The new blood diamonds?
Electronics makers are pressed to stop using 'conflict minerals' from mines controlled by armed groups in DR Congo.
NEW YORK (Fortune) -- First there were "blood diamonds," the gems that fueled conflict and human rights abuses in Liberia and Sierra Leone. Then there was "conflict cocoa," the chocolate source that's harvested by children and funds civil war in Ivory Coast. Now concern is rising about the minerals that go into common consumer electronics. Could that be a BloodBerry or a Conflict Cell in your pocket?
A new pressure-group campaign and pending legislation in Congress aim to increase awareness of "conflict minerals" from the Democratic Republic of the Congo and push companies to rid their supply chains of them. In question are ores mined by violent armed groups in the country's eastern region that can turn up in nearly any electronic product - like smart phones, MP3 players, and laptop computers. Activists say that buying products that contain the minerals indirectly allows outlaw factions to continue a conflict characterized by its brutality, including the murder of civilians, violence against women and conscription of child soldiers.
"The consumer electronics industry is the largest end user of the minerals that are fueling the fighting in eastern Congo," says John Norris, executive director of the Enough Project, an Africa-focused advocacy group and leader of the coalition. "These companies have an obligation to ensure they are not financing armed groups by demanding more information and better behavior from their suppliers."
Consumer electronics companies have been aware of the issue for some time, but they have generally focused on only one of the ores coming from the region, coltan. Coltan is a colloquial African word for ore containing tantalum, which is used in electricity-storing capacitors, common in electronics. The Enough Project says it sent letters to 21 large electronics companies last month asking them to audit their supply chains for tin, tungsten and gold as well, using some kind of independently verifiable tracing system.
In Congress, Sen. Sam Brownback is partnering with Sen. Russ Feingold and Sen. Dick Durbin to revise legislation that Brownback introduced last year addressing the issue. Set to be introduced by April 4, the new bill would require companies that use minerals mined in the region to disclose sourcing to the SEC.
"In Congo, many people - especially young children and women - are suffering at the hands of armed groups who are trying to make a profit from mining 'conflict minerals' like coltan," Brownback said in a statement to Fortune. "I hope my colleagues and I are able to pass legislation that will bring accountability and transparency to the supply chain of minerals used in the manufacturing of many electronic devices, and that the legislation will ultimately save lives."
There's no question that the minerals fund armed groups in the largely lawless region. The factions - which include a mix of renegade Congolese army troops, Rwanda-influenced Tutsi rebels and fugitive Hutu fighters from the 1994 Rwandan genocide - control mines that generate an estimated $144 million to $218 million each, according to the Enough Project and reports by the United Nations, Global Witness and others. Since 1998, more than 5.4 million people have been killed in DR Congo's conflict, according to the International Rescue Committee, making it the deadliest on earth since World War II. The UN estimates that 200,000 women have been raped and the armed factions still active in the country's east have used children for mining, fighting and other work, according to Human Rights Watch, the UN and others.
Minerals from eastern DR Congo are shipped mainly to middlemen in Malaysia, Thailand, China and India, according to Enough. The companies buy the same minerals elsewhere and mix them together, but Congolese ore, although a small percentage of the total, is cheaper, according to Resource Investor. Once processed, the refined metals are bought by electronics manufacturing companies, turned into usable components (e.g., circuit boards containing tin), and put into electronic devices ranging from cell phones to digital cameras to televisions.
David Sullivan of Enough says they are appealing to electronics companies, users of the minerals, and not the middlemen, because they have the greatest leverage. "It is unrealistic to expect the average consumer to go to a smelter in Thailand," Sullivan says. "It is realistic for a consumer to ask for peace of mind that their purchases are not underwriting the worst sexual violence in the world."
Some companies already have policies on minerals from DR Congo. Motorola (MOT, Fortune 500), Apple (AAPL, Fortune 500), HP (HPQ, Fortune 500), Nokia (NOK) and RIM (RIMM) bar suppliers from selling them Congolese coltan. "Mining activities that fuel conflict are unacceptable," Motorola wrote in response to Enough's request.
HP also said it would work on the issue. "We take very seriously the issue of the social and environmental conditions associated with our electronics industry supply chain," says Judy Glazer, director of HP's global social and environmental responsibility operations.
But even if the companies want to help, it's not easy. There's no certification system for minerals from the region. "Short of banning all minerals coming from the Eastern Congo or coming from Central Africa, it's going to be very difficult to set up a system on the ground that will be able to distinguish between good and bad minerals," says Jason Stearns, a former UN DR Congo investigator. And simply avoiding minerals from the region isn't perfect either, both because rebels profit from other sources, like charcoal sales and bribery; plus, legitimately mined minerals are a critical economic driver for the region.
Many of the big companies are members of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative, which have a joint workgroup focused on mineral issues like those from DR Congo. A report by the groups last year noted the challenges of getting rid of illegally mined minerals, mainly because there's no mechanism to differentiate between "good" and "bad" sources. The report outlined goals to address the problem, including the commissioning of "supply chain transparency models" for tin, tantalum and cobalt, but notes it would do so "without identifying their commercial relationships," at odds with Enough's proposal.
Previous efforts to clean up supply chains have had mixed results. The Kimberley Process, a joint government, industry and nonprofit initiative that certifies shipments of rough diamonds as "conflict-free," was largely successful, now covering most of the world's diamonds. But the chocolate industry's response to criticism over child labor on cocoa farms in West Africa, a voluntary protocol by which companies would wean themselves from child labor, then certify as much, hasn't significantly changed practices in Ivory Coast and elsewhere.