Companies want to sell you conflict-free phones, but certification isn’t foolproof
At 2,344,858 square miles, the Democratic Republic of Congo (DRC) is the 12th largest country in the world. Much of that acreage is covered by tropical and subtropical forests. Though the country’s biodiversity is under threat, it’s still a place where you can hear the bubbly croak of an African toad and one of the only areas where endangered mountain gorillas still live.
It’s a country marked by colonialism, wars, and corruption. In 1909, Sir Arthur Conan Doyle called Belgium’s exploitation of the Congo “the greatest crime ever committed in the history of the world.” It began with slave labor for harvesting rubber and obtaining ivory, and by the 1910s the Congo’s first industrial mines were in place in the Katanga province. After World War I, there were gold mines in Kilo-Moto, copper mines in Katanga, and tin mining in Manono. Kinshasa, the country’s capital, is over 1,500 miles away from many of the mining sites, which are found in the eastern provinces such as North Kivu, South Kivu, Ituri, Tanganyika, and Maniema. After independence from Belgium, in the in 1960, the country had a thriving mining industry, only to see it fall apart due to subsequent wars.
The minerals are highly valuable. Tin is found in the eponymous cans, solder (an alloy used to join pieces of metal), and circuit boards. Tantalum is used in the automotive industry, for jet engines, and in insulin pumps. Tungsten shows up in tools and golf clubs. Beyond its use in the jewelry industry, gold is also utilized by the electronics sector. All four minerals have been used by cell phone manufacturers, while cobalt is used in electric car batteries. The DRC is also an important source for copper and diamond.
Minerals are commonly mined using heavy machinery designed for industrial operations, and mining is a major part of the DRC’s economy. But it also involves human labor: men, women, and sometimes children use shovels, picks, and pans to mine for minerals in artisanal mines. Much of this secondary mining occur in areas of conflict — in the eastern Congolese provinces — and help fund armed groups that control the area. Hence, why they are referred to as conflict resources.
The miners do not work for any company, in a sector of the industry that’s difficult to regulate. Per Section 1502 of the United States’ 2010 Dodd-Frank Act, companies listed on the stock exchange are required to disclose their use of conflict minerals — tin, tungsten, tantalum, and gold (3TG) that “financed or benefited armed groups.” (Cobalt is not listed, but CNN and CBS News found child labor being used to mine for the mineral.)
If a company is adhering to the guidelines, it still might not be able to call its products “conflict-free.”
Despite efforts by the Obama administration and pledges from companies to curb the use of conflict minerals, progress has been slow, and is now even being hampered. In February 2017, The Guardian published a draft of a proposed Trump administration executive order calling for a two-year suspension of Section 1502. Later that year, the Securities and Exchange Commission indicated it wouldn’t enforce the rule the required companies to indicate if they were using conflict minerals. The number of companies that filed a conflict minerals disclosure in 2018 (1,098 filings) dropped by 5.1 percent, which is higher than the average decrease of 4.5 percent per year since 2013 (1,320 filings), according to Development International.
Submitting a filing does not necessarily mean a company’s products are conflict-free. Development International found that 132 of 2016 filers earned between 75 and 100 percent for the Organisation for Economic Co-Operation and Development (OECD) guidelines, considered the international standard for due diligence.
“Due diligence, as developed by the OECD, is not a tick-box, one-time compliance action,” Sophia Pickles, a supply-chain investigator for human rights group Global Witness, told Digital Trends. “It’s something that should be embedded within the business behavior of a company, so it’s a continual behavior.” If a company is adhering to the guidelines, it still might not be able to call its products “conflict-free,” but it should have mechanisms in place to deal with issues as they arise. “This isn’t about calling a particular mineral a conflict mineral or a conflict-free mineral,” she said. “This is about looking at how your mineral supply is working in constant flux.”
“Dodd-Frank was in an earthquake in the sector,” said Ken Matthysen, a researcher at the International Peace Information Service, who maps artisanal mines in the DRC. Companies had to start looking at their long, complex supply chains to see where minerals were sourced from before they were smelted and poured into products. At the time, some worried this would create a de facto ban, which would be devastating to the miners who rely on the industry to make a living. Some companies did stop sourcing the DRC, but others invested time and money into the process.
