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Sunday, April 14, 2013

Combating Tech’s Conflict Minerals with Disclosure

Some of our most advanced technology products have helped finance the deadliest conflicts of our time. Perhaps, if tech companies change some of their habits, that can change.

An essential part of most cellphones is the mineral tantalite, which is frequently obtained from the Democratic Republic of Congo under murky circumstances. Tin, tungsten and gold also finance armed groups in Congo on their way to our laptops and tablets.

Hewlett-Packard on Monday is expected to announce that it is publishing a list of 195 ore smelters, located around the world, that are identified with the minerals inside the company’s products. Within about two years, the company says, it wants its parts suppliers, which buy from these smelters, to make sure its minerals were not obtained from conflict zones.

“We believe the upshot of this is, over time, to lower violence and repression,” said Tony Prophet, who runs the global supply chain for H.P.’s personal systems group. “The smelters are the chokepoint. Once you locate them, you can start to pressure them to set a standard.”

While H.P. may be as much as four steps away from the smelters in the supply chain, Mr. Prophet said, as a major purchaser it can still compel good behavior.

In August, the Securities and Exchange Commission also adopted a rule requiring all publicly traded companies to disclose their use of certain conflict minerals beginning next year, although that rule is facing a court challenge.

The issue illuminates a chaotic underside to the clean orderliness of high-tech products. Over the last 15 years, some nine nation’s armies, and perhaps 15 or more armed groups, have fought in Congo. The body count for the region’s wars is estimated to be over five million, making it the world’s deadliest conflict since World War II.

This coincides with the rise in popularity of mobile devices, which has increased demands for minerals found in Congo. That, in turn, attracts warlords.

Despite all the killing, supplies have been stable. The minerals, it turns out, are aggregated through a series of middlemen, much the way illicit drugs are gathered from small-scale growers.

Teams of miners, sometimes carrying a few bags of rocks on dirt tracks, deliver the raw goods to négociants, who in turn sell the material to comptoirs, or trading posts. From there, the goods are consolidated by an exporter, and then go to smelters in Indonesia, China, Russia and elsewhere.

When the minerals come out of a region where there is war going on, there is a good chance that an armed group is being financed. At over 900,000 square miles, or one-quarter the size of all Europe, other areas of the country are also stable.

Under the new program, “when the smelters source from the region, they will need to have documents showing the sources of the minerals,” said Jay Celorie, H.P.’s program manager for the conflict minerals project. “If we limit the number of aggregators, we can start to source responsibly, from the country’s pockets of stability.”

If almost no one buys from conflict regions, the theory runs, that creates incentives for peace, or at least some stability, to break out.

The smelters documentation will be audited by H.P., in conjunction with Solutions for Hope, a nongovernmental organization trying to end the trade in conflict minerals.

The move follows earlier efforts by H.P. to shine a light on its manufacturing. H.P. has publicly identified its top 100 parts suppliers, both by name and address, and created a supplier self-assessment around things like labor practices.

It is an imperfect system. Last year, The New York Times reported on labor violations in China by Foxconn, a Taiwanese company that makes products for H.P., Dell and Apple, among others. In February, H.P. imposed rules limiting student labor by its contractors.

Mr. Prophet said H.P. would seek to enlist other companies, many of which already have some affiliation with nongovernmental organizations, to join the smelter program.

“Outreach is the only way to really make a difference,” Mr. Prophet said. “It took awhile to identify all of the smelters, but putting pressure on them is relatively easy.”