The Law and Conflict Minerals: Today

By Funmi Ogunlusi

Having discussed the background against which the regulation of conflict minerals can be set, this article will now look at the situation as it is today. Recent laws enacted to this effect include the US Financial Reform Act and the UK Bribery Act. These pieces of legislation were put forward by their respective countries in response to the global financial crisis as a means of making companies more responsible. Though mostly focused on regulating financial practices and corruption, certain clauses do include strict requirements on the ethical sourcing of conflict minerals. Over all, the aim is to clean up companies- not just in terms of their books, but in their factories as well. Yet, similar problems which faced the Kimberly process could afflict attempts to regulate conflict minerals. The issue of enforcement remains crucial to ensuring that any measures taken to address the issue have an actual impact.

Aside these problems of enforcement and intentional disobedience of such international agreements, I would argue that the regulation of conflict minerals poses even greater challenges. Firstly, the Kimberly process tackles only one industry. An attempt to regulate conflict minerals would involve checks on casseterite, coltan, wolframite and so on. The multi-faceted nature of this problem adds a layer of complexity to any possible Kimberly process for conflict minerals. Moreover, the supply chain for these minerals, I would argue, is far more complex. With diamonds, the stones get processed, polished and set in jewellery which is then sold. With these minerals, they are often used to make various components such as capacitors, circuit boards and even solder- an alloy of metals used to weld components together. These components are manufactured by different companies across the world and have already undergone a complex supply chain before they even begin to get assembled to go into a device like the iPhone.

This problem was raised on a class trip to a factory run by STACI Corp in Donguann, China. The CEO there, explained how difficult it is to pinpoint exactly where each mineral comes from due to the increasing segmentation and globalisation of production. The benefits of division of labour and specialisation lead many companies to produce only small aspects of a product before passing it on to another. Simply put, A makes component which is sold to B who includes it in a more complicated contraption and sells it to C who includes this on a circuit board and then sends it to an assembly giant like Foxconn- a major client of Apple’s to which production of the iPhone is outsourced. Also, the material used for solder requires such specific composition and measurement that companies specialise in this. So, even something as simple as the very glue holding a device together may include conflict minerals since companies have no control over the solder supplier’s procurement policy. Thus, before the product is even assembled, manufacturers may not be able to trace it beyond the previous two production stages, if components are traceable at all.

However, though there may be some merit to this argument, it could be an excuse behind which high-tech companies hide in order to shirk an important but cumbersome responsibility. HC Stark, a manufacturer of refractory metals and ceramics which conduct high levels of heat and serve as important components for many electronic devices, has announced that it has established a procedure through which it can certify its minerals as conflict free. Its procurement policy focuses on sourcing tantalum from Brazil instead of conflict-stricken areas such as the Congo. This has been vetted by the independent Electronic Industry Citizenship Coalition (EICC). A major difficulty in translating such a development to consumer brands like Apple is the fact that HC Stark is at an earlier stage of the production chain and therefore actually manufactures its own products. Thus, it has a greater deal of control over its factories and raw materials. In contrast, brands like Apple mostly outsource production. Yet, if it is truly possible for a firm like HC Stark to verify minerals as conflict-free, then the industry can take steps towards replicating such success with other manufacturers and this would ultimately lead to an end product with a less harmful humanitarian footprint.

In summary, it can be seen that two main approaches to regulation have emerged in the fight against the illicit trade of conflict minerals. One is geared towards governments, while the other is focused on companies. This contrast can be seen in the approaches of NGOs working on the issue. Global Witness, an international NGO attempted to pursue the first method when it sued the British Government for not recommending supposedly corrupt companies for sanctions by the UN (due to the said companies’ alleged fuelling of crises in troubled regions through the purchase of conflict minerals). The second method has been discussed in another article by my classmate Rhona Murray who looks extensively at the Enough Project- a coalition on NGOs aimed at influencing procurement policies of companies.

Each method has its merits. Affecting government legislation makes abiding by set guidelines mandatory as state law is binding on subjects. Yet, as seen in the failure of Global Witness to even have their case heard- it was thrown out by the High Court within months- governments in today’s globalised world tend not to wish to ruffle corporate feathers. The ease with which capital moves nowadays could man that a country could suffer considerable economic setbacks if it is seen to be heavy-handed and abandoned in favour of less regulatory economies. On the other hand, influencing companies can be very effective when brands like Apple are involved since ethical concerns contribute greatly towards their brand image. However, such pressures may not work so well on nameless factories in the Third World where production is outsourced to. Still, the possibility of generating enough consumer interest in the issue to change corporate behaviour incrementally across the production line should not be underestimated.

In conclusion, therefore, it is crucial to note two things. Firstly, enforcement is key. The same way in which a country could agree to an international accord and renege on it without consequences, companies could similarly claim to pursue more ethically responsible procurement policies without making concrete change. Holding these parties accountable for the atrocities that are are knowingly or unknowingly complicit in is key to ensuring that we witness improvement in this field in the near future. Secondly, the power of the consumer should not be underestimated. The debate and awareness surrounding “blood diamonds” led to definitive action in form of the Kimberly process. Similarly, concern over conflict minerals is causing companies to address the issue. HC Stark, as aforementioned, is an example of this. Also, Apple and Intel have recently agreed to a Conflict Free Smelter Program run by the Global e-Sustainability Initiative (GeSI) and the EICC which was earlier mentioned to have supported the efforts of HC Stark. This program means that these companies have vowed not to use these conflict minerals. Again, the issue of enforcement is vital to take this pledge beyond mere rhetoric and publicity. Yet, the very fact that this matter is on the agenda is a step in the right direction.

References

Apple and Intel Vow to Stop Using Conflict Minerals from Africa. Available at http://www.switched.com/2011/04/04/apple-intel-vow-to-stop-using-conflict-minerals-from-africa/ [Accessed 17 April, 2011]
EICC Certification Confirms the Use of Conflict-Free Raw Materials at HC Stark. Press release published on April 5, 2011. Available at http://www.hcstarck.com/en/home/press/press_releases.html [Accessed 17 April, 2011]
HC Stark signs Tantalum Supply Agreement with AMG Metallurgical Group. Press release published on April 4, 2011. Available at http://www.hcstarck.com/en/home/press/press_releases.html [Accessed 17 April, 2011]
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