Dodd-Frank was instrumental in getting companies to act, said Joanne Lebert, executive director of Impact, but “the kind of approach, which is black-and-white, conflict-free or not, is maladapted to what really needs to happen, which is progressive improvement.” She agrees that companies need to proactive about identifying risks in their supply chains and then publishing how they responsibly handled them.
The major complaint is that there are no benchmarks for progress and no data to support them even if they existed.
When minerals start at an artisanal mine, they might go through several hands — including consolidators, exporters, and traders — before reaching the smelter or refiner (SOR). Once they leave the smelter or refiner, the minerals have likely been mixed and point of origin is essentially impossible to trace. Organizations such as the Responsible Business Alliance’s Responsible Minerals Initiative (RMI) thus focus on SORs, saying it verifies they “have systems in place to responsibly source minerals in conformance” with global standards. Intel, Microsoft, Apple, Samsung, and Amazon are all members. “That helps us have shared best practices, shared processes, shared assessment of new issues that are coming up,” Suzanne Fallender, Intel’s director of corporate responsibility, told Digital Trends of the company’s membership in RMI. “I would say that the fundamental feature of both the RBA and the minerals initiative is collective knowledge and tools that can can then be leveraged,” said Leah Butler, vice president of RMI.
After the law passed, companies realized they needed dedicated staff and software to trace their supply chains. “It’s totally burdensome, it’s expensive for companies to manage these programs,” said Chris Bayer, principal investigator for Development International, which tracks SEC filings. “A lot of third-party suppliers have popped up and made a lot of money off this.” It’s one way of reducing cost and labor. Companies outsource to these third-parties such as Assent Compliance and iPoint, which then conduct supplier surveys and attempt to follow up with those who didn’t respond, and also provide training and support materials, according to SEC filings.
After speaking to a number of experts, there were several problems with certifying minerals as conflict free that we heard over and over again: Problems on the ground with tracing minerals, paper-based systems that bog down the process, reliance on smelter certifications that aren’t completely reliable, and a seeming lack of willingness to follow up on risks and gaps when they appear. The major complaint, though, is that there are no benchmarks for progress and no data to support them even if they existed.
On the ground
Estimating the number at around 3,000 artisanal mines in the eastern DRC, Matthysen said, “It’s impossible to control all of those mines.” One program that’s attempting to do so is International Tin Association’s ITRI Tin Supply Chain Initiative (iTSCi). Starting with a pilot mine in 2010, the industry program has grown to monitor more than 400 DRC sites in 2016. The traceability system includes the “bagging and tagging” of minerals, weighing the bags and making sure nothing is added or removed along the supply chain. It’s meant to ensure tantalum from a non-certified mine doesn’t get mixed in with a batch from one that’s been designated as “conflict free.” It’s a designation companies are willing to pay for. “They become something like a clearing house,” Bayer said of ITA. “They’re like an exchange now, that’s how big they are.”
“Everybody has to adhere to it and all the buyers adhere to it,” Lebert agreed. “They have quite a lot of control and say over both supply and demand.” While ITA does track the number of incidents — including things like missing bags of minerals and mining accidents and deaths — it’s hard to measure the program’s actual impact. The number of incidents is up from 50 in 2011 to 593 in 2016, but it added 296 mines in that time period, so an increase in incidents makes sense.
The iTSCi program isn’t foolproof. The tags themselves became a commodity, with sellers targeting those who wanted to make their minerals appear conflict-free. When IPIS researchers show up at a certain mine that’s supposed to be producing a certain quantity and find few workers there, “it shows that a lot of minerals from other mining sites are transferred to the mine to be tagged as minerals from that particular mining site,” Matthysen said. “So there’s a lot contamination.” It’s an issue ITA says it’s addressing by having other groups in the chain monitor how many tags its agents receive.
“This is characteristic of a war economy or a fragile economy because people are desperate for goods.”
Even if there aren’t a lot of hard and fast numbers to point to, almost everyone we spoke to agreed that there are signs of improvement for tin, tantalum, and tungsten. “Gold is a whole other trick, because gold is smuggled so easily,” said Bayer. Matthysen estimated that 80 percent of miners work in the gold industry. “It’s not like a 90 kilogram bag of ore for 3T,” Lebert said. “The value is not in the gold; the value in what they do with that gold.” Traders will take gold to a large city, get cash, then buy a bunch of necessities — like palm oil for cooking — then take those goods back to the remote communities, where such items are hard to come by. The traders make their money selling their wares at a markup. “This is characteristic of a war economy or a fragile economy because people are desperate for goods; they’re desperate for stability,” Lebert said. “They need this stuff, and gold plays a particular role in bringing those things to those communities.”
