Ethical strategies for cobalt supply

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Modern nickel-manganese-cobalt (NMC) battery cells contain between 100 and 360 grams of cobalt per kilowatt-hour of capacity. However, since a report by Amnesty International was released in early 2016, cobalt mining has been the focus of media attention. The report showed that children were involved in mining the metal in the Democratic Republic of Congo (DRC) and that miners without protective equipment were risking their lives tunneling in hand-dug mine shafts.

At the end of 2017, Amnesty International confirmed that the situation had improved, but it still saw significant gaps in due diligence. Its conclusions led to headlines such as “People die here for our electric cars.” For companies in Germany that use battery cells containing cobalt, this was an opportunity to take a closer look at their supply chains, uncover weak points, and decide for themselves how to deal with the shortcomings of mining operations.

These companies managed to counter the image conjured up by sensational headlines. Articles and television reports often give the impression that cobalt is extracted exclusively by poor miners and their families from deep, dark, and dusty holes at the edge of slums.

But this is only a small part of the story. Cobalt deposits are generally present alongside copper or nickel. The DRC, in particular, is home to many such mining operations. “Copper has been mined there since 1924, most of it from industrial open pit mines,” says Philip Schütte from the German Federal Institute for Geosciences and Natural Resources (BGR). Large mining companies, including partly state-owned and foreign companies, have been granted concessions, often covering hundreds of square kilometers, in which copper and cobalt are mined with large machinery and comparatively few workers. There is occupational safety and access control, which effectively rules out the use of child labor, according to Schütte’s assessment.

The real problem is small-scale mining. In April and May 2019, a team from the German institute traveled through the provinces of Haut-Katanga and Lualaba to conduct a study with employees of the Congolese mining authority and representatives of civil institutions. They visited 58 small mines, most of which are operated illegally on the outskirts of large mining operations.

Vicious cycle

The Democratic Republic of Congo sits on an estimated 48% of the world’s cobalt reserves, and in 2017 it met about 60% of global demand. According to BGR estimates, 10% to 20% of this 60% currently comes from small-scale mining.

Since these mines are mostly illegal, the miners are trapped in a vicious cycle. They are at the mercy of the authorities and can work only when tolerated by concession holders. When selling their ore, they have to bend to the dictates of dealers, who often advance funds. There are also frequent and often fatal accidents in the deep shafts. Child labor is a direct consequence of this precarious situation. If the miners’ families do not have enough money to pay for school, they have to take the children to work to supervise them.

The field research team found an estimated 2,500 children in 17 of the 58 mines they visited. The children worked in 11 mines, collecting and sorting ore and helping to wash it. The observers often found it difficult to tell whether the children were forced to work or were only present, either because their parents were working there or because the mine was located in a residential area. In one case, however, the team discovered 120 children who clearly had been forced into hard labor.

Avoidance and solutions

So how do companies that manufacture and use battery storage systems deal with this situation? Essentially, they are pursuing three strategies. The first is to forgo the use of cobalt from the Congo. This is possible because industrialized countries such as Canada and Australia also mine the raw material. But companies pursuing this strategy are highly constrained by the fact that these countries have a smaller share of the world market and that the volume of cobalt they mine depends on demand for copper and nickel. In addition, cobalt from these countries is processed in closer proximity or together with cobalt products from the Congo, if not in the same smelter, then it is at cell producers in South Korea, China and Japan.

From Amnesty International’s point of view, however, avoiding raw materials from the DRC and from small-scale mining is not an effective solution, either. “Of course, companies have to pull out of a market if they are unable to comply with their due diligence obligations,” says Lena Rohrbach, an expert in business and human rights at Amnesty International in Germany. This is the case when proceeds from a mine in a war zone are used to finance the conflict, for instance.

In the DRC, however, due diligence requires companies to use their influence to improve the situation for miners and their families, ensure safety standards, and prevent child labor. After all, more than 100,000 people are dependent on cobalt mining for income. In addition, the due diligence obligations under UN principles call for reparations to be made for human rights violations that have been committed in the past.

A second strategy – using only cobalt-free batteries – is only a partial solution. Cobalt is used in lithium batteries to improve stability and longevity at high power levels. Cobalt-containing batteries are both comparatively light in weight and space-saving. These qualities are also why cobalt-based NMC and NCA cells are the first choice for laptops and mobile phones.

Other options include lithium-iron-phosphate cells, salt, or redox-flow batteries, which can be used in applications where size and weight is less important. In the end, however, the type of cell selected is based on the characteristics of the battery-storage system itself.

