the SEC is struggling to interpret and implement), left Western OEMs and suppliers holding the bag without a clear guideline, screwed up small raw material vendors in the conflict zone, and boosted the street value of the actual conflict minerals, because now the warlords must add smuggling costs.

However, Congress is happy it has done its moral duty, and you might be glad too that your next iPhone won't contain conflict minerals. Some Western OEMs have satisfied the law also and burnished their images with impressive reports from organizations like the Enough Project. And legal Chinese producers are happy they don't have to compete as fiercely with rivals in the conflict region. Life hasn't really improved, though, for the folks the law was meant to protect. It might, in fact, be worse.

22 comments on “Illusions of ‘Conflict-Free’ Minerals

  1. Nemos
    August 16, 2012

    “The conflict minerals are in our phones, tablet PCs, computers, and much other high-tech equipment.”

    So that makes us accomplices to what is going on in Congo . The analysis is a detailed one but I would like to hear also your proposal about what we/they should do about it if the congress Laws are not enough to have the desired “Conflict Free” minerals.

     

  2. _hm
    August 16, 2012

    Thnaks for introducing new word Hubris.

     

  3. R.J.Matthews
    August 17, 2012

    Really disappointing to see yet another article on EBN knocking the efforts to clean up the supply chain inconflict minerals from the Drc.

    How about one focusing on what is being achieved for a change, by the ngo's others and the supply chain professionals helping them? 

    perfect, clean ,and 100 percent legally mined mineral materials from the democratic republic of congo? That will be the day.

    Well thats what the solutions for hope project is not far off from.

    The solutions for hope project's unique approach to mineral sourcing in the region utilizes a closed-pipe supply line http://solutions-network.org/site-solutionsforhope/

    generally..

    ..these steps have had an effect on the on going conflict in congo,as armed groups are currently only able to generate approximately 35 percent of what they made from the trade in tin,tantalum,andtungsten,or3ts,two years ago…

    No one expects the whole mess to be cleaned up instantly and articles like this one do not bring that situation any nearer but a lot of people are trying to change things for the better and gradually succeeding.

    The folk on the ground including the miners broadly welcome the new rules and who can blame them.

    http://news.yahoo.com/official-60-dead-northeast-congo-gold-mine-074721993.html

    Its a misconception that Chinese firms will be able to dodge laws forever as they  Supply to American companies a couple of chinese firms involved in the tin trade have already been  jumped  on.

    Just because some thing is hard to do does not mean  it is not worth doing and the push for Dodd Frank has already meant improvements.

    This article is in especially poor taste now when you have the  m23 rebels in the Drc raising hell partly funded by their illicit mineral revenue and backed by Rwanda who have also profited from the Drc conflict mineral trade.

  4. Nemos
    August 17, 2012

    “Just because some thing is hard to do does not mean it is not worth doing”

    That is true, and we must always try for the better but also we must have open eyes and see the situation as it is . We have something (Congress law) but there are more actions that we/they must take.

  5. R.J.Matthews
    August 18, 2012

    What you say is true but whole article is not a fair reflection of the current situation Nemus but a opinion piece which suggesting Ngo's and others are totally clueless about the situation.

     

    quote..

     

    What has resulted is the farce of the enough project and other well intended but misguided efforts to either help the people of the congo curb their decades-long civil war or keep western companies' supply chains and consumer electronic products scrupulously clean of blood-tainted components.

     

    That is simply not true Enough is for example well aware of the problems and the loopholes that still need closing.

     

    http://www.enoughproject.org/files/corporaterankings2012.pdf

     

    Despite this progress, gold smuggling remains a major problem and the new rwandan backed m23 rebel group is creating instability. But tech company action has been at the center of the long-term progress in creating solutions within mineral supplychains, as the electronics audit program only accepts minerals that are fully traced back to their mines of origin and are conflict-free, i.e.excluding conflict minerals.

     

    While companies engaged in finding solutions should be recognized for their efforts, there are still significant gaps where improvement in conflict mineral policies can be made.

     

    Then lists the areas's where further progress needs to be made including area's outside the large consumer electronics industry—jewelry, automakers, aerospace, and industrial machinery

     

    Which Dodd frank will help with.

     

    The electronic area is not just being picked on, the Ngo's know there are other areas that need addressing and also have gone out of their way to praise the”pioneers of progress”.

     

    Pity the article did not add to the progress being made by highlighting how important it is to have clean supply chains and maybe a few constructive suggestions on how to achieve this in the Drc.

