MGT 430 Saint Leo University Intel and Conflict Minerals Case Discussion

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Discussion Question 3: Answer discussion questions after reading case

How do conflict minerals, and in particular, conflict coltan get their name? What groups benefited from the trade in conflict minerals? What groups were hurt by it?

In what ways did Intel collaborate with other sectors (governments and civil society) in its efforts to eliminate conflict minerals from its products? What strengths and weaknesses did each sector bring to the task?

Discussion Case: Intel and Conflict Minerals

In 2017, Intel joined more than two dozen other companies, nongovernmental organizations, and government entities in launching the second phase of the Public-Private Alliance for Responsible Minerals Trade (PPA). The company had been an early leader in the effort to bring social responsibility to its minerals supply chain: in 2014, Intel had become the first electronics firm to announce that its products would be certified as conflict-free. This meant they would contain no conflict minerals—tantalum, tungsten, tin, or gold sourced from mines that financed horrific civil conflict in the Democratic Republic of the Congo (DRC) and nearby countries. “The solution isn’t easy,” Intel’s CEO had noted at the time. “But nothing worthwhile ever is.”

Of the four conflict minerals, the one most important to Intel and other electronics companies is tantalum. Columbite-tantalite, commonly known as “coltan,” is a black metallic ore. When refined, it produces tantalum, which is used to regulate electricity in portable consumer electronics, such as smartphones, laptops, play stations, and digital cameras. The largest share of coltan comes from Africa; other sources include Australia, Brazil, and Canada.

In the late 2000s, a common goal to ban conflict minerals emerged among members of an oddly matched group—the electronics industry, the United Nations, governments, and human rights organizations. Their efforts led, ultimately, to a set of international guidelines, national laws, and voluntary initiatives whose goal was to keep the electronics industry and its customers from inadvertently supporting killing, sexual assault, and labor abuses.

The Democratic Republic of the Congo is a nation of 79 million people in central Africa, covering a vast region the size of Western Europe. Since the late 1990s, the DRC has been the site of a brutal regional conflict, in which armed militias, including some from neighboring states, have fought for control. Despite the presence of United Nations troops, as many as 5 million people have died—the most in any conflict since World War II. Warring groups have used sexual assault as a weapon to control the population; an estimated 200,000 Congolese women and girls have been raped, often in front of their husbands and families.

The United Nations and several NGOs reported that militias had systematically looted coltan and other minerals from eastern Congo, using the profits to fund their operations. According to the human rights group Global Witness:

In the course of plundering these minerals, rebel groups and the Congolese army have used forced labor (often in extremely harsh and dangerous conditions), carried out systematic extortion, and imposed illegal “taxes” on the civilian population. They have also used violence and intimidation against civilians who attempt to resist working for them or handing over the minerals they produce.

Said a representative of The Enough Project, another human rights group, “In eastern Congo, you see child miners [with] no health or safety standards. Minerals are dug by hand, traded in sacks, smuggled across borders.”

Once mined—whether in the Congo or elsewhere—raw coltan made its way through a complex, multistep global supply chain. Local traders sold to regional traders, who shipped the ore to processing companies such as H.C. Starck (Germany), Cabot Corporation (United States), and Ningxia (China). Their smelters produced refined tantalum powder, which was then sold to parts makers such as Kemet (United States), Epcos (Germany), and Flextronics (Singapore). They sold, in turn, to original equipment manufacturers such as Dell (United States), Sony (Japan), and Nokia (Finland).

By the time coltan reached the end of this convoluted supply chain, determining its source was nearly impossible. Steve Jobs, then the CEO of Apple, commented in an e-mail in 2010, “We require all of our suppliers to certify in writing that they use conflict-free page 91materials. 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.”

As public awareness of atrocities in the Congo grew, governments began to act. The Organization for Economic Cooperation and Development, an alliance of mostly European nations, issued guidance for companies that wished to responsibly source minerals. In 2010, the U.S. Congress passed the Wall Street Reform and Consumer Protection Act (also known as the Dodd-Frank Act, and further discussed in Chapters 7 and 13). This law included a provision, Section 1502, which required companies to disclose whether tantalum, tin, tungsten, and gold used in their products had come from the DRC or adjoining countries. Although the Securities and Exchange Commission (SEC) announced in 2017 that it no longer intended to enforce this provision, the matter remained in legal limbo, and many firms continued to collect and disclose this information.

Along with governments, companies also acted. For its part, Intel sent teams to visit 107 different smelters and refiners in 23 countries, educating their partners about conflict minerals and collecting information about the origin of raw materials they processed. The company collaborated with other companies in the Electronics Industry Citizenship Coalition (EICC) to develop a Conflict-Free Smelter Assessment Program, a voluntary system in which an independent third-party auditor evaluated smelters and refiners and designated them as conflict-free. Minerals would be “bagged and tagged” and then tracked through each step of the supply chain. By 2017, this program had certified 247 smelters and refiners.

Intel and other companies in the coalition were particularly concerned that they remove from their products only conflict minerals, not minerals coming from legitimate mines in conflict areas. To this end, they worked with government agencies and civil society organizations, including the U.S. State Department and RESOLVE, an NGO working to map the conflict mineral supply chain, to form the Public-Private Alliance for Responsible Minerals Trade. This multisector initiative worked to support responsible mines and to develop effective chain-of-custody programs in the Congo. Evidence suggested that these collaborative efforts had enjoyed some success: by 2016, over three-quarters of the tantalum, tungsten, and tin mines in eastern Congo surveyed by the International Peace Information Service were found free of control by armed groups.

Sources: “Intel’s Efforts to Achieve a Conflict-Free Supply Chain,” White Paper, May 2017, www.intel.com; “Conflict Minerals Rule—Will It Stay or Will It Go?” May 11, 2017, www.conflictmineralslaw.com; The Enough Project, Demand the Supply: Ranking Consumer Electronics and Jewelry Retail Companies on Their Efforts to Develop Conflict-Free Minerals Supply Chains from Congo, November 2017, www.enoughproject.org; Peter Eichstaedt, Consuming the Congo (Chicago: Lawrence Hill, 2011); and Michael Nest, Coltan (Cambridge, UK: Polity Press, 2011). More information on the Public-Private Alliance for Responsible Minerals Trade is available at www.resolv.org.

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