Battle to end ‘conflict minerals’

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IOL BR Congo 74261 Bloomberg Balls of ore sit in a collection drum before loading into a furnace. US companies must disclose their use of conflict minerals from the DRC or adjoining countries to the Securities and Exchange Commission by tomorrow. Photo: Bloomberg.

 

Intel Corporation’s chips contain tantalum, gold, tin and tungsten – all from minerals that can be mined from war-torn parts of the Democratic Republic of Congo (DRC).

Carolyn Duran’s job is to make sure they aren’t.

For the past five years, Duran and her team have confronted companies that produce the metals to find out whether they have used ore from mines controlled by militias in the central African nation.

The effort is aimed at starving the gangs of revenue, and it has involved trekking to 21 countries and visiting 86 companies that extract metal from ore.

Along the way, Duran said, her staff had been met with indifference, foot-dragging and outright resistance – underscoring the thorny process of excluding ore that has passed through the hands of the DRC’s militias.

Intel A video wall displays Intel's logos. REUTERS

Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, US companies must have disclosed their use of conflict minerals from the DRC or adjoining countries to the Securities and Exchange Commission by the deadline tomorrow.

Those that fail to comply will be required to disclose publicly what they have done to identify conflict minerals in their products.

“Every single member of Intel’s conflict team has felt, at some point, that we’ve hit an insurmountable task,” said Duran, 43, an Oregon engineer with a PhD in materials science.

The rule faced legal challenges from the US Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers.

These groups said compliance would force companies to disclose how they had contributed to human rights issues, thereby violating their right to free speech.

They also argued that the rule imposed “staggering costs” because there was no infrastructure to certify conflict-free suppliers.

“We understand the seriousness of the humanitarian situation in the Democratic Republic of Congo,” the groups said.

“But we maintain that corporate disclosure requirements are an inappropriate and ineffective way to address the turmoil in that region.”

Boeing initially criticised the rule.

The aircraft manufacturer had since “been working diligently to carry out its requirements”, said Tim Neale, a spokesman.

Intel, Hewlett-Packard and Apple are among the companies that have embarked on pushes to make their products conflict-free, providing early case studies for other companies seeking to follow suit.

While Duran and others have encountered supplier resistance and gruelling conditions, their endeavours have helped about 100 smelters become certified as not using ore from the DRC, according to the Conflict-Free Sourcing Initiative, an NGO.

The number of smelters worldwide is estimated to be more than 300, possibly even more than 600, according to Julie Schindall, a spokeswoman.

“It’s important for that legislation to stick,” said Sasha Lezhnev, a policy analyst for the Enough Project, a non-profit organisation focused on ending genocide.

“If the entire law and rule were to be overturned, you would start to see more and more mines get militarised. You’d see companies saying this isn’t our legal requirement.”

Duran said more companies needed to act to eliminate the market for ore taken out of the DRC’s ground at gunpoint.

The ores for tantalum, tin, tungsten and gold were found in the DRC, with many of the mines being run by the militias.

“Not as many companies as I would like are rolling up their sleeves and helping,” Duran said.

“It’s a small pool.”

 

Blood diamonds

The endeavours follow past pushes around conflict minerals, including efforts in the 1990s and in the last decade to end the purchase of blood diamonds from civil war-ridden countries, such as Angola and the Ivory Coast.

More recently, the focus has been on the DRC, which has been embroiled since the early 1990s in civil war and mutinies in which millions of lives have been lost.

Intel began working to eliminate its use of minerals from the DRC’s militarised mines in 2009 after Brian Krzanich, then a vice-president and now the company’s chief executive, heard about abuses in the country.

“A lot of the income from these mines goes to fuel the chaos, the gangs and the so-called warlords,” said documentary maker Paul Freedman, who was working on a film about the consequences of the conflict.

Since a blanket embargo would have devastated the DRC’s economy, Intel decided to cut out only ore from mines controlled by militias.

Duran, a company veteran who joined in 1998 and who was a process engineer in research and development, was appointed to lead the four-member conflict team.

The company declined to say how much it had spent on the effort.

Duran and her team focused on trying to certify suppliers.

That involved conducting an audit of the supplier or getting the smelter to submit to one by a third-party firm, seeking to prove that smelters had records showing they didn’t use ore from mines controlled by armed gangs.

Duran began tracing where the metals in Intel’s supply chain originated and identified smelters, which turned ore into metal, as the point where the market for the smuggled materials could be choked off.

Yet persuading smelters to reveal where they got their ore from was not easy. Duran and her team were greeted by smelters in places ranging from South America to China with responses such as “Why do you care?” to “Stop bugging me”.

One member of her team was turned away at the door of a smelter after flying to Bolivia. Another had spent three years trying to get a smelter to agree to an audit.

When smelters were convinced to co-operate, many said they couldn’t afford to pay for an audit.

Intel, with contributions from Hewlett-Packard and the GE Foundation, wrote cheques to defray the expense, which the companies calculate cost as little as $5 000 (R52 345).

Other smelters said they didn’t have any documentation showing where their ore came from because deals had been done with a handshake.

Hewlett-Packard and Apple have done similar work.

Jay Celorie, who heads Hewlett-Packard’s conflict mineral programme, said he had travelled to smelters to get them on board.

Turning up in person was the best way to convince suppliers, he said.

“A smelter’s decision to participate is primarily based on their customers’ demands. The end goal, which Intel has demonstrated, is getting the smelters convinced that participating in the programme and being audited is good for their business.”

Apple has also sent staff to visit smelters and it has co-operated with organisations working on the issue in the DRC, says Chris Gaither, a spokesman. The company published two lists of smelters in its supply chain this year, with the number verified as conflict-free increasing to 75 last month from 59 in February.

Duran, who juggled her travels to smelters with raising three sons, said it took two years for Intel to begin seeing some results with its conflict-free programme.

As recently as 2012, fewer than 10 smelters had been validated. Smelters have since begun changing their stance and some have sought audits to ensure they aren’t disqualified as a supplier.

One supplier on which Intel and Apple’s efforts have made an impact is Malaysia Smelting.

The chief executive, Chua Cheong Yong, said his company, the world’s third-largest producer of tin, was able to pay for the annual audits with funding from the technology companies. His operation was listed as conflict-free.

All smelters needed to sign up to create an airtight system that would allow his company to source conflict-free ore from the DRC, Chua said.

“If consumers stop buying materials from the Congo, then people like us have to disengage because we cannot put ourselves in a position where people won’t buy from us,” he said. “They must buy conflict-free products, not DRC-free products.”

In January, Krzanich declared that Intel had successfully made its processors conflict-free.

That does not end Duran’s efforts, which she says have further to go because more companies need to get on board.

“We’re not there yet.” – Ian King for Bloomberg



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