Aug. 22 (Bloomberg) -- You’ve heard of blood diamonds. Now get ready for the debate over blood smartphones.
On Wednesday the Securities and Exchange Commission is expected to vote on an obscure section of the Dodd-Frank financial reform law requiring manufacturers to disclose whether they buy certain metals -- tin, tantalum, tungsten and gold -- that have fueled years of war in Congo. The metals are used in consumer electronics including computer chips, digital cameras, video-game consoles and mobile phones.
Although the measure is not the slam-dunk it might seem at first glance -- some criticisms of it are reasonable -- the SEC should vote to adopt it. Doing so would help consumers make informed choices and strengthen a voluntary effort by high-tech companies to rid their supply chains of these “conflict minerals.”
Since the fall of President Mobutu Sese Seko in the late 1990s, civil conflict in the Democratic Republic of Congo has claimed more than 3 million lives. The eastern part of the country remains in disarray despite the presence of the world’s largest United Nations peacekeeping contingent and repeated efforts by the Congolese Army under President Joseph Kabila and Rwandan military forces to stamp out rebellious militias.
Mineral wealth has been a driving force in the conflict. The Congolese military and the rebel forces such as the ethnic Tutsi M23 movement have taken over the mines and transportation networks and raked in hundreds of millions of dollars. Villagers, including children, are rounded up and put to work, often in virtual slavery. More than 60 workers were killed in a mine collapse just last week. Rape is widespread, and women and girls are forced into brothels in the mining areas.
Given the scope of the problem, the SEC measure is relatively weak. It would not forbid manufacturers from using minerals from any source; instead it would simply require about 6,000 companies to let consumers know where the minerals originated. The U.S. Chamber of Commerce objects that the sourcing would be prohibitively expensive, but the actions of many companies involved in the trade belie that claim.
Intel Corp. deserves particular credit. It has committed to making “conflict-free” microchips by next year, and has led a global effort to audit the smelting plants in the high-tech supply chain that process the minerals (most are in Asia) to discover where the raw materials originate. General Electric Co., Hewlett-Packard Co. and Motorola Solutions Inc., among others, have joined in the auditing program and helped create the Public-Private Alliance for Responsible Minerals Trade, which works with nongovernmental groups and the U.S. government to promote a Congolese mining industry free of military and rebel control. Apple Inc. was the first corporation to provide a list of the 175 smelters in its supply chain and require suppliers to use audited, conflict-free smelters when possible. (Shame, however, on Mario and Luigi: Nintendo Co. has made no effort toward responsible sourcing, according to the Enough Project, a nongovernmental group that tracks crimes against humanity in Africa.)
These measures have had real success. According to the Enough Project, armed groups’ revenue from tin, tantalum and tungsten is down by 65 percent over two years. Still, much of the material is making its way illegally out of the country. Rwandan mineral exports increased by 62 percent in 2010, although domestic mining production only rose by 22 percent.
Some criticisms of the SEC rule are reasonable. One is that it might hurt the hundreds of thousands of small-scale “artisanal” miners in Congo whose families and communities depend on meager income they can scavenge from the earth. Yet the idea behind the rule and the industry efforts is to clean up the Congolese industry and improve the welfare of workers, not to force manufacturers to look elsewhere. It need not lead to a boycott if companies use due diligence.
Other critics say that companies may look to mines in Asia where conditions are often as bad as in Congo. This seems more like a reason to improve the situation at, say, tin mines in Indonesia than to look the other way at what is happening in Africa. (As of 2009, Congo produced 17 percent of global tantalum and far smaller percentages of the other minerals.)
Some skeptics argue that the rule is no longer relevant because many rebels have switched sides to the Congo military. Huh? It seems an atrocity is an atrocity, no matter what uniform you are wearing.
In the end, the criticisms simply aren’t persuasive. The SEC should do its small part and support the corporations trying to clean the blood off our electronic gadgets.
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