APPLE FACES CHILD LABOR SCRUTINY AS IT LOOKS TO TAKE CHARGE OF COBALT MINES

APPLE FACES CHILD LABOR SCRUTINY AS IT LOOKS TO TAKE CHARGE OF COBALT MINES

23/02/2018

An impending global shortage of cobalt—an essential ingredient in everything from smartphones to electric cars—is prompting a scramble for the scarce mineral that is once again drawing attention to human rights abuses in the mining process.

In order to meet its own cobalt needs, Apple is reportedly planning to go straight to the source and secure it directly from the mines. The news follows investigations into cobalt mines in recent years that have repeatedly revealed incidents of child labor and hazardous working conditions.

According to Bloomberg, the world’s richest company has been in talks with mining companies for more than a year in order to guarantee a steady supply of the mineral over the next five years, which human rights campaigners tell Newsweek could present serious ethical challenges.

It is not clear which mines Apple is in talks with, though much of its current cobalt is sourced from the Democratic Republic of Congo, where more than 50 percent of the world’s cobalt supply originates. It is also where some of the most grievous human rights abuses have been reported.

FAIRPHONE

According to Amnesty International, children as young as seven were discovered working in cobalt mines in the DRC and in a 2016 report from the charitable organization, children working in mines recounted “being subjected to beatings and extortion by security guards and exploited by traders.”

As one of the biggest cobalt consumers—the mineral is used to produce the lithium-ion batteries found inside every iPhone, iPad, Apple Watch and MacBook—any deal between Apple and the mines would protect the tech giant from choked supply chains but also open them up to closer scrutiny. Currently, as a “downstream company,” Apple is not directly responsible for the mines’ practices.

Apple declined to comment on whether it was in talks with mining companies but reiterated to Newsweek its efforts to prevent human rights abuses in its supply chains, including that of cobalt.

Amnesty’s latest report on cobalt supply chains, published in November last year, ranked Apple favourably against other tech firms, citing the company’s decision to publish the names of its cobalt suppliers. Amnesty said Apple was currently the “industry leader… but the bar is low,” adding that the company still fell short of taking all possible action to ensure responsible cobalt sourcing.

In a 2016 report, Apple revealed that 20 percent of its cobalt supply came “from sources that don’t currently have responsible sourcing programs in place to meet our rigorous requirements,” adding that it was not cutting ties with these mines because it wanted to effect change.

“We’ve consciously chosen to stay engaged with mines and smelters that are not yet meeting our high standards and will work with them to develop responsible practices,” the report stated.

AMNESTY INTERNATIONAL

Apple also compared favourably to other leading tech companies in a study by Greenpeace last year that judged firms on their transparency, performance and advocacy efforts, though campaigners  warn that the Cupertino company will face a brand new type of challenge when dealing directly with mining companies.

Elizabeth Jardin, an IT campaigner at Greenpeace, told  Newsweek: “As companies move to ensure a steady supply of cobalt for their products, Apple and others must also take greater responsibility to ensure stronger standards to protect the health of the miners and the surrounding environment.”

Read more: With the release of the iPhone X, what is the human cost of Apple’s most expensive ever iPhone?

The issue is one that has occupied Dutch smartphone maker Fairphone since 2013, when it began working with traceability initiatives in the Democratic Republic of Congo. The startup’s aim was to produce an ethically-minded device, though the complexity of supply chains mean it is still unable to boast of a truly fairtrade handset.

“Even Fairphone isn’t able to meet its own standards,” Tessa Wernink, co-founder of Fairphone, told Newsweek at the launch of the Fairphone 2 in 2016. “There’s around 30 minerals in the smartphone and so far we’ve only been able to trace two back to conflict-free mines.”

A spokesperson for the firm tells Newsweek that cobalt is a “focus mineral” for Fairphone and partnered with Hayou Cobalt last year to set up a traceable supply chain for the material.

“Even though cobalt is not classified as a ‘conflict mineral’, the mining conditions are often associated with severe human rights violations, including child labor,” Fairphone said in a November blogpost on its website that explored the issue of cobalt sourcing.

Fairphone describes the need to improve the cobalt mining sector as “urgent” and said it has invited other brands to join them in setting up a new supply chain, but has not revealed which.

In addition to the improvements required in Apple’s supply chain, the most irresponsible companies when it comes to cobalt sourcing, according to Amnesty, include Microsoft, Huawei and Lenovo. As demand for the finite resource continues to grow, Amnesty International has called for these companies to take more action.

“This is a crucial moment for change,” Seema Joshi, head of business and human rights at Amnesty International, when its latest report into child labor in cobalt mines was published.

“The energy solutions of the future must not be built on human rights abuses.”

BY ANTHONY CUTHBERTSON 

Newsweek US

Congo Bribery Probe Puts Israeli Billionaire’s Future on Hold

Congo Bribery Probe Puts Israeli Billionaire’s Future on Hold

23/02/2018

• Gertler, longtime friend of president, made billions on deals

• U.S. sanctions are squeezing Gertler’s ability to do business

Dan Gertler in Katanga province, Democratic Republic

of Congo. 

