part 1

The Consumer Electronics Show (CES) was the worlds premier technology exhibition. It acted as the main forum for companies seeking attention within the industry.Held annually in January in Las Vegas, the event attracted more than 100,000 attendees interested in learning about the latest products and ideas in the consumer electronics industry.2 Of those in attendance, more than 40% were senior-level executives of electronics companies.3 In fact, more journalists covered the 2014 CES than that years Super Bowl in New York City.

Intels CEO, Brian Krzanich,was slated to give the conferences 2014 opening keynote address.6 The eyes of the entire consumer electronics industry would focus on him. Since assuming the role in May 2013, thiswas his first opportunity to speak to the entire industry about Intels vision for the future of the consumer electronics market.

Sitting in the audience, Gary Niekerk, Intels director of corporate citizenship, couldnt help but reflect. Krzanich was commenting to the entire consumer electronics industry and its global audience about conflict mineralsin technology supply chains, which reflected the value Intel placed on social responsibility.

In 2009, Niekerk came to his office to find a letter writtenby the Enough Project, a human rightsorganization, with a memo attached from then-Chief Operating Officer Krzanich assigning him to fix the problem. The letter asserted that minerals found in the technology, automotive, and aerospace supply chains were supporting bloodshed and crimes against humanity in the Democratic Republic of the Congo (DRC). This mineral supply chain had aided in financing the deadliest conflict sinceWorld War II. Niekerk set out to identifyif these claimswere true.

The minerals in question were found in every cell phone, computer, television, and video game console.11 With the consumer electronics industry expected to grow with the rise in disposable income in developing countries (projected at 4.1% for 2014 alone), this problem would only becomeexacerbated in years to come without an intervention.

Niekerk asked himself, what did Intels supply chain truly look like? He considered the ramifications if minerals from rebel mines were discovered in Intels supplychain. Could Intelcut the DRC out of its supplychain? If sourcing elsewhere was available, should Intel do so? Or should Intel use its influence to address the problemindustry-wide? Niekerk wonderedhow this may affect Intelsoriginal equipment manufacturer (OEM) customers. Niekerkhad a feeling that the problem of addressing conflictminerals in the supply chainspanned not only acrossIntel operations, but through multipleindustries.

His head was spinning as he set off to tackle the seemingly impossible, knowing there were more questionsthan answers and that time was of the essence. With no road map to follow and a lack of Intel employees in the DRC, wherewas he to start to address this issue and how wouldhe proceed once started?

The DRC is one of the largest countries in sub-Saharan Africa by landmass (see Exhibit 1). In terms of minerals, it is one of the richeston the continent and one of the worlds leadingproducers of diamondsand cobalt.13 The countrys total minerals reserves are an estimated USD $24 trillion,14 but a seemingly never- ending cycle of violence has made it one of the poorestcountries on the planet.

The conflict in the DRC was linked to several other regional conflicts. After the 1994 genocide in Rwanda, the Rwandan army invaded the DRC to pursue militant groups responsible for the genocide.16 Ethnic conflict between the army, government-backed militias, and rebel groups continued unabated for years. Differentiating between government and militia groups grew murky as army leaders defected or switched allegiances. Nine countries and 40 rebelgroups were involvedin the DRC civil war. A UnitedNations report identified 617 violent incidents in the civilwar that were considered war crimes, crimesagainst humanity, and/oracts of genocide. The report also chronicled a climate of impunity with rampant sexualviolence and the unsettling prevalence of child soldiers. A tenuous peace was brokered in 2003, but the calm did not extend to the DRCs easternborder with Rwanda.

Rival factions continued to fight a proxy war in the DRC. The Rwandan and Congolese governments hadtried to brokera peace treatywith each other as well as with rebel groups,but a different rebel groupcame to power in the unstable region.18 A 2013 United Nations-brokered agreement officially ended the conflict.19 Despite the peace, the region remained extremely volatile. Rebel groups exerted influence and the preagreement climate of lawlessness persisted. Violence, starvation, and disease caused by the conflict led to 5.4 milliondeaths as of 2014.