As these commodities make their 12-to-24-hour journeys from city to the mining sites, over rutted roads and across muddy rivers, they may encounter an informal roadblock. “At those roadblocks, it’s not just minerals that finance the armed groups or armed actors that are present, but it’s any commodity, anything of value that passes by that roadblock,” Matthysen said. That includes agricultural products that incur a “tax” or bus passengers that pay a “toll.” During IPIS’s visits, he said, researchers have found that it’s not necessarily rebel groups who are involved. It’s criminal units within the FARDC, the Congolese army. These elements are interfering both at roadblocks and the mines themselves, he said.
With a system such as iTSCi, the paperwork begins right at the mine. It’s where bag weights and tag numbers are first recorded. At each step along the way, agents add new information, rerecording the weight of the bag, for instance. Often, this is a pen-and-paper process, but even when there is software, it’s not exactly elegant. “The actual flow of information is based on archaic [software] — literally mailing of Excel files,” Bayer said, who’s studied smelters’ and refiners’ record-keeping methods. There seems to be little automation in the iTSCi system, but ITA says one of its priorities is implementing “more rapid digital data collection in appropriate locations.”
Minerals are tagged, barcoded and scanned in order to prevent bags from vanishing or being meddled with between destinations. Better Sourcing
While iTSCi is the dominant program in the DRC, it’s not the only one. The Better Sourcing Program, along with USAID, sets up systems to certify mines as conflict-free and trace minerals to the point of export. “We start the traceability right at the pits,” said Ferdinand Maubrey, acting managing director of BSP. From the ground, the minerals go into a bag, which is sealed with a barcoded tag that can be broken once. The bag is weighed, and an agent scans the tag and uploads the information into to digital platform: The system records agent, the time, the location, and the weight. “All that information is then digitally linked to that barcode,” Maubrey said, and follows the bag to the warehouse, for example, where it’s weighed and scanned again before being opened, so the minerals can be washed or processed. The system creates a digital trail for the minerals, with crucial information that authorized people in the chain can easily access. The on-site agents are also trained to monitor for issues, such as child labor. ”They’re equipped with a bespoke smartphone application on which they register incidents, abnormalities, risks, and things that may be non-compliant,” he said.
With a blockchained system, when information from a scanned tag is uploaded, for example, it’s entered into an un-editable “chain”.
Right now BSP is operating at 35 sites in the DRC and Rwanda, a small sliver of the artisanal mines in those areas. Without automated updating, peering into the supply chain means companies look to the smelters and refiners for records about their suppliers. “The retrospective survey method is just the worst,” said Bayer. “It’s middle-age technology in light of something like blockchain.” With a blockchained system, when information from a scanned tag is uploaded, for example, it’s entered into an un-editable “chain,” so the next person to scan the tag couldn’t go back and change the bag’s weight from checkpoint A. There are a couple problems implementing such a system when it comes to conflict minerals, Bayer admits. The data being entered into the system needs to be accurate in the first place — a problem if the agent is corrupt — and it’s not something those gaming the system want. “If I become blockchained and I’m selling to one set or a limited set of of buyers, I’m limiting my options,” he said.
Stopping at the smelter
Several people we spoke to said they felt like, for companies, due diligence begins and ends with these smelter certification programs. But because their supply chains are so complex and suppliers aren’t always responsive, there are often gaps in companies’ reporting. “We always want to improve a quality of reporting, the quality and completeness,” RMI’s Butler said. “In terms of information availability and accuracy, though we have these tools in place, we’re still constantly working on the challenge of, How can we help companies get more complete and more accurate data?”
Without that complete data, it’s difficult for companies to know exactly what’s happening on the ground with mines they’re sourcing from. In Development International’s review of 3TG+C smelter and refiner disclosure conformance, it found only 11 percent of all SORs “disclosed the actual or potential risks identified,” and only 17 percent “described the steps taken to manage risks, which is the ultimate purpose of due diligence.”
“We found that there’s very large gaps in the reporting requirements under these voluntary standards, so essentially these smelters and refiners are getting validated, are getting certified, that aren’t fully complying with their own industry standards,” Brayer said.
