Fairphone now mass balances gold at the refinery rather than at component manufacturers © Fairphone
Fairphone now mass balances gold at the refinery rather than at component manufacturers © Fairphone

Fairphone overhauls ethical gold supply chain

20 September 2019

Phone maker Fairphone has revamped the way it buys ethical gold for its latest handset.

The gold supply chain for the circuit board in the Fairphone 3 took two years to set up and posed a quandary for the company.

In a blog Fairphone said gold is an integral but problematic material for the phone as mining the metal is rife with land disputes, unfair pricing, unsafe working conditions, child labour and pollution.

When Fairphone 2 was built the company developed the first pilot Fairtrade gold supply chain with circuit board supplier AT&S, precious metal refiner Valcambi and Fairtrade.

Key to the process was a mass-balance sourcing model, under which Fairphone separated gold from certified mines at the refinery level and then shipped it to component manufacturers, where it was then mixed with other uncertified gold.

Fairphone said that though mass balancing means Fairtrade gold doesn’t necessarily end up in a specific product, it increases the amount of ethical gold in circulation.

However it said shipping certified gold to suppliers was too costly and complicated, and for the Fairphone 3 it decided to mass balance the gold at the refinery level.

“For Fairphone to buy the gold directly from the refiner and subsequently shipping the gold straight to component suppliers changed the supply chain too much: it was too complicated, more costly and operationally inefficient as all suppliers based in China source through the Shanghai Gold Exchange (SGE),” said the company.

The move has meant the firm has been able to increase the amount of Fairtrade gold it buys, from 100g per year to 500g in the first half of 2019.

“By mass balancing the gold earlier in the supply chain and paying the premium directly to the refinery but allowing the Fairtrade gold to be sold and shipped as ‘regular’ gold through the exchange, we are able to increase the amount of Fairtrade gold we are buying, connecting it to even more component manufacturers sourcing their gold through the SGE, and ultimately impacting even more people,” said Fairphone.

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