Ever since Joseph Conrad set the stage in Heart of Darkness, the Congo has been seen as a reductionist land, one at various turns dark, distorted, mystifying, terrifying. Rarely are its complexities even noted, let alone depicted comprehensively.
So when news of warlord-ruled militias enslaving children to mine the Congolese mountains permeated the West, it reaffirmed Conrad’s metaphoric view of the region. Social and economic differences, and sheer distance, made it more comfortable for the world to just turn its back to the horrors, and, in the US, even enact rules banning trade with the country. As if a 15-years-long civil war could be legislated away.
Tucked away in Article XV, Section 1502 of the Dodd-Frank Act of 2010 was an amendment to the 1934 Securities Exchange Act mandating new rules that put the onus on buyers to audit whether materials originated in the Democratic Republic of the Congo or an adjoining country and to “stop commercial activities … that contribute to the activities of armed groups and human rights violations.”
The outcome of that was an SEC rule, adopted in August 2012, requiring companies to publicly disclose their use of so-called conflict minerals. While the rule only applied to firms publicly traded on US stock exchanges, it had a chilling and immediate effect on any company doing business with affected firms, since they too would be subject to additional tracking and disclosures to ensure their supply chain partners’ compliance. Indeed, the impact began even earlier, as companies raced to sever their ties to the DRC ahead of the anticipated SEC rule. The mindset: It’s simpler to avoid all business with the DRC than it is to validate, track and report that nation’s products.
This is a story of how a Dutch prince and one of the world’s largest electronics manufacturers decided to change the arc of history. In doing so, they put new and potentially daunting responsibilities on the supply chain, and certain leading suppliers have stepped up to the task.
Jaime de Bourbon Parme is a special envoy at the Natural Resources Ministry of Foreign Affairs of the Netherlands. He is also the child of Princess Irene of the Netherlands and the late Carlos Hugo, Duke of Parma, which makes him a prince and royal heir in two nations. When it comes to electronics materials, he is not the first person you might think of.
Prince Jaime is serious about Africa. He was the lead interviewer in a 2006 documentary on that continent’s war economies called Africa: War is Business. That film, he explained to Circuits Assembly, asserted that the supply chain was indirectly adding to the cost of warfare. “Warlords take over the mine, sell to traders, who sell to other traders, who sell to smelters who sell it all over the world, and from there, no one could tell the origins of the minerals,” he says.
But making the film did not satisfy Prince Jaime’s need to find an answer to the problem. “The frustration I had in making that documentary was I was telling the story, but I wasn’t delivering any solution.” Many of those he interviewed asserted that the never-ending wars provided convenient cover for unethical and inhumane profiteering. According to Prince Jaime, Dodd-Frank shut down around 90% of trade in the DRC. Local workers were forced to move from a cash system to a barter economy.
Fast forward to November 2011. As part of his role at the Natural Resources Ministry, Prince Jaime was asked to chair a meeting in Paris to discuss guidelines on how to accommodate the newly minted Dodd-Frank Act. Included were various representatives from business and non-governmental organizations, and from the region itself. In Prince Jaime’s words, “The meeting went very well. The guidelines were adopted. Then the representative from the Congo said, ‘Now who is going to do business with us? And we all looked around the room.’ ”
It was during a coffee break that a representative from Philips stepped forward. The Dutch OEM suggested a new pilot program in a conflict area, based on the Solutions for Hope Initiative, a Motorola project designed to use a closed supply chain to obtain conflict-free material from the DRC for eventual use in cellphones. While SfH focused on tantalum, Prince Jaime’s group chose tin because of its wide use in electronics and cans.
A plan was conceived and set in motion. Biweekly conference calls commenced, and by May 2012, the group was ready to move on its plan. Funding was secured for bagging and tagging minerals. In September, the Conflict-Free Tin Initiative formally launched the plan at a joint meeting involving the Global Sustainability Initiative and the Electronic Industry Citizenship Coalition.