A 20-year friendship that helped turn Dan Gertler into a billionaire has left the Israeli businessman with a lot fewer places to go.

The U.S. government accused Gertler of corrupt mining and oil deals in the Democratic Republic of Congo and said he acted as a middle-man to enrich his longtime buddy, President Joseph Kabila. The two have been close since Gertler arrived as a young diamond merchant during a civil war in 1997, and Congo -- one of Africa’s poorest countries -- is the main source of his wealth.

“Most of my business is in the Congo and my faith is in the Congo,” Gertler, 44, said in a rare interview on Dec. 21, just hours before the U.S. government imposed economic sanctions against him.

At the time, he remained defiantly optimistic about his businesses even as he was being singled out by American and British investigators conducting prolonged bribery and corruption probes related to some of his Congo deals. “I am a strong believer in the future of the Congo," he said. But doing anything inside and out of Africa has gotten a lot harder for him in the past two months.

Sanctions have shut Gertler out of the American financial system, halting access to the dollars that are the main currency used in Congo and in global raw-material deals. U.S. companies are banned from doing business with him. Former partners are distancing themselves.

“All our payments have ceased forthwith,” said Mark Bristow, the chief executive officer of Randgold Resources Ltd., which has a gold exploration project with Gertler’s Fleurette Group in northeast Congo. “We’ve got U.S. directors, and we are listed on the Nasdaq. We cannot entertain doing business and transacting in any form.”

‘Unjust’ Sanctions

To be sure, Congo’s government stands by Gertler, who still holds mineral and oil rights in the country and funds education and health centers. 

The sanctions are “unjust,” Albert Yuma, chairman of Congo’s state-owned mining company, Gecamines, said during an interview in Cape Town, South Africa. Gecamines was a key counterparty in many of Gertler’s most lucrative copper deals. Gertler is being targeted because of the West’s deteriorating relations with Kabila, Yuma said.

And then there is Glencore Plc, the global commodity trader that was once Gertler’s most important partner in Congo. Though Glencore bought his share in their two joint-venture mines last February, it is still required to pay Gertler royalties he acquired from Gecamines in earlier deals. Brussels-based Resource Matters estimates he would receive almost $200 millionover the next two years.

“Randgold appears to be taking steps to end the relationship, but will Glencore?” the advocacy group Global Witness said Sunday.

Reviewing Relationship

While the Swiss company pledged to honor the sanctions, it says it is still reviewing its contractual obligations and if it will continue to make the payments.

“We’ve got to follow the correct procedures and we’ll come to the right conclusions,” said Ivan Glasenberg, the chief executive officer.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

Gertler has declined requests by Bloomberg for comment since the sanctions were imposed. But even before then, he said he was being unfairly targeted.

In 2016, U.S. court documents alleged Gertler channeled more than $100 million in bribes to Congolese officials on behalf of New York hedge fund Och-Ziff Capital Management LP, which paid $413 million to settle federal charges. Gertler was never charged. Separately, the U.K.’s Serious Fraud Office is investigating the 2010 to 2012 acquisitions of some Congo mines by Eurasian National Resources Corp. from Gertler, who had obtained them from the government at what Global Witness alleges were below-market prices.

For an explanation of Congo’s appeal for mining companies, click here.

Gertler denies paying bribes in Congo to secure mining deals and insists his success reflects a long-standing friendship with the country’s 46-year-old president and a track record for delivering results. Gertler credits himself for bringing more than $7 billion of foreign direct investment to Congo, creating thousands of jobs and helping to make the country Africa’s biggest copper producer.

Joseph Kabila

“We started to invest in the early days -- when nobody else wanted to invest, when the country was at war, when the copper and cobalt prices were at the bottom,” Gertler said in the interview on the 12th floor of an office building in Tel Aviv where his grandfather founded a diamond exchange 70 years ago.

Over the years, he became a kind of gatekeeper. His office -- which doubles as a Congolese diplomatic post according to a sign on the door -- includes pictures of Gertler and Kabila together in their 20s and aerial shots of the mine he built with Glencore.

Congo Partnership

Glencore was his biggest partner, and the two became synonymous in Congo. It was a relationship Gertler says he managed directly with Glasenberg. Between 2007 and 2017, the pair participated in more than a dozen transactions involving Congolese assets that turned Glencore into the world’s third-largest copper producer and No. 1 in cobalt. They also helped Gertler accumulate more than $2 billion in wealth, according to data compiled by Bloomberg. Glencore’s businesses operate on six continents and involve more than 90 different commodities.

“The difference between Glencore and me: Glencore has many Congos, I have one,” Gertler said. "I have one country, one focus."

Diplomats have counseled Gertler that distancing himself from Kabila could help reduce the focus on his activities, advice that he says he will continue to reject.

Kabila was due to step down in 2016 when his term expired, but he has held on to power and the job he took in 2001 after his father was assassinated. Over the past 18 months, the U.S. has sanctioned five Congolese officials, including the head of its intelligence agency, for human-rights abuses and undermining democratic processes.

“Should I decide who are my friends because of the threat of investigation, pressure from Global Witness or public relations?" Gertler said, rising from his chair to stride the room. “Never!”

By Thomas Wilson

Bloomberg