While a company like Apple — which is considered a leader when it comes to conflict minerals initiatives — may disclose its list of refiners and smelters, “they’re not actually then disclosing what they’re assessing,” said Seema Joshi, head of business and human rights at Amnesty International. “How are they assessing, for example adults working in hazardous conditions or child labor?… That stuff, which for us is pretty much the point of all of the due diligence these companies should be doing, is not being disclosed.” While Apple declined to comment for this story, it did point us to its supplier responsibility website.
For Intel, right now success is measured through the smelters and refiners. “We now are at 99 percent of the smelters and refiners that we trace through our chain are either participating in an independent third-party assurance program or we’ve done our own diligence through, we’ve concluded that their products are conflict free,” Fallender said. “We also do a survey of our suppliers and 98 percent of those only use smelters and refiners whose products come from conflict-free sources.”
“Essentially these smelters and refiners are getting validated, are getting certified, that aren’t fully complying with their own industry standards.”
In 2016, the OECD assessed whether the standards and implementations of programs such as RMI, iTSCi, and the London Bullion Market Association aligned with its guidance. None were fully aligned. When it checked back this year, the OECD found most standards were fully aligned, but it won’t have a full assessment in terms of implementation until next year or the year after. Some of the problems identified in the report were smelters and refiners disengaging with suppliers when risks were found instead of helping to mitigate those risks, due diligence reports that lacked in-depth descriptions, and a reliance on auditing to identify risks rather than ongoing monitoring. “The companies what they’ve done is they outsourced now their human rights due diligence to these industry bodies,” Joshi said. Global Witness’s Pickles agreed: “Such a scheme can support an individual company’s due diligence, but it can’t replace it.”
“Essentially the companies have to change the way they do business,” Impact’s Lebert said. “If they want to know what’s happening in the supply chain, they have to invest in that. And investing in that costs money. But it is, I would say, the the new way of doing business because it’s not just for 3Ts and Gs. It’s for every commodity.”
Dealing in data
One aspect Lebert would like to see companies invest in is data. “There’s been a real dearth of social and analytical research, in the sense that we haven’t had solid baseline information that’s been robust and we haven’t been monitoring on an ongoing basis how things have improved or not and making direct and indirect linkages to to efforts,” she said. It’s one of Impact’s projects, though. “For our gold work, we collect 750 data points,” she said. “So we have a baseline about livelihood, environment, women’s empowerment, mortality rate, health, other things like that. And you collect and you re-survey every six months, so you know whether or not you’re having a positive impact or not.”
Chris DeGraw/Digital Trends
The DRC is such a large, diverse country, it makes it difficult to compare what data exists. IPIS does yearly evaluations of mines, for example, but it might not go to the same province for several years in a row, and it may not necessarily visit the same mines both times. Almost everyone we spoke to mentioned how different the gold issues was from other minerals, so having more concrete details could help companies come up with more targeted solutions.
“I would say that’s probably right now one of the major challenges we’re grappling with, is understanding what makes sense in terms of metrics and indicators and what would a baseline look like and how would you measure against that,” said Butler. “For a company that’s set all this up, for you not to know whether you’re having even a smidge of impact is frustrating,” said Bayer. “You want to know that what you’re doing isn’t just to protect your image.”
“For you not to know whether you’re having even a smidge of impact is frustrating.”
That frustration worries Joshi, who said the types of conversations she’s had with companies has changed. Early on, they were focused on identifying sexual violence and other human rights violations that were happening at mine sites. Now, she said, “these types of discussions have completely disappeared.” Lebert agrees but thinks data, which she stresses should be gender-disaggregated to ensure women’s issues don’t get lost in the numbers, can turn things around. “I think it’s really critical to bring people back into the conversation,” she said.
For Pickles, it’s important that companies keep this in perspective: “Their sourcing decisions do have direct impacts on the livelihoods of hundreds of thousands of individuals, not just in DRC,” she said. “The point of the responsible sourcing framework is for the ultimate beneficiaries of these supply chains to be the miners and the mineral-producing communities, rather than they being the groups that bear the brunt of sourcing decisions that fund conflict and human rights abuses within their communities.”
- Garbage to gold: How Yahoo unethically sells your spam email
- Asteroid mining is almost reality. What to know about the gold rush in space
- The browser-based Monero miner Coinhive generates around $250,000 each month
- Apple just banned apps from cryptocurrency mining on iOS devices
- Want a future-proof degree? Head to Colorado for asteroid mining