With the increasing focus on electric vehicles, demands for cobalt – a key raw material for producing batteries are growing. There is a grim and dark truth behind the global cobalt supply chain. This leads to the question are electric vehicles really green?
If the global auto industry is witnessing the next major shift in this decade, that is its ditching good old internal combustion engines and making way for the greener and zero tailpipe emission electric vehicles. There are debates about the true green status of electric vehicles, but that is from a different perspective of the energy generation process. But, it is not only about how the energy is being generated for the electric vehicles but about where the materials are coming from as well.
In 2016, when Amnesty International report ‘This is What We Die For’ outlined the gross violation of human rights in some of the cobalt mines, stakeholders of the global EV industry among others started showing interest in the matter. Before that, EV batteries’ prime raw material lithium used to be the sole point of attention for the investors. However, the Amnesty International report suddenly shifted the focus of the investors to the cobalt supply chain. Many didn’t know that cobalt is another key raw material for manufacturing batteries for electric vehicles.
The report identified the salient risks involving child labour and forced labour as contributing factors to investment decision making in this segment. The good thing is some small groups of investors such as Robeco, APG, MN and Federated Hermes worked with the Principles for Responsible Investment (PRI), an UN-supported network of investors with more than $100 trillion assets under management.
PRI established an investor project to address human rights issues in the supply chain. The PRI came with two investor guides and set out expectations for the downstream companies to manage their supply chain in a better way. They focused on responsible sourcing practices and the role of investors in promoting them. But there is a catch. It is not yet known whether the electric vehicles are clean from bloodstained cobalt or not, even though the industry stakeholders vow to promote responsible sourcing practices.
It is not only about electric vehicles, but the tech industry too is linked to this crisis. Cobalt is a key material for manufacturing batteries for not only electric vehicles but smartphones and batteries for several other gadgets as well. In fact, companies such as Apple, Google, Tesla have been named in a US lawsuit over the Congolese child cobalt mining death issues.
Over 70% of the world’s total cobalt production is attributed to Democratic Republic of the Congo.
With the demand for batteries increasing rapidly, due to the increased concern around global climate change, electric vehicles are finding a stronger footprint every year. Hence, cobalt and other battery materials are coming into the spotlight, with their demand increasing multifold.
While automaker like Tesla is leading the way, legacy auto brands such as Daimler AG, Volkswagen, General Motors, Ford, BMW, Audi, Jaguar Land Rover have announced their respective ambitious electric vehicle production targets. According to a forecast made by IHS Markit, battery electric vehicle (BEV) production is expected to reach more than 35 million units globally by 2033.
Blood diamond moment of DRC
More than half of all cobalt reserves are located in the Democratic Republic of the Congo (DRC). The dependence on production is even more pronounced, with over 70% of the world’s total cobalt production is attributed to the African country.
Around 15%-30% of the Congolese cobalt is produced by the artisanal and small-scale mining (ASM).
Around 15%-30% of the Congolese cobalt is produced by the artisanal and small-scale mining (ASM) sector. Several human rights groups have documented severe human rights violations for years in these cobalt mines in DRC. The country is devastated by a poor economy due to several problems including violent ethnic conflict, Ebola pandemic, and high levels of corruption as well. The absence of strong laws has failed the cobalt mining sectors from engaging in child labour practices.
The child labours not only die and get injured from fatal accidents but due to the recurrent violent clashes between the artisanal miners and security personnel of large mining firms. While the world community have learned about these issues, they have been facing problem in shutting the down the ASMs.
These ASMs are the lifeline for millions of Congolese who live in extreme poverty. Cutting these ASMs out of the cobalt supply chain will directly impact these people, which is not desired. Also, shutting down the ASMs is not feasible due to the interwoven nature of the cobalt supply chain as well. Environmental, social and governance (ESG) issues are critical factors in the global cobalt supply chain, due to the mining conditions in DRC, especially in the ASMs.
How ASMs work?
Most of the cobalt is mined by large scale mining (LSM) firms. But a substantial amount of global cobalt mining is attributed to the ASMs as well. According to an estimate in 2020, 78% of global cobalt extraction was derived from LSMs, while 12% was derived from ASMs and the rest of 10% from recycling. Clearly, the ASM output is highly sensitive, even if we keep away the factor of the employment generation in DRC.
Human rights violation
The unorganised ASM sector practices the old way mining method. Mining is carried out manually with handheld tools. This leads to significant health and safety risks for the labourers. A large number of the workforce in these ASMs are children who come to work in these mines either by force or driven by poverty. The risk of injury, fatalities is much higher among these child labourers. Also, the fierce fighting between the different ASMs and with LSM security guards results in the deaths of many labours, a significant number among them are children.
There is another angle as well, which results in human rights violations in these ASMs. The ASM production of cobalt is highly sensitive to prices. In 2018, when cobalt prices surged, ASM’s share of global cobalt extraction increased substantially. This was achieved by the means of longer working hours for sure. Estimating the production volume or the worker numbers in these mines are very difficult as most of the ASMs are operating illegally.
What can be done to make electric vehicles truly green?
Some companies have started experimenting with these ASMs. They are trying to formalize the ASM operations by introducing regulated mining methods and working conditions. Some are in the planning phase while some have started implementing the regulated methods.
These projects show that ASM operations can be carried out in a more responsible way, slightly minimising the profit levels for the owners. While it may be tempting for the companies to adopt an LSM-only cobalt mining process, considering the risks and negative publicity associated with the ASMs. But, that will hurt the poverty torn country’s economy in the longer term. Artisanal mining is an important source of income for impoverished communities in the African country and excluding them from the global cobalt supply chain will exacerbate poverty.
Also Read: Smaller electric vehicles to reach price parity with ICE counterparts by 2028
