Conflict Minerals and the Game Industry: Progress and Setbacks

Conflict Minerals and the Game Industry: Progress and Setbacks

How Microsoft, Sony, and Nintendo are responding (or not) to the conflict minerals issue.

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some opponents claim that the rules cause the SEC to overreach its mission and get involved in foreign policy

Yarp. And the problem is that this is exactly what's required. A few people touched on it last week and it's being screamed here too; the problem isn't the minerals, it's the fact that the country itself is in bits. Auditing clean simply reroutes the problem to somewhere else.

The manufacturers can try to source from clean mines, and Motorola starting their own in the DRC is a brilliant step. But as long as the power and financial clout in the region is held by the person on the other end of the gun, what would actually be needed is diplomatic development and intervention. And as you alluded to at the end, that worked out so well in Afghanistan and Iraq...

The whole of central Africa is minerally rich but socially and politically poor. Blame it on centuries of European oppression - probably accurately - but blamestorming isn't going to get anybody anywhere now. What's needed isn't gadget builders sourcing from clean mines, it's a complete regional socioeconomic rebuilding. And between us in the developed world, we've screwed up too many attempts at forcing that in recent years to make another one palatable.

it was interesting reading the link to the article on the discovered mineral resources in afghanistan. while it could rebuild the country and help so much the country has got zero experience in environmental management not to mention a corrupt little puppet in charge who the americans have already had to bail of of trouble once when he got caught with a large bag full of cash at an airport.

i really hope im wrong but i see it more like nigeria. amazing natural wealth that foreign corporations exploit and leave a devastated mess while the local populus live in poverty and risk their lives just to tap pipelines.

Robert Rath:
Rare earth elements will likely play a larger role. Lithium will be the mineral of choice...

Lithium isn't a Rare Earth element, it's an Alkali Metal. I get that you just mean it's hard to find (i.e rare) but the pedantic scientist in me just thought I'd clear that up.

Apart from that this was an excellent article that rivals (and even surpasses) articles found on 'proper' news websites.

Well, my respect for Nintendo has actually gone up a smidge.

LysanderNemoinis:
Well, my respect for Nintendo has actually gone up a smidge.

Unaudited, biased internal review mechanisms in favour of an oversight provided by someone who doesn't have a vested interest in your company? Yeah sounds awesome.

This was an interesting read. Unfortunately it only confirmed much of what I was already assuming to be the case.

Third world conflict exports are a though nut to crack. Boycotting them is clearly not the answer as that just leave the people to starve with out an income making the situation even more desperate, but buying their goods keeps the conflict going. So when even that basic question can not be answered it makes it even harder for us as consumers to hold companies responsible by voting with our wallets (ad to that, that we as consumers are very quick to forget our morals when faced with a small price increase).
All in all a tragic situation that I honestly do not know how what to do with. As most people I would like to do the right thing, but I have no idea what that is (smarter people than me do not know).

Should I boycott the WiiU? If I did how would they know that was the reason I did not buy it, as opposed to, say, a week library? And that is assuming that Nintendo not doing the audit is a bad thing.

So I think that I will just play some video game and hope some one else will fix it. Not something I am proud of doing but to be honest I have found that if I do not chose to ignore the, unbelievable, unfathomable, insane, enormous amount of human misery that is to be found on this planet, my heart and mind simply breaks.

Any one up for giving me an easy answer to this?

Like most human being caused problems there are no easy answers to this situation I think. However reading this article would lead me to avoid Nintendo's products simply because bullshit.

At least the other companies are attempting to do something about this frankly appalling situation rather than just fucking grin inanely at their suppliers.

Thank you very much for this article.

Well...

The only thing that will help that country in the end is stability. Once the controlling bodies are secure in their power, then they can naturally progress to social reform, rather than continually looking over their shoulder for the inevitable knife in the back.

The problem is that the country is very badly mismanaged. Trade auditing does go a long way to supporting the stability of the government... but there's not a lot of point in supporting an incompetent government. If people are swelling rebel militias, then the government is no longer providing the best option... and frankly they don't pay their own enforcers. Even the lowest school yard gang can tell you that's a bad idea.

Really need to have some education out there. Once people learn you don't need a gun to make money, things will be made better. Otherwise, all you're doing is waiting for a man with a conscience to get his own gun, but that rarely happens, and more often than not he loses to a man with no conscience.

The word "smile" crops up a lot through the president's message. Nintendo is "spreading smiles around the world," they have a corporate "Smile-Spreading Project," and their growth depends on whether they can "connect the smiles of all people involved in Nintendo" to form a "Smile Value Chain" that makes everyone happy, from manufacturer to consumer.

There's no indication that Nintendo intends to audit this Smile Value Chain.

God... what is that smell?

It's like a bull took a massive dump in here.

Another great article. But it does strike me as a little odd that only console manufacturers were mentioned. Games are also played on general-purpose computers made by many manufacturers, so why weren't they included?

