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The Playstation War: Conflict Minerals and Video Game Manufacturing
by Barbara Jones on 04/18/13 02:29:00 pm   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutraís community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Tin, tantalum, tungsten, and gold (3TGs) are minerals commonly found in an array of electronics including video game consoles and components. These minerals, which have been termed “conflict minerals,” are being mined in the Democratic Republic of the Congo (DRC) and used to fuel what has become the deadliest conflict since World War II. In fact, gaming consoles and conflict minerals are so closely linked that some refer to the decades-long conflict in Congo as the “Playstation War.”

Enter the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, in which a provision in Section 1502, ordered the U.S. Securities and Exchange Commission (SEC) to develop rules that force companies to disclose the origin of their minerals. Diligence efforts are not confined to SEC issuers, with supply chain participants deeply involved in determining and certifying the original source of supplies of 3TGs, and their numerous derivatives, sold to their customers.

Central to the application of the SEC rule is whether a conflict mineral contained or used in a public company’s product and “necessary to the functionality or production of a product manufactured or contracted by that registrant to be manufactured” originated in the DRC. 

The Electronics Industry Takes Action

Some game console manufacturers have made a great deal of progress on the issue, and electronics giants such as Microsoft, Intel, Motorola, and HP engaged early on by developing compliance policies and procedures. Nintendo, which has been viewed by many as slow to get on board, recently stated that all production partners have taken steps to comply with Nintendo's guidelines, and that Nintendo "obtained individual confirmation from each production partner that they agree not to use conflict minerals."

Impact on Video Game Manufacturers and Components Suppliers

The SEC regulations impose a three-stage procedure that applies to public companies. Under the new rule, public companies must determine whether they use any metal sources designated as "conflict minerals." If they do, they are obligated to conduct due diligence to discover the origin of those minerals. If those minerals are not found to be from the DRC, or are from a government controlled mine in the DRC, they can label their products "DRC Conflict Free."

If the minerals come from rebel-controlled mines, or the company can't determine the origin of the minerals, it cannot use the "DRC Conflict Free" label. Regardless, public companies must publish a Conflict Minerals Report that is reviewed by an external auditor, and they must disclose those findings in their annual report.

Failure to comply may result in loss of S-3 eligibility, SEC enforcement proceedings and/or shareholder litigation, not to mention adverse publicity from shareholder activists or humanitarian groups. 

May 31, 2014 is the current SEC-mandated compliance date for companies to file their initial conflict minerals disclosure on Form SD for the calendar year 2013 and, if necessary, an independently audited Conflict Minerals Report.  Companies are advised to start the process now, since the diligence process required for compliance will be long, expensive and arduous.

Unfortunate Consequences along the Supply Chain

An interesting consequence of the mandated diligence and reporting is emerging: some companies are seeking to impose requirements in their supply contracts to ensure 3TGs are not sourced from the DRC at all or are considering alternatives to these minerals in the manufacture of their products.  Many U.S. and non-U.S. companies along the supply chain, whether public or private, remain at risk of losing business if they are unable to provide the requisite certifications to their customers.   In addition, some companies are using this exercise to streamline their operations by reducing the number of suppliers they engage and by reorganizing internal operations to minimize functional overlap and rethink product specifications.

Video game companies must push forward with their diligence and compliance efforts, using this as an opportunity to rethink certain aspects of their operations and derive efficiencies where possible.  Ironically, in this case, it is likely that any humanitarian benefit will be merely a footnote.


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Comments


Lihim Sidhe
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The fact that this article won't be the most heavily discussed in recent weeks implies that however this conflict is linked to video games, it won't garner enough attention to make a difference until electronics become a luxury for the fortunate few.

Justin LeGrande
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The reason why almost no one concentrates on issues like these is because it reveals the true depth of one's humanity. Who TRULY wishes to evaluate their own humanity with EVERYTHING they do? Not very many people.

