From Congo to China: How fair is mobile phone production?

For most people, the smartphone in their hands comes from Apple, Samsung or Nokia. Behind the development of mobile technology is a complex global network of raw material suppliers, accessories manufacturers and other participants in the supply chain. We took a closer look at the steps...

Aluminium, plastic and glass: Holding an iPhone in your hand gives little hint of the half of the periodic table of the elements that is inside. The production circumstances of minerals such as tungsten, tin, tantalum and gold remain hidden from the average smartphone user.

Smartphone purchase finances armed conflict

Because the English translations of tungsten and zin are "tungsten" and "tin", the four minerals mentioned are collectively referred to as 3TG. But something else connects the four elements: the mining site. They are stored in mines in the Democratic Republic of the Congo and in the neighboring countries of the country, which is best known to us for the ongoing civil war. A well-known problem: The purchase of these minerals by international technology groups finances the equipment of the armed groups. Until now, consumers have not been able to make a personal decision not to buy products containing conflict minerals because companies were not obliged to disclose their suppliers. However, this has recently changed with the US Dodd-Frank Act.

While the main focus of the legislation is on reforming the US financial market, Section 1502 of the comprehensive work requires publicly traded US companies to provide information. Minerals originating from mines in the DRC and neighboring countries that are used in any form in production must be publicly disaggregated in an annual report. If conflict minerals are used, the companies are obliged to describe measures for due diligence in the supply chain and to name the country of origin and the measures to identify the specific mine.

At the same time, the law requires the US Secretary of State, in cooperation with the United Nations, to develop a map of mineral locations and trade routes controlled by armed groups. This measure is intended to support companies in the future in only selecting mines that are not controlled by militias. As the law states that the review must be carried out "to the best of our knowledge and belief", the measures do not guarantee the accuracy of the reports.

Nevertheless, the first reports published by Time Magazine give a sense of reality. Google writes that there is reason to believe that 3TG minerals come from the affected areas, but that no direct support from armed militias could be found. Of the smelters in Congo that prepare the minerals for production, only a third are guaranteed conflict minerals free. At Apple, the quota of guaranteed conflict-free furnaces is at least 80 percent. The processor manufacturer Intel can already guarantee that all processors and chipsets are conflict-free. The online retailer Amazon cautiously explained in its report that the majority of retailers in the supply chain are guaranteed to work without conflict minerals.

Theoretically, the disclosure obligation only applies to US companies, but due to the complex supply chain with US branches of foreign companies, the disclosure obligation also applies to some companies outside the USA, including those from Germany. The use of conflict minerals remains permitted, but disclosure enables consumers to deliberately avoid certain products.

Although the financial part of the Dodd-Frank Act is rarely seen as a success, the conflict minerals-related measures are already having an impact. According to a report by the Enough Projects, an initiative fighting genocide and crimes against humanity, "The law [...] has rendered mining of tin, tungsten and tantalum uneconomic by armed groups."

Voluntary avoidance of conflict minerals

One company that already completely avoids conflict minerals is the Dutch company Fairphone. "We use around 30 minerals in the Fairphone, four of which have been classified as conflict minerals by the OECD: tin, tantalum, tungsten and gold," says Roos van de Weerd, Public Engagement Manager at the company of the same name. According to the expert, doing without conflict minerals is the first step in the value chain of a smartphone that needs to be radically changed. "Our great mission is an ethical and transparent value chain. However, the growing complexity of our little electronic helpers is making it harder and harder for us to see the bottom of the value chain. We only know where the materials in the first and second supplier levels come from, after that it's lost the overview."

What Fairphone does not currently monitor are the working conditions in the mines and the fair wages of the miners. One hundred percent fair production is a long-term goal, but only small steps are currently possible. "If we want to produce a completely fair smartphone from now on, this would only be possible if there were world peace," says van de Weerd. "We have to proceed step by step. Our top priority was eliminating the stimuli of conflict and supporting the local economy in the Democratic Republic of the Congo. Together with initiatives such as Solutions for Hope, we are on the right track. Working conditions and wages are on our priority list only in second place." Combating environmental problems that arise when the minerals required for production are mined are also future issues at Fairphone: "We take care of the social problems first. However, when designing the product, we already have better environmental compatibility in mind."

Rare earths for better smartphones

The so-called rare earth metals are responsible for by far the greatest environmental problems. These are required to provide our smartphones with certain properties. The minerals are not really rare, but the concentration is usually so low that mining is only worthwhile in a few places in the world, including southern China. The global demand and concentration on the mining area is so lucrative that China is currently responsible for 97 percent of global supplies.

One mining location is in Baotou, a city in Mongolia. A reporter from the British Daily Mail was able to gain access to this in order to assess the environmental situation on site. Acids are required to process the rare earths in order to separate the various substances such as yttrium, cerium or dysprosium from one another. In Baotou, the waste ends up in a lake with an "apocalyptic sight," according to reporter Simon Parry. Instead of what used to be green meadows and fields, there is now a black sea of ​​acids and other industrial waste, into which seven million tons of waste leftover from the production of neodymium and other rare earth minerals flow every year.

On the other hand, we can't think of any alternatives yet. Yttrium, lanthanum, praseodymium, europium, gadolinium, terbium and dysprosium are required for bright colors in smartphone displays. Praseodymium, gadolinium, terbium, dysprosium and neodymium are also used for the tiny but powerful loudspeakers. The composition of the vibration motor in the smartphone is similar. The connection of all individual parts via the mainboard, the central control unit of all smartphones, is only possible due to the use of the minerals mentioned. The rare earths are mainly used because tiny amounts of rare earths can significantly change the properties of another metal. An alternative name for rare earths is therefore "spice minerals". A few milligrams of neodymium, for example, ensure that a magnet is permanently charged. A possible alternative to the environmentally catastrophic mining could be on the seabed.

