Intel Steers Clear of 'Conflict Minerals'
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And I'm Audie Cornish.
The Consumer Electronics Show is best known for its whiz-bang gadgets and tech wizardry. But the world's biggest maker of computer processors, Intel, used its keynote speech to announce something different: That its processors are now free of so-called conflict minerals. They include tungsten, gold, tantalum, and tin found in everything from light bulbs to the smartphone in your pocket. But they're often sourced from war-torn countries, like the Democratic Republic of Congo, where mines have ties to armed groups.
Four years ago, the president signed a Conflict Minerals Rule into law. Companies now have to make public whether their supply chains are conflict-free, the deadline for them to comply is this spring.
Intel is the first American company to say they're already there. Their supply chain management director is Carolyn Duran. She's here to explain how they do it. Welcome to the program and tell us how this process works.
CAROLYN DURAN: Well, this is really focused in two manners. The first was to focus on the supply chain and understanding where those four metals were used. And once we knew where they were used, mapping down through the entire supply chain to figure out where those minerals came from. The second part of it was to identify the smelters as part of that supply chain, and to do third-party audits, or intel direct observations by visiting smelters. By those two methods we were able to accomplish our goal.
CORNISH: So help us understand, will there be enough supply. I mean essentially if you rule out certain smelters, is there going to be enough to make all the products?
DURAN: There will definitely be enough. Once we hit, I call it an inflection point, when enough smelters of a given metal have gone through, we've found that it's better - the smelters have found that it's better for them to be engaged and validation processes than to not.
CORNISH: Why, just because they need a guaranteed customer?
DURAN: Yes, that's where the supply chain pressure comes in. So if enough customers say I need to see some validation of conflict free sourcing before I'll buy from you, when enough are there saying yes, we offer that, those that are not begin to offer it.
And I can give you an example of that. In tantalum, which is the place where the electronics industry has the largest purchasing power - we're the largest consumer of tantalum - we saw in the beginning several that joined with us right from the beginning, saying this is the right thing to do, and yes, we'll go for it.
We saw a few that said oh, it's not my problem. I don't need to do this. And when customers said: You know, you have to validate this in enough customers said it, they actually changed their systems. Before that time, they just didn't care. They would just buy what was cheapest. After enough supply chain pressure came in, they did start to care and implemented those systems. And that's, for me, a very heartwarming - when we started I wasn't sure how this is going to play out. We were just doing our best effort. We saw smelters changing their behavior, to me that meant we were successful.
CORNISH: How can you absolutely be sure the source of each mineral?
DURAN: So we'll never absolutely be sure forever, right? We're testing in a point in time from the soldier for their materials that were transacted over the past year. So we'll be constantly monitoring. And if we do find issues, which we may, we expect to resolve them and get those taken care of as quickly as possible.
CORNISH: Now, how meaningful do you think this effort is - this law is - if essentially there aren't any penalties, right? I mean a company who comes to say: Yes, there are conflict minerals in our product, and they make that public. But, at the end of the day, they don't, you know, there's no consequence for that.
DURAN: That's true. I think the consequence will be coming from the public. And so, the law is a way for companies to be required to disclose what they're doing. And it will be up to the public and ultimately consumers to determine and highlight those that are doing the right thing and those that are choosing to turn away.
CORNISH: How significant or important is it for a company of your size to be doing this?
DURAN: I would imagine that it's pretty significant. We are a recognized brand so people will know of Intel and we also have a pretty complex supply chain. Even though this is focused on the microprocessor where we have large control, based on our manufacturing of these parts, it was still a significant challenge for us and took us several years to accomplish. So for us to stand up and say it was worth it that we did it, that it can be done, is pretty powerful.
CORNISH: Carolyn Duran, she is the supply chain management director at Intel. Thank you so much for speaking with us.
DURAN: Thank you.
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