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Never-Ending Conflict (Minerals)?

The conflict minerals regulation being implemented by the US Securities and Exchange Commission as part of the Dodd-Frank Act could be just the beginning. Amid reports of minerals coming from conflict in geographic regions other than the Democratic Republic of Congo, some governments — most notably the European Union — are talking about regulating on a broader scale.

Although the Congo conflict is the best known example, it is not the only area where minerals are being used to fund guerilla warfare. “The guerrillas of the FARC (the Revolutionary Armed Forces of Colombia) operating in Colombia and Venezuela are just one other example, using production of both gold and the tantalum ore, coltan, to continue their campaign as cocaine production has become more restricted,” Karel De Gucht, European Commission of Trade, said in a speech in September. As the EU considers its own conflict minerals rule, he said, it will “frame this initiative in the wider context of a comprehensive approach to break the link between conflict and raw materials.”

An article in August by Bloomberg reporter Michael Smith detailed the conflict that De Gucht referenced. Smith describes how Amazon Indians make a living by carting rocks out of a part of the rain forest along the borders of Venezuela and Brazil. Smith reports that the rebel FARC army “uses the cash it makes from selling metals to finance one of the world's longer-running guerillas wars, the Colombian National Police say.”

A big buyer of the tungsten is the US subsidiary of Australian metals processor Plansee, called Global Tungsten & Powders (GTP), says the article. Smith notes that a few days after being asked about the origins of its Colombian tungsten, the company issued a news release saying it would “suspend all further purchases of tungsten from Colombia” pending an independent assessment of the situation.

The article further claims that Apple, Hewlett-Packard, and Samsung all buy parts from a firm that buys from GTP, although it's not clear what component company that is, and says that both Apple and Samsung have opened investigations into the issue.

Meanwhile, experts in the risk and compliance area agree that such regulations are likely to spread and broaden. An article in Compliance Week (subscription required) noted that tin from Indonesia is controversial because of both human rights and environmental concerns. And there is continuing speculation that cobalt, a component of lithium ion batteries, could be deemed a conflict mineral, at least in the Congo region.

In fact, regulations could ultimately include more than just minerals. “Today we are talking about conflict minerals,” Sonal Sinha, associate vice president of industry solutions for MetricStream, a provider of governance, risk, and compliance software, told Compliance Week. “Tomorrow it could be wood or other materials. The list can just go on and on.”

11 comments on “Never-Ending Conflict (Minerals)?

  1. Hailey Lynne McKeefry
    October 17, 2013

    @Tam, thanks for this post. It just highlights that this is an incredibly complicated issue. I'm prone to be all for any attempt to address human rights issues. To really be effective, though, we really do have to look at the breadth of the issue.

  2. prabhakar_deosthali
    October 18, 2013

    I am just wondering here that someday everything we buy will have some malicious source attached to its production.

    I fail to understand why are we banning the material just because of its spurious source irrespective of how pure or good that mineral is.

    Are other industry segments also implementing such regulations or it is just the semiconductor industry that is so fussy about human rights violation?

  3. Daniel
    October 19, 2013

    Tam, like your title, the issues with respect to conflict materials are never ending. We had come across many issues with in the last couple of years with respect to the conflict mineral. But I didn't get why its not get resolved for such a long period. I think the Amazon issue is a new one

  4. Daniel
    October 19, 2013

    “Are other industry segments also implementing such regulations or it is just the semiconductor industry that is so fussy about human rights violation?”

    prabhakar, the major issues are with semiconductor industry, where such minerals are using for component manufacturing. In IT industry, pirated copies or cracked versions are major issues

  5. R.J.Matthews
    October 19, 2013

    Sorry all but the conflict issue is going seem never-ending especially if nothing is done about it as the trend is for minerals to become more valuable and where there is big demand for a product there will always be someone who wants to profit and does no care about the moral dimension.

    Simply put the growth of China and emerging economies means there is going to be more demand for minerals this can already easily be seen in the rise in the goldprice over the last ten years.

    http://goldprice.org/gold-price-history.html#10_year_gold_price
    http://www.miningweekly.com/article/china-tipped-to-become-global-leader-for-base-metals-demand-2013-10-18

    Going to be more demand for lots of metals though and this is likely to become an even bigger factor when the world economy takes off.

    Eventually terrorists and anti american organisations will start looking towards profiting from minerals the same way they have profited from the drug trade.

    http://www.washingtontimes.com/news/2013/sep/20/terrorist-organizations-still-profit-afghan-drug-t/

    It's going to be an increasingly important issue for the whole supply chain and i expect the jewellery industry to start being highlighted more in the future.

     http://www.enoughproject.org/blogs/new-report-striking-gold-how-m23-and-its-allies-are-infiltrating-congo%e2%80%99s-gold-trade

    Its inevitable that supply chain professional of all kinds are going to be increasingly on the frontline of dealing with the conflict minerals problem generally and globally.

  6. _hm
    October 20, 2013

    Yes, this looks to be very complex issue. Sprit of this law is very good. However, developed countries and industries should also monitor that their stringent law is not adversely affecting most vulnerable poor in those civil war countries.

    In place of current way, can there be more innovative way which help the poor and defeats the bad guys?

     

  7. Daniel
    October 20, 2013

    “the growth of China and emerging economies means there is going to be more demand for minerals this can already easily be seen in the rise in the goldprice over the last ten years.”

    Mathews, you may be right about the rising demand. And sometimes this rising demand can create controversies.

  8. Alison Diana
    October 22, 2013

    There are some companies, such as Fairphone, that claim to use non-conflict products and work programs in the manufacture of their devices (in Fairphone's case, a smartphone). Yet how many people will pay for a device solely because of this differentiator? I'd argue a device must also be better than — or at least equal to — competitive products in order to reach mass market. Sadly, we've seen that with other products that appeal to consumers' better sides. 

  9. ahdand
    October 24, 2013

    @Aison: Yes paying for a device is not a good you if you cannot get all the expected things done out of it. The risk is high and the investment value too maybe high in such scenarios.     

  10. SP
    October 24, 2013

    @Alison, quite agree. It will still take many more years before consumers start buying products that don't have banned materials. Right now they don't see gains in buying thes products. Its all mfr driven.

  11. Anand
    October 28, 2013

    The problem is not conflict minerals. The problem is illegal arms dealing by guerrillas. They intercept the mineral route in countries like Colombia and Congo, sell minerals illegally, make money and buy illegal arms and fund their guerrilla warfare. The respective country's armed forces should be tight enough to control such activities. Rules and regulations won't change anything unless somebody takes control of the situation, and that too with force.

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