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Using technology by IBM and overseen by responsible-sourcing group RCS Global, Ford and its partners are working to ensure that the cobalt used in lithium-ion batteries for electric vehicles has not been produced in conflict zones or mined using child labor.
“It’s step one,” said Ted Miller, Ford’s senior manager for energy storage strategy and research. “We still do auditing, we still do actual site visits, but this is allowing us to use and take advantage of technology,” he told Fastmarkets during an on-stage interview at the 25th Mining Indaba in Cape Town, South Africa.
A pilot of the scheme should be completed by mid-year and will track cobalt from Huayou’s mine and smelter to LG Chem’s cathode and battery plant in South Korea and on to a Ford plant in the United States.
“We realize there are risks we have to manage, so we really look at this holistically and ensure that any materials we use have accountability, and that you can demonstrate the accountability; that’s a commitment we made to our customers and to our shareholders, including local communities and employees like me at Ford,” Miller said.
But this is not the only step the company plans to take: Work is expected to be extended beyond cobalt into other battery metals and raw materials, including tantalum, tin, tungsten and gold.
“We really want this to be spread across all materials we use. Cobalt is the outstanding one that gets lots of press, but there are others we have concerns about and that we want to create this accountability for,” Miller added.
While he acknowledged that the supply chain is complex and that tracking it at every step could be difficult, Miller said he expected the initiative to motivate change throughout the industry.
“You’re running a risk if you’re trying to fool the system. We look at that as a key sourcing decision, so our suppliers have every reason to ensure they don’t lose our business too, and that flows throughout the chain,” he told Fastmarkets. “We’re not naïve to think it’s infallible. It’s just employing technology to try to do more, and ultimately when it becomes more, it becomes really hard to do anything in a dark corner.”
In October, the London Metal Exchange issued a position paper on responsible sourcing in which it said it would have the right to name and shame, suspend and even delist brands that fail to comply with its proposed responsible sourcing principles. Audits for cobalt and tin will be mandatory.
Cobalt in particular has hit the headlines in recent years, with concerns over child labor and poor working conditions in artisanal cobalt mines in the DRC, leading major original equipment manufacturers to step up pressure on producers to prove their brands complied with responsible supply chain guidelines.
Fastmarkets, the leading industry benchmark for the cobalt industry, includes brands by Vale Canada Ltd, Sumitomo Metal Mining Co Ltd, Jinchuan Group Co Ltd, Freeport Cobalt Oy, Compagnie de Tifnout Tiranimine, Chambishi Metals Plc and GEM (Jiangsu) Cobalt Industry Co Ltd in its assessment of the market.
It does not include the brand produced by Yantai Cash Industrial Co Ltd, which was established in 2002 and processes cobalt concentrate from Africa.
Fastmarkets assessed standard-grade cobalt metal around two-year lows in a range of $18.75-20.35 per lb, in-warehouse, on February 1.