The conflicts human toll was impossible to quantify and even more difficult to state in words. Millionsof people were forced to migrate because of ethnicity, with the United Nations reporting over 200,000 rapes from 19982013.21 The extraction of minerals provided three-quarters of the stimulus that fueled the DRC conflict, leading to the coiningof the term conflict minerals.

The constant state of violence severely impacted the governments ability to successfully protect its citizens and play a governing role in society.The World Governance Indicators Project, which measured the ability of national governments to effectively govern, ranked the DRC in the bottom 5% for rule of law, government effectiveness, and political stability in comparison with Finland, which ranked in the top 5%.

The eastern region of the DRC was one of the most mineral-rich regions in the world. Armed rebel groups accounted for nearly 35% of the countrys mining profits.24 Exhibit 2 shows the distribution of minerals in the DRC.

The four main conflict minerals were tantalum, tin, tungsten, and gold, also known as 3TG. Each mineral has a unique character, both in terms of use and extraction. Table 1 outlines the global amount of each mineral originating in the DRC, its total revenue generation, and the amount it contributes to the growingconflict. See Appendix A for information about 3TGs use in the technology industry and Table 2 for a breakdown of the percentage of global 3TG supplies used bythe electronics industry.

The DRC conflict has disrupted many industrial mining operations, leading to an increase in artisanal mining operations. Artisanal mining involved little or no machinery and relied on manual labor to dig narrow, deep, steep tunnels.25 Minerals from artisanal mines in the DRC passed through multiple intermediaries before exportation to a smelter.There were few smelters and sources of raw materialsavailable in the global market.

Once at the smelter,each shipment of raw materialwas mixed into a largerbatch with shipments from other sources. This led to a near-impossible scenario wherein the identification of the origin for materials became indecipherable. Smelters then supplied refiners, who sold the refined minerals to manufacturers, such as Intel. Mineralshad a horizontal supply chain with many actors and little transparency.

Since its founding in 1968, Intel has become the leading manufacturer of computer, networking, and communications products. In 2013, Intel brought in USD $52.78B in revenue as compared with the totalUSD $641.8B generated in the global semiconductor and electronics parts manufacturing industry.26 Thisaccounted for 8.2% of the industrys revenue and represented 7.3% of the market.

The other significant player in the semiconductor and electronics parts manufacturing industry was Samsung. Samsung accounted for 5.3% of the total market and had USD $41.7B in revenue in 2013,27 which was 5.5% of total industry revenue. Intels global supply chain included over 90 commodity products, over 16,000 suppliers, and nearly 500 supplier factoriesin 22 countries.28

Also in 2013, Intel had over 100,000 employees and offices in 66 countries.29 Interbrand named Intel one of the Top Ten Most ValuableBrands in the World in 2012,30 and Fortune magazine recognized Intel as one of the 100 Best Companies to Work For based on its employeetraining and development initiatives.

Social responsibility was a key pillar of Intels approach to business. According to the Environmental Protection Agency, Intel was the largest voluntary purchaser of green power since 2008.32 Community involvement was also important to Intel, as noted by the accumulation of 4 million employee volunteer hours over the last decade and its investment of $100 million annually in education throughout more than 100 countries.33 In its 2013 Corporate Sustainability Report, Krzanich states that he was especially proud of [Intels]leadership in the area of conflict minerals.

RESOLVE

RESOLVE, a Washington, DC-based independent not-for-profit, was founded in 1977 to promote the collaboration and consensusbuilding of public decisions to help diverse interestgroups engage in dialogue.35 The group was one of the pioneers in the institutionalization of dispute resolution techniques for natural resource, environmental, and public health issues.36 Its operations were funded through a combination of grants, donations, and earned income from fee-for-service consulting and innovative, solutions-oriented programs. The organizations work focused on themes of clean air and water, healthy people and communities, natural resource conflict, resilient ecosystems, smart energy, and sustainable development. See Appendix B for a sampling of projects engagedin by RESOLVE.37