Perhaps one might be willing to help out a neighbor in trouble, but are they willing to go far enough as to advocate the prevention of someone else, who lives halfway across the planet, from being exploited, instead of buying a new tech gadget without caring about the process of how it arrived to them?

When it comes down to it, almost no one alive today is truly virtuous.

Lihim Sidhe
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Firstly I wish the commenting system was better on this site. Disqus is an option.

Secondly, you're absolutely right Justin. The entire foundation of our modern, first world, lifestyle rests on the sacrifices of those not as fortunate as us all the while depleting finite resources from a world that becomes increasingly corrupt both environmentally and spiritually.

I'm really examining my options to exit the Army and pursuing the path that lays between a game and web designer. However, I really SHOULD be going to school for agriculture or something similar so I can live in harmony with my environment in a self-sufficient manner. Eschew everything to do with the modern world and become an ascetic living off of soybeans high up in the mountains.

Of course I am not going to do that. My compromise in lieu of what Bruno Xavier said, "Someone could make a game out of this...."

Someone could, someone should, and someone will. ;)

Ramin Shokrizade
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I'm a bit surprised that this rider made it past our legislature at all. It seems to favor the government over the rebels in the DNC. I don't know enough about the conflict to know why we are taking sides. On the other hand, I could care less if we ran out of oil (I'm a walker) but I probably would take up arms if I could not get computer parts :) Maybe the DNC will end up on our "next to be invaded" list.

Karla Colonnieves
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Then please wake up and learn about the conflict. First, it's not the DNC, it's the DRC. Second, this is not a political thing, it's not a question of whose side to take. These are human rights abuses we're talking about. The DRC has been called the "rape capital of the world," as rebels use rape as a main weapon to instill fear in communities. The rebels fight for control over these mines that provide the minerals in our technology, using slaves to do the mining. The rebels are kidnapping children, forcing them to kill their parents, and taking them captive as child soldiers or brides for the militia. The US has already sent troops to the DRC to try to hunt down Joseph Kony, leader of the LRA (one of the rebel groups), but he hasn't been found. The conflict in the DRC has killed an estimated 5.4 million people since 2006. You really don't care whether your computer parts are contributing to this or not? Please wake up, and think before you post something so ignorant. Do some research;it's not that hard. http://www.enoughproject.org/conflicts/eastern_congo

Bruno Xavier
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Hey, someone could make a game about this...

Clifford Roche
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That Apple could then censor

Michael O'Hair
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Maybe throw Apple Inc. some free press by titling the game "iWar" or something similar, without the hyphen so as not to confuse the game with the Atari Jaguar game of the same name.

Apple can't censor it if it's not on their app store...

Justin LeGrande
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This is an article which seeks to get the ball rolling on unveiling the military-industrial complex at work, which is destroying this planet from the inside out. I applaud Ms. Barbara Jones for concentrating on this issue.

This issue gets my blood BOILING. I hate not being able to always know where the materials for the things I buy are sourced from. I have made it a point to buy food and goods which are sourced from local artisans or fairly traded sources as often as I can.

Even if not many people are talking about this issue, it is indeed a part of one of the most important issues in all of human history. I do not jest when I say that. Any and all compliance with what is happening from those who run the businesses and governments that knowingly source their materials from slavery is monstrous. This goes beyond shame- anyone who knowingly participates as a merchant on this issue has forfeited their humanity.

I don't want to use devices which came from such dire circumstances, but there is a philosophy which I use to explain my own hypocrisy- if I take care of the product, do not knowingly buy from unfair sources, or at least treat the product of someone else's hard work with respect, without trashing it so easily, then that is the first step to circumventing the military-industrial complex.

I have volunteered for over 3 years now as a recycling and testing agent for computers. I have done my fair share of sorting to do my part to prevent E-waste, and to be a part of bringing the sorry state of these minerals, forged into metals, full circle, to once again be crafted into something which might be useful to someone who needs it... or at least, I always hope that's how they are used... the plastics are not such an easy matter...


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