But anyway, Nintendo... wow. I think it might have been lost in translation - I think rather than spreading "smiles" across the world, they might have meant "shit-eating grins" instead.

Aardvaarkman:
Another great article. But it does strike me as a little odd that only console manufacturers were mentioned. Games are also played on general-purpose computers made by many manufacturers, so why weren't they included?

Because PC gaming is an irrelevance that's been dead for the last twenty-five years. Haven't you ever been on the internet before? :-p

Glibness aside, "many manufacturers" is the issue; by the time you've written an audit on every single component manufacturer, from Intel to AMD to Asus to Seagate to etcetera, you'd have a hundred page article that didn't end up actually saying all that much. Boiling it down to the three consoles provides a neat delineation of the possible positions; trying to do something, trying to help other people do something, and not giving a crap.

As I mentioned in my reply to the previous article this is already pretty much a non-issue. Electronics companies and smelters are already taking care of this in an surprisingly successful case of self-regulation (one of few). Very little dodgy Congolese ColTan enters the supply chain now.

This legislation can do nothing about non-compliant smelters or electronics companies based outside the USA, as it only affects primary users, the smelters and manufacturers of the capacitors. A company that doesn't actually take Cobalt or Tantalum and manufacture something from that is not obliged to report to the SEC. That is the majority of electronics companies in the US and Worldwide. The present self regulation applies to the WHOLE supply chain. You don't get a get out of jail free card just because you buy your capacitors (or whatever) from a 3rd party. You are expected to ensure that the 3rd party isn't using conflict minerals.

EDIT: The successes that the author of this article claim for the legislation were as a result of self-regulation, not legislation. I am normally not one for promoting self-regulation but in this case it has worked.

EDIT 2: the industry group overseeing this is the EICC

Robert Rath:
Conflict Minerals and the Game Industry: Progress and Setbacks

How Microsoft, Sony, and Nintendo are responding (or not) to the conflict minerals issue.

Read Full Article

So what is your response to the people who claim that these new regulations have succeeded all too well, and that by cutting mineral exports by 90%[1] are directly responsible for the destabilization of the current Congolese government and the current success that is being enjoyed by the M23 movement?

I don't want to be Monday's expert, but surely something like this was always on the cards, right?

Karma168:

Robert Rath:
Rare earth elements will likely play a larger role. Lithium will be the mineral of choice...

Lithium isn't a Rare Earth element, it's an Alkali Metal. I get that you just mean it's hard to find (i.e rare) but the pedantic scientist in me just thought I'd clear that up.

Apart from that this was an excellent article that rivals (and even surpasses) articles found on 'proper' news websites.

Thanks for the correction. I didn't mean to claim Lithium is a Rare Earth element (as you correctly pointed out, it's an alkali metal), but I definitely constructed the paragraph in a way that gave that impression. Thanks, good writing lesson!

Andrew_C:
As I mentioned in my reply to the previous article this is already pretty much a non-issue. Electronics companies and smelters are already taking care of this in an surprisingly successful case of self-regulation (one of few). Very little dodgy Congolese ColTan enters the supply chain now.

This legislation can do nothing about non-compliant smelters or electronics companies based outside the USA, as it only affects primary users, the smelters and manufacturers of the capacitors. A company that doesn't actually take Cobalt or Tantalum and manufacture something from that is not obliged to report to the SEC. That is the majority of electronics companies in the US and Worldwide. The present self regulation applies to the WHOLE supply chain. You don't get a get out of jail free card just because you buy your capacitors (or whatever) from a 3rd party. You are expected to ensure that the 3rd party isn't using conflict minerals.

EDIT: The successes that the author of this article claim for the legislation were as a result of self-regulation, not legislation. I am normally not one for promoting self-regulation but in this case it has worked.

EDIT 2: the industry group overseeing this is the EICC

Thanks for your comments. I disagree that this is a non-issue for a number of reasons--but I would, wouldn't I? I mean, I wouldn't have written the article otherwise. It's definitely true that industry associations have, and will continue to play, a large role in cracking down on conflict minerals, but I want to clear up a few things you said that contradicted my research.

The idea that the legislation doesn't apply to "generic" components like capacitors is actually a fairly common misreading of the statute. The exemption for "generic" products applies to companies like WalMart, Target, and Walgreens that buy products that have already been fully manufactured and are then sold under the store brand. (i.e. if you go to Walgreens you can buy "Walgreens" products, but Walgreens didn't make those products, it just bought generic products cheap and put them in Walgreens-branded packaging.) The idea that companies could claim the exemption by saying they're buying "generic" capacitors and solder has been knocking around since the SEC wrote the regs, but that's not how they were intended or have been interpreted by electronics companies (most of whom don't manufacture products for generic sale anyway). Is there wiggle room? Oh yeah. But until that assertion is tested in court it's only a theory, and I don't see any company wanting to be the test case for it.

