Just six months into his role as CEO of Intel, Brian Krzanich announced today that the electronics giant hit a momentous goal in the world of corporate social responsibility: Starting right now, every microprocessor that Intel ships will be made entirely with conflict-free minerals.
Every piece of tantalum, tungsten, gold, and tin found in the microprocessors will come from smelters that only source minerals mined outside the quagmire of armed conflict and human rights abuse that plague parts of the Democratic Republic of Congo (DRC) and surrounding countries.
The world of electronics manufacturing is complex. Large companies like Intel buy minerals in bulk from suppliers, which in turn buy them from smelters around the world--and so the electronic companies often aren't familiar with the origins of their minerals. For Krzanich, who previously led Intel's supply chain and manufacturing efforts, improving supply chain transparency is part of a long-standing effort that culminated in today's announcement at the Consumer Electronics Show in Las Vegas.
"I was managing all of Intel's supply chain--not only factories, but everything we buy," he told Co.Exist in an interview. "As a part of that, you are heavily involved and looked at as one of the leaders of Intel's corporate social responsibility efforts. Factories tend to have large footprints in the communities we live in."
That focus on corporate social responsibility led to an interest in conflict minerals about four years ago, when the electronics industry first started waking up to the issue (This was prior to the announcement of a rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which now requires U.S. companies to disclose the use of conflict minerals sourced from the DRC and surrounding countries).
Krzanich's gut reaction was to just ditch sources from the DRC and nearby countries and rely instead on conflict-free regions. But the supply chain team quickly decided that wasn't the right approach; it would eliminate a key source of income for local residents. Instead, Intel took the more difficult road, supporting conflict-free sources within the region. In 2012, the company committed to only manufacturing conflict-free microprocessors by the end of 2013.
When Intel first began looking into conflict minerals in its supply chain, the company immediately hit a wall--it didn't yet know what the breadth of the conflict was or what its options were. The first year was spent "determining if we were supporting metals from conflict regions, particularly tantalum," explains Carolyn Duran, the director of supply chain at Intel and program manager for its conflict mineral efforts. Intel is the largest commercial consumer of tantalum, and consequently has the most power to change the market.
Along with other electronics companies investigating conflict minerals in their supply chains, Intel concluded that it should focus its investigations specifically on smelters--a pinch point in the process.
Finding the smelters behind Intel's minerals was a slog. Many of the company's suppliers didn't know what smelters they used, while others had confidentiality concerns. Supply chains are like tangled webs--Intel had to start working with banks, for example, because they purchase some of the same materials, like gold (in the form of gold bars). Asking the banks which refiners they worked with got the company closer to finding its smelters.
It took years, but Intel finally hunted down all of the smelters used to produce all the minerals in its microprocessors. Now they're all conflict-free, too. Most have been validated by third-party audits.
A small subset of the smelters hasn't yet been audited by a third party, but Intel has concluded that they're conflict-free after extensive direct observation. "It's exactly based on third-party audit protocol," says Duran. This includes an examination of each smelters' conflict minerals policy, whether a smelter has management committed to responsible sourcing, and whether the smelter recycles its metals.
Developing an auditing process that all sides could agree on was another pain point in Intel's conflict-free quest. "You're really going like a plumber into the depths of these smelters," explains Sasha Lezhnev, policy director at the Enough Project, which works with Intel on its conflict-free sourcing. "These are highly secretive industries. They're just not used to public scrutiny. This is just an organizational and cultural change that they in some senses have to react to."
The company has had to ditch a small number of smelters who refused auditing. But some of them are coming around. "They can come back in later when they're validated," says Duran.
To date, Intel has visited more than 60 different smelters working with the four types of conflict minerals in 20 countries. The journey to conflict-free mineraldom hasn't been cheap, however. While Krzanich says that having conflict-free microprocessors won't add any costs to Intel's products, a lot of pricey travel and manpower has gone into the effort.
Though Intel has undoubtedly pushed the entire electronics industry ahead in its quest to become conflict-free, the company can't work alone. "This was sheer brute force on Intel's part for the microprocessor," admits Duran. Intel has outsize purchasing power for tantalum, and its efforts have been boosted by the gold industry's push to become conflict free, but more needs to be done before the majority of smelters feel pressured to ditch conflict minerals.
In addition to work from individual companies, there need to be changes in public policy, too. "It's also making sure the rest of the causes of the conflict are addressed, and sending messages to the U.S government, the UN, and other governments in the region that they need to get this peace process organized," says Lezhnev. He's hopeful that conflict-free mineral certification from the International Conference On the Great Lakes Region (ICGLR), will also encourage smelters in the DRC and nearby areas who want to be more attractive to companies like Intel.
Krzanich, who has been deeply involved in the conflict-free minerals search since its beginning--even during his short time as CEO, he has met with the conflict minerals team several times--knows that there is a long way to go. "We ship a lot more than just microprocessors. For us even to expand to everything we ship is going to be a journey," he says. A decade down the line, he hopes that Intel can become at least 90% conflict free, with the other 5% to 10% of minerals being "new materials, new innovations that haven't really been checked out yet."
Other companies, like Apple, Samsung, and HP, have also made strides in identifying their smelters and keeping them conflict-free when possible (Intel is rated first in the Enough Project's rankings of electronics companies removing conflict minerals from their supply chains). "I think everybody is interested in doing this," says Krzanich. "The fact that we're going to take portion of our supply chain, microprocessors, and make that conflict free--it set a benchmark for a way to do this."