Conflict minerals: Genocide in your gadgets?

Firms try to limit conflict minerals in electronics. It's no easy task.

Deep inside cellphones, iPods, and laptops lie four particular metals: tin, tantalum, tungsten, and gold.

These "Three T's" and gold are essential to the technology industry – but are also notorious among human rights groups. For years, warlords in eastern Congo have mined and sold the minerals to finance brutal conflicts and sexual violence.

"Rebel militias are making hundreds of millions of dollars off these materials – materials that go mainly into electronics," says Sasha Lezhnev of The Enough Project, a branch of the Center for American Progress that works to end genocide.

To shed light on the human cost of gadgets, The Enough Project released a report ranking tech companies by their efforts to rein in the use of conflict minerals. Only a handful of corporations received positive scores. However, Mr. Lezhnev says, consumer pressure has pushed those top few toward plans that could shut down conflict mines and improve the entire industry.

While Congo holds a significant share of the world's Three T's, other mines – often safer and better-paying mines – dot the globe. Yet some smelters favor Congolese ore because it costs a third to half of the usual market price.

"In eastern Congo, you see child miners – no health or safety standards," says Lezhnev. "Minerals are dug by hand, traded in sacks, smuggled across borders."

This ragtag approach benefits the warlords in two ways, says Jason Sterns, former head of the United Nations Group of Experts on the Congo, who was not involved in the study. It keeps costs minimal and also obscures accountability.

The problem: Electronics companies rarely own the factories in which their products are made. They design gadgets and then enlist manufacturing and assembly plants, which enlist material sourcing firms, which enlist smelters, which enlist mining supply companies, which then enlist mines. This twisting global supply chain leaves behind little reliable paperwork and lots of room for deniability.

"We require all of our suppliers to certify in writing that they use conflict-few materials," wrote Apple chief Steve Jobs in response to consumer questions last summer. "But honestly there is no way for them to be sure. Until someone invents a way to chemically trace minerals from the source mine, it's a very difficult problem."

Rather than wait for a scientific breakthrough, several tech giants, including Apple, have pushed for stronger audits and mining certifications, similar to the Kimberley Process that helps curb conflict diamonds.

These companies ranked highest in Enough's report.

Hewlett-Packard topped the list for publishing the names of its suppliers, the first in the industry to do so, and for carrying out regular audits. Intel pioneered on-site visits at its tantalum smelters, spurring other companies to follow suit. Motorola backed an African certification policy and helped lead an industry trade group aimed at curbing the use of conflict minerals.

While The Enough Project assigned scores, Lezhnev says he prefers thinking of the standings as tiers. Companies with 15 percent or more (see chart, above) form the top tier, those leading the industry in their efforts toward responsible change.

The middle tier – 5 to 14 percent – made initial steps, yet lacked either vigor or transparency, according to Enough.

Finally, companies in the bottom slots may not be using any conflict minerals – but, as far as Enough can tell, they have done little or nothing to find out.

The study is based on an 18-part survey, sent to each of the 21 companies. About two-thirds of them responded, says Lezhnev. Enough then used public information and corporate reports to fill in unanswered questions where possible.

By next summer, some of these details will be required by law. Last year's Dodd-Frank Wall Street Reform Act includes a provision that requires all publicly traded American companies to disclose their suppliers.

Mr. Sterns calls the bill "very intelligent" but also flawed. The law doesn't punish companies for using conflict minerals, only fines them for not reporting it. "The punitive measures come from us – the consumers," he says. "The second flaw is with the approach. Due diligence relies on having good information. But the situation on the ground is so confusing that it's tough to find out who's in violation."

Sterns worries that the tech industry will simply cut off all shipments from Congo, rather than spend the time and effort to investigate which mines are run legitimately. Companies that really want to make a difference, he says, should agree to pay a premium for minerals proven to be conflict-free, just as Americans do with fair-trade coffee.

"None of us thinks an embargo on eastern Congo is a good idea," says Sterns. "Past efforts have failed because they failed to change the incentives."

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