What price a mobile phone?

Glen Newey · Conflict Minerals

What price a mobile phone? Pursuant to the Dodd-Frank Act, passed after the 2008 crash, the US Securities and Exchange Commission set 2 June 2014 as the deadline for mining companies to report the provenance of minerals they put on commodities markets, the aim being to flag ‘conflict minerals’ as such. Minerals dug in the Democratic Republic of Congo’s North and South Kivu provinces, including coltan (columbium tantalum) cassiterite and gold, are used in capacitors and other components for tablets, phones and computers. Various armed rebel groups in and around the Kivus vie for control of the mostly hand-worked mines.

Though the M23 rebels, who’d been supported by Rwanda against Joseph Kabila’s government, surrendered last November, the Great Lakes area remains volatile. Several Mai-Mai militias remain active, as do Joseph Kony’s Lord’s Resistance Army and other groups. The UN maintains a task force, MONUSCO, in an expensive and largely vain attempt to keep the peace (UN missions have cost $8.7 billion since 1998).

Mining companies are running scared. Last month they argued in a District of Columbia circuit court that disclosure of conflict minerals’ provenance breached the First Amendment, because it made them say something – a burden that food and drugs firms have laboured under for decades. The companies would have been required to badge those minerals which had ‘not been found to be “DRC conflict-free”’ on their websites.

The DC court found meritless the SEC’s appeal to what’s called ‘rational basis review’, by which statutes like Dodd-Frank get opt-outs against constitutional rights if it can be shown that they are reasonably needed for ends pursued by the US government – which means, roughly, whatever you want. Unlike ingredients in food or liquor, telling consumers whether their phone uses minerals mined by children to fund warlords was deemed either not to be a reasonable end itself, or not reasonably to promote an end, of government. On 14 May the mining firms suffered a reverse in the courts in their efforts to get an across-the-board postponement of the 2 June deadline, but were granted a stay on reporting conflict minerals, lest their First Amendment rights be jeopardised. Only firms that actively label minerals ‘DRC conflict-free’ will be subject to a private sector audit. While the US reporting regime targets the Kivus, the effective cause of conflict lies elsewhere. Despite its potential wealth – the epitome of the ‘resource curse’ – Congo remains a failed state. While public money is blown on networks of clients, the government cannot project executive power in the vast hinterlands east and south of Kinshasa. In the mineral-rich southern Katanga province, now relatively peaceful, non-US mining concessions go on doing their stuff, operating outside the conflict zone. Recently Glencore Xtrata, based in Jersey and Switzerland, acquired equity in the Katangese Kansuki and Mutanda mines after the state-owned stock had been sold by Kabila’s government at a knock-off price to a company in which his close friend, the Israeli tycoon Dan Gertler, has an interest. In 2011 Gertler was alleged to have links with 29 of a list of 59 offshore shell companies dealing in DRC assets, many based in the British Virgin Islands. The FTSE-100 listed Eurasian Natural Resources Corporation has obtained stakes in DRC mines via Gertler. Questioned about his relationship with Gertler in 2012, the ENRC’s then chair Mehmet Dalman said: ‘Don't give me questions that I will look bad on, right? Come on. Be fair.’ Dalman resigned amid corruption allegations last year.

Meanwhile, Congo remains dirt-poor. The World Bank ranks it last but one (just above Burundi) by per capita GDP, at $262 in 2009-13. Rape of women and children by militiamen is endemic. Since 1998, armed conflicts in the DRC have claimed up to 5.4 million lives. That’s roughly a 9/11 every three days.


  • 27 May 2014 at 9:10pm
    Timothy Rogers says:
    Glen Newey’s opening line raises a second question that is not discussed in his very good piece, which focuses on government actions and judicial glosses on them (at least in the US). The unraised question has to do with the habits of consumers. Price is a major factor in the minds of consumers, who are also concerned about owning an object that is both stylish and efficient (and, for cell phones, has constantly expanding capabilities through “Apps” and internet connectivity). Most of them could care less about any other aspect of the cute little electronic gadgets they own. Many of these consumers, again in the US, are well-educated, middle-class folks who imagine that they have high ethical standards, but when those standards are compromised by buying products whose manufacturing involves numerous ethical (or moral) problems, they choose to ignore this dimension or throw up their hands with, “Well, it’s beyond me, I can’t do anything about that”. They would hardly accede to the Reagan-era slogan of “Just say No,” because that would inconvenience them. It’s actually quite possible for 95% of those who use cell phones to toss them in the waste bin without any serious consequences for their lives. But they would never dream of that. Technophiles love and admire men like Steve Jobs (thank god he’s gone, I wish it had happened years earlier) who export hundreds of thousands of jobs and make deals with questionable Chinese or Indian officials and businessmen who run cheap and dehumanizing labor markets, and then justify their behavior by citing the nostrums that their products are consumer-friendly and cheap. If there were ever a congressional move to change this situation by placing restrictions on the export of such jobs, all holy hell would be raised about the sanctity of “free markets” and government interference in the private sector. It would, of course, be well-funded and effective and secure the services of talking heads on radio and television. And the additional argument that making American consumers pay more for an object (which most cell-phone users could afford to do if it was truly necessary for their domestic or work lives) would violate “consumer’s rights”. In any case our judicial branch, with either its innate prejudices or its wooly-minded commitment to ethereal principles that have little to do with the real world, would pile on to sustain the existing situation. All this means that action is stymied by a pincers involving corporate power and greed on one side and consumer apathy and convenience on the other. It takes two to tango, and the ambitious and aggressive corporations that are willing to tolerate all kinds of local infamies as they secure and exploit resources will easily find their partners in consumers who just don’t care about such things, even when these vicious and benighted ventures are brought to their attention.