     

     

     

     

     

  6. Nemos
    August 18, 2012

    Something went wrong and the text doesn't have “space” can you re type it please (you can use the “edit” option.) 

     

  7. dalexander
    August 18, 2012

    @Bolaji, I have talked to manufacturing execs and asked if they could absolutely guarantee that the materials they are using are conflict free. The most positive response I received is that they would not sign any paper that guaranteed conflict mineral free product. The most realistic response I received is that they would be willing to sign a document that stated ” to the best of our knowledge we are conflict mineral free.” I know when I travel abroad, I am always asked that if at any time was my hand carry luggage out of my sight? I say no because if I take my eyes off of my laptop bag to look at my phone, the luggage has been out of my sight, but if I say yes, then I and my luggage are pulled aside and I have just added a layer of inconvenience to my trip. How much more difficult and invisible to the end user is the supply chain movement? Your article was spot on. Who can claim their luggage was never out of their sight? If a pickpocket can go into your jacket and remove your wallet without you knowing it, then a terrorist drop a weapon or explosive in the outside pocket of your carry-on just as easily.

  8. stochastic excursion
    August 18, 2012

    There is opportunity for cynicism at all levels and each phase of the refinement process, when seeing judgment passed on people who participate in sourcing these vital materials.  The only remark I'd make is that Intel is not known for board-level components, which is where the bulk of tantalum components are mounted.  For this reason their inclusion in the Enough top five seems not very meaningful.

  9. R.J.Matthews
    August 18, 2012

    Douglas one reason we need new rules is things have been too loose and manufacturing execs have not known enough about where their product is coming from.

     

    Taking your example about luggage. The rules and safeguards over luggage are there for areason to cutdown on terrorism and drug smuggling, yes there are inconvenient but the world would be a lot more of a dangerous place without them.

     

     

     

    Same with conflict minerals balancing the inconvenience of the few against the well being of the many. It is also a lot easier nowadays to track things and it would be hard to slip twenty tons of dodgy ore into your manbag!

     

     

     

    Think you might be interested in these links.

     

     

     

    http://www.dailymail.co.uk/news/article-2178026/professor-paul-frampton-british-scientist-68-arrested-trying-smuggle-cocaine.html

     

    http://www.dailymail.co.uk/sciencetech/article-2187623/contour-crafting-builds-house-24-hours.html

     

  10. dalexander
    August 18, 2012

    @R.J., like Paul is going to find the perfect 10 woman on the Internet who is just dying to marry a stodgy old professor. Like she had no other options. Either Paul has extroidinarily high self-esteem, or he is living in la la land. Thanks for the links.

  11. dalexander
    August 18, 2012

    @stochastic, I agree completely. Intel should possibly say what minerals they are using and citing as not coming from a conflict area or nation. Bolaji's point about regions inside countries classified differently is a new one on me. Overland smuggling by roving armies is definitely a liklihood, especially in Africa now.

  12. R.J.Matthews
    August 19, 2012

    Well Douglas as the say on the big bang theory smart is the new sexy!

  13. bolaji ojo
    August 20, 2012

    R.J., I didn't take lightly the issue of “conflict minerals” because I know lives are on the line in the Democratic Republic of Congo. I believe you missed my point. Let me try and restate it and attempt to draw you into the more important discussion here.

    First, these minerals were dubbed “conflict minerals” because there is a conflict — better known as “war” — going on in the Congo and some of the surrounding countries. The minerals were not the reason for the “conflict.” They are being used to fund the “conflict,” hence the name they've been given. At the heart of this “conflict” is a political problem. You won't see that mentioned in the Dodd-Frank report or any other attempts to find a resolution to the problem of conflict minerals.

    The minerals have gotten caught up in Congo's political problem. There are no “conflicts” in the minerals themselves. Congress knew this. The international community is keenly aware of this and knows the wars in the Congo have been going on for decades. Solve that problem and the “conflict” in conflict minerals disappear. Show me the serious efforts being made to solve that problem if we are so concerned about the people of the Congo. Or is Congress more concerned about image?

    Congress punted. The international community punted. They sent the ball to the high-tech community, the ones that are least well positioned and have the least authority to solve the problem. We asked electronics manufacturers who lack an army or any other forms of political authority to solve a political problem because we don't have the stomach for it.

