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A blog about economics in the South Caucasus.

Does Your Smartphone Make You an “Unconscious” Villain?

Our dependence on smartphones can hardly be described as anything other than addictive. We invariably use them to document trips and thus to have the world at our fingertips. Though, these precious little gadgets have a dark history that we, as consumers, unconsciously support. Unfortunately, we will not be able to discuss in detail all the negative impacts within the supply chain of smartphones. Nonetheless, we wish this article to serve as an awakening, and a reminder, of what we as consumers are promoting. Moreover, what we - and governments - could do to avert some of these negative impacts.


HUMAN RIGHTS VIOLATIONS RELATED TO COBALT MINING

Cobalt, copper, silver, gold are examples of indispensable components within smartphones. Cobalt is used in every rechargeable lithium-ion battery and it is a central component in electronic vehicles and jet engines. More than 60% of the world’s supply of cobalt is acquired from mines in the Democratic Republic of Congo (DRC). While approximately 20% of this supply is mined by locals (ca 255,000 locals are employed in the DRC, as documented by a Guardian journalist), the vast majority is mined by foreign-owned industrial companies, among which Chinese ownership maintains the lion’s share. The heterogenite stone, where one finds cobalt, is rinsed in lake water by the locals and thereafter purchased by traders. The cobalt is then refined, in order to produce cobalt hydroxide, which is subsequently exported to China. Major component manufacturers and well-known electronic companies across the globe then purchase the refined cobalt from China in order to make the phones that consumers crave. In the DRC, both adults, and children as young as four years old, are employed in the extraction process. The standard procedure is to dig for the stone with their bare hands; with no protective gloves or safeguards. As a result, the locals breathe in the residual dust and are exposed to a hard, gruelling environment, often for over twelve hours and earning only around 0.10 - 0.65 USD per day. Additionally, far too frequently tunnels collapse and bury workers alive. Cobalt mining also has an impact on new born babies, who are regularly found with infections and rashes covering their bodies, as confirmed by a doctor interviewed by the Mining Review Africa in January 2019.

Exposed by an Amnesty International report from 2016, the supply chain of major companies, such as Apple, Microsoft, Samsung SDI, and Sony, among others, admitted to implementing little monitoring, which is facilitated by poor governmental regulations in the DRC. A follow-up study in 2017 by Amnesty international indicated that human rights were still being violated. For example, while Samsung SDI and Apple have been credited with stepping up their efforts in improving their supply chains, for which they are considered to have taken adequate action, the majority of the 20 reviewed companies were found to have taken minimal or no action. Although major phone suppliers have been making greater efforts in recent years to clean up the supply chain (UN Environment, 2019), there are still major concerns that need to be addressed with regard to various environmental and economic characteristics.


THE ENVIRONMENTAL COST

In addition to requiring the substantial use of fossil fuels, industrial mining and the processing of metals leads to heavy environmental pollution (2018) in nearby communities. Electronic devices have negative environmental impacts, even at the end of their lifecycles. In developing nations particularly, utilizing landfills as dump sites for waste has grave consequences as they leak toxic substances. But they have also consequences on landfill workers. The electronics industry generates approximately 41 million tons of waste/year. Shamefully less than 16% of the volume is recycled, despite the fact that e-waste is, quite literally, a gold mine. UN Environment reveals that 300 tons of gold are used each year in electronic devices, some of which could be reused for other products. As noted by the American Electronics TakeBack Coalition report (2014), recycling one million mobile phones would salvage as much as 24 kg of gold and more than 9,000 kg of copper. Throughout the world in 2016, the estimated worth of the 435,000 tons of discarded mobile phones amounted to 10.7 billion USD in the cost of raw materials, as defined by the UN Environment. Accounting for the second-hand market could push that estimate even higher. Nevertheless, recycling is not occurring to the same extent as the development of newer devices, those which the market craves, often leading to fully functioning phones being wasted.


THE GEORGIAN PERSPECTIVE

Georgia does not yet have a unified national system to deal with old mobile phones, be it by recycling devices for further use or disposing of them following internationally accepted standards. Furthermore, the country lacks any official statistics of electronic waste, nor are there any specific landfills for such waste.

Despite these factors, there are certain options for the recycling or reuse of mobile phones. For example, there are secondhand Georgian trade websites like Mymarket.ge or Extra.ge. People use them to sell old electronics, where sellers post notices with photos of their old devices and specifying further contact information. Buyers can pick and choose their ideal phone. Moreover, small-scale financial institutions, notably pawnshops, offer people the option to leave their old smartphones as a guarantee for borrowed money. Often these devices remain in pawnshops uncollected, leaving their final destinations uncertain. It is likely that these phones, along with other discarded technology, culminates in unofficial small electronics stores specializing in, for example, the repair of phones from spare parts. In addition, authorized resellers for Samsung and Apple in Georgia have recently initiated a trade-in promotion. This offers consumers the opportunity to replace their old phone, depending on its condition, with a new device for a discounted price.

Obviously, this is not enough. As in many situations, there are two clear options for governmental intervention: the command-control and market-based policies.

Under the command-control policy, Georgian authorities could rely on regulations (permission, prohibition, standard setting, and enforcement) to prevent and sanction dangerous behaviors and practices. While its logic is straightforward, this option would require the strengthening of national legislative and control measures by establishing the required competences and resources for law enforcement, in order to be in line with the best international practices. Capacity building for the entire enforcement chain would also constitute a significant component within the successful implementation of the policy.

Whereas, incentive-based mechanisms would instead attempt to affect individual choices by rewarding desirable behavior and by making undesirable choices more costly. For example, additional fees could make the acquisition of new smartphones more expensive, while the revenues could be used to reward proper disposal practices. This process could be performed alongside the introduction of extended responsibilities for producers, with manufacturers of electronic appliances (and, indirectly, consumers) covering the costs associated with the proper handling of devices at the end of their lifecycles. This policy also includes a certain aspect of the command-control mechanism, as under this system, the legislation compels entrepreneurs to take responsibilities for the recycling and financing of such schemes.

Regardless of governmental choices, actions from non-governmental organizations and other stakeholder to help build awareness of the massive health risks associated with electronic waste, and the importance of recycling and well-managed waste segregation would be ideal.


ARE THERE ANY SOLUTIONS?

As we have already mentioned, some solutions can be driven by governments, through tougher regulations and stronger financial incentives, as well as targeted awareness campaigns to help affect consumer and producer behaviors. As consumers we can, for example, buy fairphones, developed with the intent of minimizing negative social, economic, and environmental impacts. We can also delay purchasing replacement devices and make sure the old models are disposed of properly.

Improved technological processes and increased mining costs can also help. Innovative solutions, like harvesting cobalt from depleted lithium-ion batteries, are on the rise, exemplified by American Manganese. The recent price spike in cobalt/ton has lead Panasonic, a supplier for Tesla, to phase out cobalt in their batteries.

Therefore, a combination of increased consumer awareness and technological change might improve the situation, as might developing and developed countries increasing their efforts and placing more emphasis on minimizing the negative impacts of “smartphone frenzy”, through the appropriate use of economic instruments and standards. Nevertheless, a significant amount of responsibility remains on the consumer. While it is true that our beloved smartphones do have momentous negative impacts, there is much we can do to help minimize these effects.


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Tuesday, 22 October 2019

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