© U.S. Air Force / Staff Sgt. Levi Riendeau Electronics Production | January 25, 2012

Conflict Minerals - a question for all electronics companies

Representatives from the European Commission, Nokia and Swedwatch / makeITfair came together this week to talk about the problem of conflict minerals and who's responsible.
The Social Democrats in European Parliament arranged the seminar, which took place in Stockholm on Monday. The moderator was MEP Marita Ulvskog.

“Some countries have fallen into a commodity trap. Their resources finance war and atrocities while we depend on them for our industry”, she said.

The situation in the Congo is often used as an example of the problem. Here various rebel and militia groups control much of the mining activity and can earn up to one hundred million U.S. dollars in one year. This in a country where a Kalashnikov goes for as low as $ 30.

What does this have to do with the electronics industry? It is precisely within the electronics industry that a large proportion of these raw materials are consumed. The 3TG-minerals (tin, tantalum and tungsten) and gold are famous for this fact - all are found in mobile phones, computers and other electronics.

The issue of conflict minerals has been a hot topic recently, particularly in United States, where the Dodd-Frank-act was signed in 2010. The act requires companies to keep track of their supply chains and report irregularities to the public. A so-called "naming and shaming", if you will.

The law has come under a lot of criticism in both the U.S. and elsewhere in the world for being relatively toothless, with no prohibitions or restrictions (a line that the EU also seems to echo). The law may only be effective in consumer cases, because in other areas, such as defense electronics, “naming and shaming” might not work. These type of customers are not always as interested in the source of their minerals.

Pekka Isosomppi, Director of Social Regulation at Nokia took a slightly more cautious approach at the talk. He believed that a law is needed, but that the companies who follow the rules must be supported by governments, mostly to avoid the rules serving as a competitive disadvantage for western companies.

Isosomppi also stressed that Nokia and several of their competitors, including Sony Ericsson (now Sony) and Motorola are already addressing the issue and basically keep track of the supply chain already.

Companies between Nokia and the mines, he continued, everything from contract manufacturers, PCB fabricators and component manufacturers to mineral-sellers, must also be held accountable. At the moment, he says, they aren't.

The closest scenario for the EU right now is probably a law like the Dodd-Frank Act that builds on on due diligence.

There are already five step framework set by the OECD, the Organisation for Economic Co-operation and Development, and UN Security Council related to due diligence for companies in this area:

- Establish strong company management system
- Identify and assess risk in the supply chain
- Design and implement a strategy to respond to identified risks.
- Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain
- Report on supply chain due diligence.

There are still many questions left to answer. Who should bear the brunt of responsibility? Countries, OEMs or component manufacturers? How do you ensure that the directives are followed globally and not just in the U.S. and Europe?

All this to fix while not strangling commodity trade for the countries that depend on it. It's a tough balance.
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