With Philips willing to lead the way, its supply chain was left to choose how to proceed. One of the major suppliers of solders and alloys to Philips is AIM. As a private company, AIM is not directly responsible for complying with Dodd-Frank, but many of its larger customers are. Up to that point, AIM had never sourced material from the Congo. As David Suraski, executive vice president of Assembly Materials, summed up, “We’ve always tried to avoid potential hotspots.”
But the opportunity to work more closely with a significant customer was the key. As AIM president Ricky Black says, “We don’t have a business without our customers. If something is important to them, it’s got to be important to us. If a customer says, ‘We would like you to join forces with us,’ it’s a great opportunity. It shows we are committed and serious and not just ‘putting metal in a box.’ ”
For AIM, agreeing to help a customer was one matter. Ensuring that the minerals were of the proper purity, that the mines were valid, that the ores remained segregated, and that the cost to establish a new supply chain was within reason was something else.
Like all electronics metals companies, the RoHS Directive gave AIM added experience in maintaining and tracking individual material supplies. The risk of lead contamination provided tremendous motivation to develop new processes. In AIM’s case, that meant storing product in different places. “With lead-free, we’ve had to divide out buildings so we keep them separate,” Suraski said. “Any intermixing can cause huge problems.”
Conflict-Free tin, on the other hand, poses no technical risk, making it in one sense easier to handle. “If we mix [tin] materials, there’s no technical problem. And customers would generally be OK with it,” Suraski says. “Where there’s an issue is if CF tin is mixed with other tin. Our job has always been to isolate materials from each other. It’s not just lead and lead-free; it’s all alloys.”
“We’ve developed the quality assurance system over several years,” AIM environmental director Mathieu Germain elaborates. “Everything is identified by lot as soon as the material comes in. We can follow it by its exact weight and location of manufacturing and ensure where it is used. We are using the skills developed over years of handling metals.” AIM also maintains two labs to ensure the integrity of the respective environments.
Then there was the matter of the mine itself. The Kalimbi mine, in Kalehe, South Kivu, on the Congo’s eastern border, was selected, as it had remained open and secure throughout the Congolese war. The effort was supported by the provincial leaders, including South Kivu Province Governor Marcellin Cishambo. A contingency plan was drawn up whereby tagging of the material would be suspended if there were any direct risk that would compromise the integrity of the CFTI system.
Documentation is vital to ensure compliance with corporate rules ranging from internal to ISO to Dodd-Frank. The process goes like this: AIM obtains documents from the mine that the ore is mined per the standards they’ve negotiated. A Certificate of Conformity is then issued. The ore is bagged and tagged, and shipped to a smelter, always remaining segregated from non-Congolese material. Once smelted, the bars are labeled and shipped to AIM in Montreal.
Upon arrival, the CF material is stored in a specific section of the plant. A lot number is attached, and AIM traces the path as each lot number is integrated in production. Once readied for shipment to Philips, the material is again labeled. At no point will CFTI material be mixed with other products within AIM.
“Philips was very, very specific about the products they want to obtain,” Germain said. “They were specific about the packaging and the products.”
All parties agree that Dodd-Frank is clear as to what companies can and cannot do. The CFTI model, as executed by Philips, MSC and AIM, traces material from cradle to final production.
However, Dodd-Frank covers only freshly mined ores. It does not extend to recycled materials, so AIM put recycling procedures in place. “The US and Canadian Armies have extreme tracking procedures,” Germain noted wryly. “I’m sure our CFTI system is on par.”
It takes a long time to prove Germain right. Late last October, the Kalimbi mine began producing material for the CFTI program. In December, the first container, holding some 24 tons of tin, was shipped to the trader. A month later, the material was on its way to Malaysia Smelting Corp. The smelter then purified the ore, molded the bars and transported them via ship to AIM in Montreal, where they arrived at midday on Aug. 20. After AIM processes the solder, it will be shipped to Philips in Mexico. The company plans to manufacture bar and wire alloys to start.
There is a cost to the CFTI program, but it’s not seen as a significant premium over traditional suppliers. From Black down the line within AIM, all those we spoke with downplayed the financial expenses to start up another supply line. Unanimously, they agree there are bigger issues in play, and the benefits far outweigh the risks.
