Following the close of this week's unprecedented U.S.-Africa
Leaders Summit, the business community's eyes are trained on
African. Perhaps not since colonization has the West demonstrated
such concerted interest in that part of the world, with all its
promise and peril. Africa's more than 1 billion people have no
interest in allowing history to repeat itself, and companies that
hope to profit from the continent's potential will have to use an
entirely new playbook to succeed. Some figured this out quite a
while time ago.
There may be no more dramatic illustration of this complex
landscape than the issue of conflict minerals from the Democratic
Republic of Congo, or DRC. Armed militias use the country's
mineral wealth to fund violence and insurrection. In the eastern
part of the country, fighting has continued for 15 years, enabled
by the trade in these minerals. Millions of people have died,
many more have been displaced, and rape has been widely used as a
weapon of war. The situation is simply brutal.
Rob Lavinsky, iRocks.com - CC-BY-SA-3.0.
Western consumers play a role in this dynamic by way of our
electronics and, increasingly, jewelry. There are four main
minerals in question:
- Cassiterite is the ore for tin, which is a circuit-board
- Coltan is the ore for a rare metal called tantalum, which
goes into capacitors.
- Wolframite is the ore for tungsten, which makes your mobile
- Gold goes into electronics as a wire coating. It's also in
The illicit trade in these minerals provides fighting factions
with tens of millions of dollars a year. Some industry
players have been trying to change that for some time now. Others
will be forced to under U.S. law.
Two sections of the Dodd-Frank Wall Street Reform and Consumer
Protection Act target corporate activity in parts of the world
where corruption and human rights violations are especially
prevalent. Section 1502 addresses the ongoing conflict in the
DRC, requiring that companies
disclose their use of conflict minerals
from that region in their products. While this provision is
still quite new, activists in the region credit Dodd-Frank with
helping to reduce armed groups' involvement in the Congolese
As part of the U.S.-Africa Leaders Summit, representatives
participated in a round-table discussion on responsible minerals
sourcing, hosted by the Enough Project at the Center for American
Progress. Each of these companies has developed robust systems
that aim to eliminate the terrible human cost associated with the
minerals they need to make their products. They are working with
, an NGO that works to provide a framework for best
In case you're in doubt, there is a business case for this. I
asked how the corporate representatives would respond to someone
who said that any efforts beyond legal compliance constitute a
violation of their fiduciary duty and their obligation to
maximize shareholder value. They had no trouble answering.
Mike Loch, Motorola Solutions' director
of supply chain corporate responsibility, observed that
industry hates surprises and price spikes, and the conflict
minerals situation creates both. He noted that supply disruptions
result from volatile circumstances on the ground, and then grow
as legislation is passed in response to demonstrably terrible
conditions. A company that sees these factors clearly and
implements solid processes to manage them will be much more
likely to guarantee supply chain continuity.
Carolyn Duran, Intel's conflict minerals program manager
and supply chain director, pointed out that with each passing
year, more and more
shareholders are filing resolutions
that push companies to address the human cost of their extractive
activities in Africa and elsewhere. Duran has seen the voice of
investors calling for more responsible corporate practices grow
ever louder, and she believes Intel is at the vanguard of
answering that call.
Luwowo Coltan mine near Rubaya, North Kivu, DRC, March 18,
2014. Source: MONUSCO/Sylvain Liechti. Luwowo is one of several
validated mining sites that guarantees conflict-free
Not as easy as it sounds
The solution to the conflict minerals problem demands far more
than goodwill and a statement of intent. The factors that create
this problem are stubbornly intractable, and any substantive
solution requires expertise, creativity, systematic
implementation, and constant reevaluation. This means companies
can't just suddenly jump on the bandwagon when things get too
hot. It takes years, resources, and work to get this right, just
as it does to develop a blockbuster product or service.
Intel distinguished itself in 2014 when it became the first
company to make its entire line of microprocessors conflict-free.
earlier this year, Gary Niekerk, Intel's director of corporate
responsibility, explained the immense challenges involved:
There were no established mechanisms or systems in place to
track minerals from the mine of origin throughout the supply
chain. Electronics manufacturers didn't know where their metals
were coming from. We determined that the smelters processing
the ore were a key choke point in the supply chain, so we set
out to implement a smelter validation system with our industry
partners to give us reasonable assurance that minerals
processed in those smelters were not contributing to conflict
in the Congo. This process took several years and is still
I asked Carolyn Duran if this wasn't a very expensive
undertaking for the company, but she said no. She explained that
when accounting for sustainability is already a part of a
company's fabric, as it is at Intel, the costs don't increase for
what is a successful business model. Duran made the important
point that whatever money the company spends on tracing was
already going somewhere anyway, because operating in conflict
regions brings all sorts of added costs.
Meanwhile, Motorola Solutions used the summit to announce that
the Motorola Solutions Foundation
had awarded a grant to
-- a public policy dispute resolution organization -- to
Solutions for Hope
, a project that has created a closed-pipe system of mining
conflict-free tantalum from the DRC. Motorola, like Intel, has
identified smelters as a weak point in its efforts to maintain
traceability of the minerals entering its supply lines, and the
closed-pipe system helps to seal off some of those holes in the
Civil war is just bad for business
These companies are demonstrating tremendous agility and deftness
in their handling of an intensely complex set of circumstances.
Failure to do so will become increasingly costly, as
learned in the Niger River Delta
, where it has seen untold oil riches seep into the ground as a
result of vitriolic conflict with local populations.
Increasingly, companies will ignore social strife in their areas
of operation at their own expense.
A decade from now, we're likely to look back on this first
U.S.-Africa Leaders Summit as the beginning of a new era of
business activity in Africa. Enduring success will go to the
companies that establish good relationships within their areas of
operation. Local communities, shareholders, and legislators
demand no less.
How to get even more income during retirement
Social Security plays a key role in your financial security,
but it's not the only way to boost your retirement income. In
our brand-new free report, our retirement experts give their
insight on a
simple strategy to take advantage of a
little-known IRS rule
that can help ensure a more comfortable retirement for
you and your family.
to get your copy today.
How to Make the Most of Africa's Business
originally appeared on Fool.com.
has no position in any stocks mentioned. The Motley Fool
recommends Ford and Intel. The Motley Fool owns shares of Ford
and Intel. Try any of our Foolish newsletter services
free for 30 days
. We Fools may not all hold the same opinions, but we all believe
considering a diverse range of insights
makes us better investors. The Motley Fool has a
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a