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Conflict Minerals: The Human Cost of Technology

Conflict Minerals: The Human Cost of Technology

Technology and consumer electronics are enormous and enormously successful industries that profit immensely from still-growing customer populations. How popular can a company remain and how badly will its shiny packaging and reputation be tarnished if its material success is built on the suffering and broken lives of enslaved workers, child miners and rape victims?

By Charles King E-Commerce Times ECT News Network
02/11/14 5:00 AM PT

The retail image of consumer electronics products -- bright and shiny in their meticulously sterile packages -- fundamentally contradicts how they are manufactured. Anyone who has spent time on a factory floor knows this. The work is often dirty and occasionally dangerous, emphasized speed leads to injuries, and the constant stress of repetitive motions and work quotas can exact other kinds of tolls.

However, looking deeper into the supply chain -- including where and how common and critical base minerals are extracted, refined and prepared for production -- reveals different sorts of costs. In many, or even most cases, issues including the living and working conditions of miners, and the impact of these processes on the environment are pretty well understood. Not always, though, and that is especially the case in regions where political and economic conflict are rife.

In those places, a greedy elite few often benefit by brutalizing and terrorizing the vast majority of their countryfolk. Nowhere on the planet is this more common than in the Democratic Republic of Congo where, despite the country's astounding mineral wealth, some 80 percent of its 65 million-plus citizens subsist on 30 US cents or less per day, and the average life expectancy -- 48 years in 2013 -- is one of the world's lowest.

The vastness of the DRC's natural and mineral resources is hard to imagine. Along with being part of the world's second-largest rain forest, the DRC contains a wealth of strategic minerals, including cobalt, copper, zinc, gold, diamonds, silver, magnesium, germanium, uranium, coltan and petroleum. In fact, it is estimated that the DRC has anywhere from 64 percent to 80 percent of the world's reserves of coltan (critical to electronics manufacturing), 34 percent of cobalt and 10 percent of copper.

Extracting and processing these minerals and materials comes at a terrible human cost. Many mines and smelting facilities in the DRC and adjoining countries depend on what is effectively slave labor. Moreover, much of the general population is systematically terrorized, both by government forces and their opponents.

Hundreds of thousands of women have been raped by soldiers and militia groups. Overall, an estimated 6 million people have died as a result of political conflicts and related causes since 1996, and an average of 45,000 more people die every month.

Conflict Minerals - The IT Angle

What does any of this have to do with the technology industry? Quite a bit, actually, from both legal and moral perspectives.

Let's begin by considering the first point. In Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the gold, columbite-tantalite (coltan), cassiterite (tin) and wolframite (tungsten), which are mined in and near the DRC are identified as "conflict minerals" that the Securities and Exchange Commission is tasked to regulate as part of a broader effort to destabilize their illicit trade and exploitation.

The U.S. Department of State issued guidance concerning due diligence in July 2011, and in November 2012, the SEC's final rule implementing Section 1502 took effect, setting forth disclosure and reporting requirements relating to businesses that use any the four conflict minerals. In May of this year, companies using those minerals, which include nearly every major IT and consumer electronics vendor, will be required to disclose what they have done and are doing to abide by the SEC regulations.

Some are addressing the issue in a far more proactive manner than others. For example, during his first CES keynote, Intel CEO Brian Krzanich said that the company had achieved a critical milestone, and that the minerals used in microprocessor silicon and packages manufactured in Intel's factories were "conflict-free" as concluded by third-party audits or direct validation by Intel's supply chain organization. In other words, the company had cut the DRC out of its products.

That Intel and its new CEO are moving forward so aggressively is hardly surprising. When he took on the job of overseeing Intel's manufacturing facilities in 2009, Krzanich made eliminating conflict minerals a top priority. In 2012, he set the milestones in place to create conflict-free CPUs and appointed Carolyn Duran as director of the program. The process was anything but simple; Intel contacted scores of smelters globally and met with the 60-plus it engages directly. Although challenging and complex, the effort paid off.

Intel certainly isn't alone in ridding its supply chain of conflict minerals. The Enough Project's "Raising Hope for Congo" campaign has been tracking and ranking similar efforts by technology and electronics vendors, and while its current rankings are somewhat dated (2012), they provide insights on which companies are making progress (Intel, HP, AMD, Dell, Apple, Microsoft) and which need to work far harder (Canon, Nikon, Sharp, HTC, Nintendo).

Every company involved has time to get it right -- there's a two-year window to comply with the SEC regulations -- and the issue is likely to gain a higher profie and closer examination after the disclosure deadline in May.

Final Analysis

The second and perhaps thornier issue related to conflict minerals is moral in nature. Technology and consumer electronics are enormous and enormously successful industries that profit immensely from still-growing customer populations. How popular can a company remain and how badly will its shiny packaging and reputation be tarnished if its material success is built on the suffering and broken lives of enslaved workers, child miners and rape victims?

Some may dismiss the idea out of hand, believing that the global demand for technology is so high and that public interest in the DRC's ongoing political and social conflicts is so low that negative side effects will be minimal. That's an unenlightened form of whistling past the graveyard that ignores the perseverance of activists and the success of analogous efforts like those around conflict or "blood" diamonds.

Whatever the eventual impact of Section 1502 of the Dodd-Frank Act happens to be, Intel and the other vendors consciously excising conflict minerals from their supply chains and products are doing the right thing for themselves, their shareholders, their customers and the world.


E-Commerce Times columnist Charles King is principal analyst for Pund-IT, an IT industry consultancy that emphasizes understanding technology and product evolution, and interpreting the effects these changes will have on business customers and the greater IT marketplace. Though Pund-IT provides consulting and other services to technology vendors, the opinions expressed in this commentary are King's alone.


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