Individual components are made from metal

The actual production of the smartphone begins with the delivery of the minerals to the factories in Asia. Or rather: the individual components such as the display, processor, RAM, camera, chips for Wi-Fi, 3G, 4G, GPS, Bluetooth, NFC and more. The layman can only guess what the manufacturers build into their devices in detail, since specific manufacturer and model names of tiny individual parts are withheld in marketing in favor of features and specifications. Thanks to analyzes by specialists such as iFixit, however, there is still an overall picture of which parts are used in the case of the iPhone 5s, for example.

The analysis of the individual parts enables the calculation of the complete hardware costs, which iSupply regularly carries out. The iPhone 5s with 16 gigabytes of storage space consists, among other things, of a flash memory chip for 9.40 US dollars, main memory and processor (30 US dollars each), camera module (13 US dollars), mobile radio chips (32 US dollars). ), sensors such as the fingerprint scanner ($15), the chip for WLAN, Bluetooth and GPS ($4.20), battery technology ($11.10) and other mechanical parts for $28 . The most expensive part is the combination of display and touchscreen at 41 US dollars, Apple pays 7 US dollars for packaging and packaging contents. Plus manufacturing, which companies like Foxconn charge around $8 for, the cheapest iPhone costs $198.70 to manufacture. However, what cannot be quantified are the costs for research and development, patent fees, software development and transport costs.

The cost estimate is again based on the manufacturers behind each component. The battery in Apple's top model comes from Desay Battery Co., LTD, the fingerprint scanner from Apple's AuthenTec company, the iSight camera from Sony, and one of the wireless modules from Broadcom. The list of suppliers could be continued indefinitely with names such as SK Hynix, Qualcomm, TriQuint, Texas Instruments, Skyworks, but the bottom line is always the same: handling all suppliers is the second mammoth task for smartphone manufacturers, alongside the procurement of raw materials.

Across all industries, Apple took the crown for best supply chain management for the seventh time in a row in 2014, closely followed by McDonald's, Amazon, Unilever and P&G, according to Gartner's ranking of market researchers. In its current list of suppliers, Apple lists 200 companies that together account for 97 percent of its products' materials, production and assembly spend. Germany is represented on the list by the Bertelsmann subsidiary Arvato AG, Henkel, Infineon, Osram and Dialog Semiconductor GmbH. However, the lion's share of the suppliers are based in China, as are Foxconn and Pegatron, the companies responsible for final assembly.

China's advantage

The fact that production takes place in China is by no means a coincidence, but the logical consequence of the search for favorable wage conditions. The factory workers, some of whom work up to 16 days with poor hygiene on assembly lines, receive between 300 and 500 euros – an average of 60 hours a week, according to the report by the non-profit organization Fair Labor Association. According to Fairphone's Roos van de Weerd, this is simply because of the classic profit-growth model: "The goal of all capitalist companies is profit. We have relied too heavily on supply chain companies across the industry. The problems in Congo and the labor conditions in China is witness to this development, so it is important for us to show where customers' money is going and what minerals and individual parts a smartphone is made of."

Although Fairphone provides slightly better wages and a social fund at its contract manufacturer Guohong, the manufacturer has had to deal with criticism in the past for adorning itself with fine words instead of real deeds. As van de Weerd explains, it is difficult, especially for smaller companies, to change an entire system all at once: "We don't pay the workers ourselves, but the manufacturer. In order to achieve fair wages, the work culture has to change. How can we? more money from the consumer to the contract manufacturer, but this does not result in higher wages. Due to the small quantity, we only have production for a few months a year." Consumers therefore hardly have a chance to push through changes in the People's Republic with their purchase.

In addition to Fairphone, which tries to enforce measures directly on site, other sizes are represented by the Fair Labor Association (FLA). In addition to Apple, the most prominent supporters of the FLA include industry giants such as H&M, Nestlé, Nike, Adidas, Puma and S. Oliver - "from coffee and electronics to clothing and shoes", according to the FLA. The primary objective of the FLA is to set and enforce standards to protect workers and the environment. The FLA investigates whether and how the working conditions are on site and whether rules are being observed by means of monitoring and controls, which are publicly reported. The FLA provides companies with training to help them adapt and improve their working conditions.

In the case of Apple, in a December 2013 report, the FLA found significant progress in terms of hours worked, although Apple's contract manufacturer is not yet fully compliant with FLA requirements: "Foxconn's compliance with FLA hours of work standards is a huge step in right direction. The FLA expects Apple to rigorously monitor hours worked to comply with the FLA standard, while making progress towards China's 49-hour-week limit," said FLA chief Auret van Heerden. The currently higher number of hours is mainly due to overtime, which is readily accepted as an opportunity to earn additional income due to the wage level.

Code for less e-waste: recycling

Armed conflicts, environmental damage from mineral extraction, waste mismanagement and poor working conditions. As clean as the new smartphone looks at its owner out of the packaging, the path that our devices take on their production route is sometimes dirty. The voluntary waiver of a regular upgrade is only an option for very few technology fans. However, the smartphone industry is also making it increasingly difficult for users to replace even the smallest defects themselves, such as a dead battery.

But Fairphone is also trying to get its industry colleagues to rethink here, as Roos van de Weerd explains: "We try not to sell our customers a black box. With our smartphones, not only can the battery be easily replaced, but also the camera module, the screen or the vibration motor. We think it's important that a device is used up and not planned to be scrapped after a certain period of time."

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