    Let's be blunt. Yes, some of the actions being taken by high tech manufacturers will cleanse some of the “conflict minerals” but believe me if you track the paths taken by the “clean” minerals, you'll see traces of blood. This is the way it will continue to be until the political problems that turned them into “conflict minerals” are resolved.

    Secondly, the legal system that would support the eradication of “conflict minerals” doesn't exist in the Congo. And, this is because of the problem identified above. BP spilled oil in the Gulf of Mexico and within days began cleaning it up. The oil company has so far spent tens of billions to clean the Gulf and compensate people and businesses that were impacted. That was because a government with sufficient power and authority to investigate the incident and prosecute BP was in place. The legal system compelled BP to do what other oil companies that have similarly polluted other lands refused to do. A foreign government did not need to get involved when BP created the mess in the Gulf.

    If a working system of authority, checks and balances exist in the Congo, a foreign government would not have to get involved. Electronic manufacturers are being asked to do what governments and the international community refuse to do. Like Congress (which included “conflict minerals” in the Dodd-Frank bill to show it is doing something about the problem in the Congo) component makers and OEMs will show steps, processes, actions and other moves taken to get rid of “conflict minerals” and this will result in reports like the one published by the Enough Project.

    On the ground, neither Congress's action nor the ones being taken by electronic makers would ever be “enough.”

  14. R.J.Matthews
    August 20, 2012

     

    Bolaji

     

     

     

    The tittering you hear is coming from a corner office somewhere in silicon valley, tokyo, shanghai,or seoul tittering?

     

     

     

    What has resulted is the farce of the enough project what farce?

     

     

     

    Life hasn't really improved, though, for the folks the law was meant to protect. I t might,in fact,be worse.?

     

     

     

    You won't see that mentioned in the dodd-frank reportor any other attempts to find a resolution to the problem of conflict minerals?

     

     

     

    That is simply not accurate Bolaji could trackdown and give you plenty of links to articles going into the other problems in the Drc and why they are contributing to the conflicts there from organisations fighting the conflict mineral issue and others.

     

     

     

    That does not change the fact that the conflict mineral issue is a major cause of conflict and a major source of funding for it. The recent m23 rebellion shows this very clearly its leader is a conflict mineral kingpin bosco”terminator”ntaganda and one of the reasons the troops are rebelling is that they did not want to be moved out of the region where they were leeching off the mineral trade.

     

     

     

    The rebellion would have already collapsed if it was not for the support of Rwanda who want to protect their economic interests in the kivu ie the illicit mineral trade.

     

     

     

    Show me the serious efforts being made to solve that problem if we are so concerned about the people of the congo?

     

     

     

    http://www.un.org/en/peacekeeping/missions/monusco/facts.shtml

     

     

     

    Massive efforts are being made but a lot more could be done.

     

     

     

    Congress punted well they are politicians if millions had died indirectly and directly in the USA and not the Drc the problem would have already been sorted. Is that a reason to fight the efforts that are being made though?

     

     

     

    No one expects everything to be cleaned up perfectly overnight, but massive improvements can be made nothing farcical about that.

     

     

     

    It is not enough to just depend on the legal system in the drc which is why Dodd Frank is needed though efforts are being made in the Drc as well.

     

     

     

    Electronic manufacturers are being asked to do a lot because they are in a position to do so through the supply chain, hence the relevance of your article in the first place.

     

     

     

    When you are talking about avoiding the mistakes of the past that have lead directly and directly to the death of millions what is enough?

     

     

     

  15. bolaji ojo
    August 20, 2012

    R.J. I agree something is being done but what is being done isn't by any means enough to resolve this crisis. So, if conflict minerals stop being taken out of the Congo will the war and the attrocities end?

    The warlords are called “warlords” and they are despicable people. They've earned these descriptions. But they emerged out of bigger political problems in the region. They used the gains from the mines to fund their wars. Much as in Angola, another country where Africa had a multi-decade war, the wars and barbaric acts in the Congo won't end until a political solution to the conflict is effected.

    If the warlords don't use conflict minerals, they will use other resources. In fact, they are using other resources, including lumber from the rain forest, wild animals and other not so popular minerals.

    I also agree the electronics companies should be involved. But manufacturers were handed a hot potato and they went for mittens. It will stop them getting hand burns but what about the cauldron?

    It is band aid solution and both the lawmakers as well as the targeted companies know this. Plus, the onus of proving the supply chain hadn't been tainted was put on these companies. Are they really in the best position to do this? They are doing what they can and that's admirable. It will result in some changes but the core of the problem will remain and as long as these companies get a sticker on their products that proclaim the components were manufactured with “conflict-free” raw materials, executives can sleep easy.