In addition, I respectfully disagree with your assertion that the legislation does not affect non-US manufacturers. The SEC regulations are not limited to US-based companies, since they very clearly cover any company listed on Wall Street--which covers a wide number of foreign manufacturers that are on the NYSE. I will, however, say that you're right that this doesn't cover a lot of smelters. Essentially, with these regs the SEC hopes companies will put pressure on smelters so that the manufacturers can claim compliance.

It's true that several industry associations were beginning to address Coltan (several, including the EICC, were mentioned in the column) but many manufacturers were dragging their feet about joining these associations, particularly those outside the United States. Dodd-Frank has done a lot to accelerate voluntary, and involuntary, supply chain tracking and auditing that was previously sporadic at best--basically lighting a fire under companies that weren't putting their shoulder behind the effort, which was most of them. Sure there were private measures looking into the problem, but they hadn't solved anything and a lot of companies weren't members at all. Sony, for example, had not joined any industry initiatives as of 2010.

Even so, there was little to no interest in tracking things like tin and gold, which are much more difficult to trace than Coltan--a fact that has meant that gold is now the largest DRC conflict mineral. Chemical testing is great, but there need to be different processes for different minerals and, as I mentioned, some like tin are extremely difficult to track.

And that's assuming any of these measures even work in the long term--and the jury's out on that.

Aardvaarkman:
Another great article. But it does strike me as a little odd that only console manufacturers were mentioned. Games are also played on general-purpose computers made by many manufacturers, so why weren't they included?

Mostly, as mentioned, because the article would just be too long and the "big three" console manufacturers were a good microcosm. This series was almost 6k words already!

If you want to look at how other major manufacturers did, I linked Enough Project's report in the column. I will tell you that Intel is the leader with a score of 60 and they hope to produce a conflict mineral-free microchip in a few years.

Paradoxrifts:

Robert Rath:
Conflict Minerals and the Game Industry: Progress and Setbacks

How Microsoft, Sony, and Nintendo are responding (or not) to the conflict minerals issue.

Read Full Article

So what is your response to the people who claim that these new regulations have succeeded all too well, and that by cutting mineral exports by 90%[1] are directly responsible for the destabilization of the current Congolese government and the current success that is being enjoyed by the M23 movement?

I don't want to be Monday's expert, but surely something like this was always on the cards, right?

God I love it when people cite sources from reputable publications. You're my new favorite commenter.

That's a great article, but it's a little biased to the industry position--as is understandable for a publication like BusinessWeek. It doesn't mention, for example, that a major part of the drop in mine production was from a DRC government ban on mining aimed at not only combating conflict minerals but also pushing out the rebel groups controlling mines in the Eastern DRC. (And as mentioned in the column, the flaw in this plan was that unpaid DRC troops are basically rebels-in-the-making once they're far from the government's reach and in control of mineral resources.)

I think that Dodd-Frank has absolutely had an effect on the DRC minerals market and--at least in the short term--created a rise in poverty and joblessness among miners while simultaneously cutting funding for armed groups. Is that dangerous? Hell yes it's dangerous. Is it directly responsible for the current M23 resurgence and threat to Kabila? I'm not willing to go that far yet.

The fact is that the situation is still developing very rapidly, and I don't want to call the game based on a kickoff play. At this point, I WILL say that the DRC's government, and its predecessors, have been facing continuous rebel movements and in the Kivus since the 1960s and the area has never been fully under government control. This isn't due to the present situation, but more a long-term consequence of having a weak central government attempting to administer a large and volatile region with a lot of social/ethnic/economic strife plus widespread access to weapons. The Kabilas themselves were part of a similar rebel movement that gained speed without the current problems with mineral production, and Joseph Kabila isn't anything like a popular leader, especially in the east.

So essentially what I'm saying is this: Is the de facto embargo contributing to the problem? I would say it's playing a role, but I'm not prepared to say how big a role. Is it "responsible" for the M23 movement's momentum? No, I wouldn't use the word "responsible," but again, I think you could say it's "contributing" to their success.

It also goes without saying that we're in the very early stages of M23's offensive and we don't know how successful it will ultimately prove, but it's definitely alarming. However, cause and effect can be elusive things in Congolese politics, and it might be years before we really know how much of a role the SEC regs had.

Good comment!

Robert Rath:
{Snip}

No, thank-you for knowledgeable commentary on the business week article. Your response was insightful. And yes, I would say that it comes from a decidedly pro-business publication with an accompanying bias, but at the very least you can give them credit where it's due for wearing that affiliation on their sleeve.

I do have a few more questions, if you'd like to take some time and answer them for me.

1. How does the Democratic Republic of the Congo's immediate African neighbors fit into region's problem with conflict minerals?

2. What would Rwanda and Uganda stand to gain from supporting M23 rebels in their efforts to supplant the current regime of Joseph Kabila?

3. Are any of the other big world powers involved in the traffic of Congolese conflict minerals at all? I'm thinking specifically of either Russia and/or China.

 

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