Apple Inc. (NASDAQ:AAPL), the beloved maker of addictive gadgets, says it is using gold mined in Uzbekistan, one of the world’s most notorious human rights abusers, in some of its most popular products.
The disclosure follows new American legislation requiring US-listed companies to reveal supply chains to show they are not using “conflict minerals” – tin, tantalum, tungsten and gold – that have helped fund Congo’s never-ending war.
According to Apple’s May 29 Specialized Disclosure Report to the US Securities and Exchange Commission (SEC), last year the California-based company used gold from Uzbekistan’s Almalyk Mining and Metallurgical Complex and Navoi Mining & Metallurgy Combinat. Gold from those companies could have ended up in “Apple’s iPhone, iPad, Mac, iPod, Apple TV, displays, and accessories,” the disclosure said.
“The ethical sourcing of minerals is an important part of Apple Inc. (NASDAQ:AAPL)’s mission to ensure safe and fair working conditions in its supply chain. Apple is determined to use ‘conflict free’ minerals in its products,” Apple said in its SEC filing.
The new SEC reporting requirements affect some 6,000 US-listed companies, Forbes reported last month. The SEC estimates the extra due diligence will cost these companies between $3 and $4 billion this year and $207 to $609 million annually afterward, Forbes said.
While Apple is not breaking any US laws by using Uzbek gold, the revelation that it is sourcing its gold in a country holding thousands of political prisoners, where torture is “endemic” according to Human Rights Watch, and where up to a million people are forced to pick cotton each fall, could prove embarrassing.
“There is no prohibition against using conflict minerals, but increased transparency raises reputational risk to companies that do,” Forbes said.
In order to obtain a “conflict free” label from the SEC, Apple will have to submit more detailed information on how it sources its gold.
Uzbekistan’s mining industry is veiled in secrecy, plagued by constant disputes between increasingly wary foreign investors and the notoriously opaque government.
Western companies have certainly not had much luck in the country, which is the ninth-largest gold producer in the world, according to the US Geological Survey.
In 2006 following the US criticism of Tashkent’s suppression of a protest in Andijan the previous year, Uzbek authorities brought tax evasion charges against the US-Uzbek gold joint venture Zarafshan-Newmont.
And in 2011, following sustained pressure (including the imprisonment of a company metallurgist for 12 years on espionage charges), UK-registered Oxus Gold agreed to sell its 50-percent stake in the Amantaytau Goldfields operation to its Uzbek partners. Oxus is now locked in litigation, seeking $400 million at international arbitration over what company lawyer Robert Amsterdam has bitterly described as “an ongoing campaign to fabricate a reason to steal the last foreign assets in the mining industry in Uzbekistan.”