    You cited what the United Nations is doing but fewer attrocities were committed in Libya and Egypt before the dictatorial regimes in those two countries were bundled out. Yes, local efforts were critical to this but so was the support of the international community, which decided to act promptly. How long has the wars in the Congo been raging?

    Since the electronics industry seems to have a lot of money (Apple alone has enough to finance several wars) we might as well ask them to raise an army, occupy the mines and ensure payments are made directly to workers and the country!

    R.J., We are on different sides of the same argument but I believe we share the same convictions and I respect your pointing out the effects of the actions being taken. My position is that something more concrete need to be done right now. Passing the job on to electronics makers may make us all feel good something is being done but it's far from being one-fifth enough for those on the ground. Time is what they haven't got in places like this yet time is the commodity we want them to trade.

  16. Barbara Jorgensen
    August 20, 2012

    Bolaji–well said, as always. As much as I agree with the intent of Dodd-Frank, it was clearly written and endorsed by people who likely have never been to Africa. (I haven't either, but that doesn't stop me from opining on the matter…) The fact that this particular issue was attached at the last minute to another bill should speak volumes about the US political system. Another well intended, badly executed directive.

  17. R.J.Matthews
    August 20, 2012

    Agree Bolaji we are on the same side in thinking a lot more needs to be done but think you are under estimating the issue of conflict mineral as it makes many of the other issues worse and is the biggest funder of conflict in the Drc.   Other sources simply do not bring the same amount of cash.

    The current pressure has lead to armed groups only being able to only generate 35 percent of what they made from  tin tantalum and tungsten compared to two years ago. Also has been a factor in a major reduction in the threat from the FDLR rebel group which has drastically shrunk in numbers and influence.  

    Agree also other meta ls need looking at as well a prime example being gold as it has rocketed in price and is now a much bigger factor so you need jewellery companies getting onboard which Dodd frank should help with.

    The UN could do a much better job in the Drc and of course but in Libya and Egypt it was people power that changed things. On past wars in the Drc no coincidence that fighting keeps breaking out in the most mineral rich region leading to multiple countries getting involved and helping themselves to mineral riches along the way.   http://en.wikipedia.org/wiki/kivu_conflict

    We could suggest Apple raise an army but think they are already taking over the world anyway!

    Barbara gree that the rules were a bit sneaked through but as could hardly say they are badly executed as the rules have not even really been executed yet after being passed in july 2010!

  18. Taimoor Zubar
    August 20, 2012

    I think what people need to realize is the fact that despite how deep the conflict may be with regards to these materials and how badly the people of countries like Congo might be suffering because of these materials, the mining of these materials is still the sole source of bread and butter for these people. Already countries like Congo are in deep state of poverty and these minerals contribute a lot to their economy. If companies decide to cut on the usage of these minerals, they may end up hurting these people more.

  19. R.J.Matthews
    August 20, 2012

    Taimoorz the Drc is a mineral treasure house and should be to mining what Saudi Arabia is to oil production. If the trade is cleaned up there would be a lot more mining production in the country and more wealth produced.

     

     

     

    The Drc should be a rich country with its natural resources ,fertile land and possible sources of hydro power and now with oil being discovered as well.

     

     

     

    The hold up in bringing the rules in is creating uncertainty which is hurting investment.

  20. Taimoor Zubar
    August 20, 2012

    @stochastic: Even if Intel is not the leading user of tantalum components, it's still encouraging to see that they are doing something about it to address the issue. It may be a marketing stunt but at least they're making an effort to address an important social cause. It would encourage other companies to also address the issue.

  21. stochastic excursion
    August 20, 2012

    Arab nations are still rigidly stratified compared to the West in terms of society, but living in a place with valuable resources has benefited the common people there. Speaking as a distant observer and I'm sure making easy generalizations, the same prosperity seems to be denied to the Congolese.  I'm pretty sure this is an important motivation for the violence in the Congo.

    However I see this as an opportunity for sourcing outfits to make a difference where Western foreign relations officials and NGO's have been so ineffective.Unfortunately this means diverting focus from what can be gotten from the region, to a longer-term objective of allowing economic and infrastructural improvements to be implemented using the region's natural wealth.  This raises the prospect of limiting production, but surely will do more good than the haphazard stop-gap policies now in place.

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