“We’ve thought this through,” Suraski says. “It wasn’t a quick decision. We analyzed the situation quite well.”
“You buy a hybrid [car] not for the cost but for the sustainability,” adds Germain. [Likewise,] “we’re trying to do the right thing.”
“Strategically, it’s important to be involved in this because if it does turn out this country becomes a significant contributor to the industry, we’ve been there from the beginning,” Black notes. The global raw materials marketplace is dynamic, he points out. “It’s interesting how commodity markets work. When people think tin, they think China and Indonesia. [But] there could be local considerations, geopolitical considerations. A lot of that is unpredictable and out of our control. You don’t want to be that guy who has nowhere to turn. You want to leave yourself some flexibility, keep your options open. If you are in early on a trend, you always stand to benefit from it.”
He also allows there’s a marketing advantage: “It’s ethical; it’s conscious. These are so much more important than they ever were. I hope things like this help us stand out from the market.”
Although the first shipment of CF tin product is still in process at the Montreal site, AIM feels it is already reaping the benefits. “This has strengthened our relationship with Philips,” Suraski said. “We are in frequent communication with them, and we now speak to people at different levels than we once did.” AIM’s participation was also a factor behind Philips Lighting in China citing the solder company as its Green Supplier of the Year, he adds.
Germain feels the CFTI is helping suppliers pursue sustainability. “We are working with regions affected by slavery. No one is buying tin from them because of Dodd-Frank. So sustainability in this case is helping customers buy a product and ensuring that all aspects are controlled. That’s what we are doing: making sure every single aspect is checked.”
Back in the DRC, the workforce at the Kalimbi mine has jumped from under 100 to over 1,200 diggers. The income stream has been rising too, more than doubling to $4 to $6 per kilo. It’s hard work. Much of it is performed manually with crude tools. But an entire local economy has sprung up, and the residents have migrated from the barter economy to a cash-based system.
No one expects the amount of ore being shipped to change the war-torn country’s near-term future. But revolutions start one person – or company – at a time. Says Prince Jaime: “This won’t be a silver bullet. Resources are not the cause of conflict, but the fuel of conflict. The Dodd-Frank Act stimulates a war economy. We need to stimulate a peace economy, where the solution can be political. There is opportunity and hope for the local population. This is their ticket out of absolute poverty. It’s very tough conditions, but they can work for something there.
“It’s like a dry economic plant. With a little bit of water, it starts to grow by itself. We finally have a formal mine, not a mess of smuggled minerals. Our supply chain has proven you can source from the region.”
The CFTI is onto something. Such efforts come about to build a company’s brand, not to sell a product. And there are ancillary benefits. With the electronics industry engaged, now the tin can industry’s interest is piqued as well.
The fruitlessness of trying to legislate away slave labor in lands thousands of miles away, not to mention the unintended yet painful consequences of such endeavors, is enough to drive one as mad as Kurtz in Conrad’s novel. Heroes often come from unexpected quarters. A Dutch prince. A major OEM. A Malaysian smelter. A solder supplier with a conscious. Together, with insight and heart, they are making an African nation’s future a little less dark.
A Closed-Loop Supply Chain
This piece focuses on a few of the key companies involved in the Conflict-Free Tin Initiative (http://solutions-network.org/site-cfti). There are others, however. Motorola, BlackBerry and Alpha are among them, and the CFTI welcomes mines, smelters, component manufacturers and end-users to join, adding that success will “be largely measured by the industry participation in the closed-pipe supply system.”
Most of the CFTI information is in the public domain. AIM indicated it hasn’t been approached by competitors, but it holds out hope the program will grow for the broader industry. Already, interest is rising.
“As soon as we announced our participation, a lot of companies have been asking us for information and to get batches of these products,” David Suraski said. “And it’s not only major companies; it’s companies that want to sell product with a label that says CFTI.”
Mike Buetow is editor in chief of Circuits Assembly; email@example.com.