Holistic approach

A further consideration is that cobalt is not the only problematic battery material. In the extraction of lithium from brine, large quantities of water are pumped out of the ground (see page 60). In areas where water is scarce, such as the desert regions of Chile, Argentina, and Bolivia, this deprives farmers of their livelihoods. Depending on the location and climate, assembling battery components in dry rooms consumes large amounts of energy, which in the case of China is often supplied by coal-fired power plants.

Copper also has a large environmental footprint and may originate from small mines in the DRC if the supply chains are opaque. “If you condemn one raw material and continue using the rest as before, you’ve gained nothing,” says Thomas Timke, a battery expert at German supplier Solarwatt. “That’ s why we’re helping to develop assessment procedures at the national and EU level, and we only work with companies that share our values.”

The third strategy for dealing with cobalt – responsible mining and the reduction of demand through subsequent recycling processes – has the greatest potential, according to experts from NGOs such as the Raw Materials Working Group. The tools for solving the problem are already available, because similar problems have already arisen with other raw materials. The purchase of so-called 3TG raw materials – tin, tantalum, tungsten, and gold – is regulated by the European Conflict Mineral Ordinance, which was passed in 2017, years after it was first announced. The ordinance establishes standards and obliges companies along the entire supply chain to obtain certification. Certified supply chains already exist for these raw materials, and the BGR has been supporting national authorities for 10 years in the course of German-Congolese development cooperation, in order to strengthen controls along these supply chains. “There was considerable resistance at first,” says Schütte. “And the difficulties have not yet been worked out.” But there has been significant improvement, he says. “The groundwork for tantalum is now showing up in the cobalt sector,” explains Schütte. “We’ re seeing an awareness of the problems among many of those responsible and can have much more productive discussions.”

Known methods

Car and cell manufacturers can also apply OECD due diligence guidelines to their cobalt supply chains. One supply chain criticized by Amnesty International, for example, was one that led from Congo Dongfang International Mining – a subsidiary of the Chinese Huayou Group – to LG Chem and from there to vehicle manufacturers and makers of stationary battery storage systems. Material from the group’s major mines as well as raw materials from intermediaries on the free market entered the Korean company’s supply chain.

Since 2017, LG Chem has therefore had Congo Dongfang and Huayou audited, in accordance with the OECD guidelines, and has itself been audited by German car manufacturers. It has imposed a code of conduct on suppliers that it inspects, and it has also secured more direct access to mining conditions by purchasing shares in Congo Dongfang.

Huayou, on the other hand, has introduced additional structures and management processes and is working to prevent the smuggling of cobalt into the supply chain from major mines. Only sealed trucks directly from audited mines are accepted at the company’s depots in the DRC, auditing service provider DNV GL said in a 2018 report commissioned by LG Chem. “But even certificates don’t provide 100% percent certainty,” says Jörn Jürgens, director of energy storage systems at LG Chem Europe. “That’s why we make sure that a portion of the profits is spent on local projects. That’s part of our policy.”

Cooperation with small mines has also been explored. For example, manufacturers and suppliers finance RCS Global’s Better Mining Initiative. RCS Global specializes in helping build responsible supply chains and monitors small mines. It has field observers who record incidents daily using a smartphone app and it monitors risks from seven categories, explains Nicholas Garrett, CEO of RCS Global. The information will be made available to participants in the supply chain. “This monitoring generates much more data and is, therefore, more helpful than random audits, which hardly do justice to the dynamic environment of a mine,” he says.

It should be noted that the scheme initially serves to improve transparency. It allows conclusions to be drawn as to which measures pay off and which do not. This is good for the miners involved, while the companies receive export certificates and can use the data to enhance their image.

To make sure that this is not just a fig leaf, however, action is now needed from policymakers. After all, a handful of inspected mines is not enough to change the sector. The greater danger is that these monitoring activities will wither in the face of unfair competition, to the detriment of committed companies and waning public attention. Policymakers must create an environment that enables companies and obliges them to roll out existing solutions on a broad scale.

“Corporate due diligence obligations should not be voluntary; they should be prescribed by law,” says Amnesty International expert Lena Rohrbach. But even the comparatively small step of including cobalt in the EU’s conflict minerals regulation is not considered likely.

This is another reason why recycling should not be ignored. Between 96% and 99% of cobalt can be recovered and reused. Once rapidly increasing demand has been met, a closed-loop economy could be feasible.