However, a global partnership between suppliers and automakers — including Ford Motor Co. and Fiat Chrysler Automobiles NV — seeks to bring transparency to the origins of these raw materials. The goal is to give companies confidence in the responsible sourcing of its materials.
"Automakers can't afford to ignore this issue of human rights," said Caspar Rawles, a senior analyst at London-based Benchmark Mineral Intelligence. "Even if one gram of cobalt is mined by a child, they want to avoid this from an ethical and from a brand-management standpoint. Automakers need to work hard with the supply chain to ensure that doesn't happen."
Set to launch commercially in spring 2020, the Responsible Sourcing Blockchain Network creates a step-by-step digital record that tracks cobalt from mine to end-manufacturer. A typical electric vehicle battery requires up to 20 pounds of cobalt.
"The Responsible Sourcing Blockchain Network is going to help us focus on the problems and give us enough visibility, which we could not do in the past," said Sai Yadati, partner at IBM global business services, which powers the network.
Most of the world's cobalt — nearly 70% — comes from the Democratic Republic of the Congo in central Africa. The southern province of Lualaba is one the Congo's most significant cobalt mining areas.
Some 40,000 children in Congo work in cobalt mines, according to 2014 estimates from the United Nations Children's Fund.
"The level of unemployment is extremely high," said Cristina Duranti, director of the Rome-based Good Shepherd International Foundation, a Catholic organization that does work in education and job training in the country. "People have nothing else but extraction. It's more or less a gold rush. It's the cobalt rush."
While some industrial miners follow safety standards, they are in the minority, Duranti said. Some small-scale miners fail to ensure that workers are kept safe, and that labor by children and slaves is not used. Operations without sufficient security can be open to trespassers who do their own mining, which can put them at risk. Desperate families may scavenge leftover material piles, where they risk injury and work all day in the sun — often with small children.
And even at companies that work to ensure their materials come from responsible sources, cobalt from other sources may get mixed into the batch at refineries and other places down the supply chain, Rawles said.
The complexity of the supply chain and a lack of organization can make it a challenge for companies to ensure their materials are being responsibly sourced. Identifying the right contractors is a time-consuming, manual task, said Nicholas Garrett, CEO of Germany-based RCS Global Group, a founding partner of the organization that assesses supplier sourcing.
"It is a laborious process to trace the materials and seek information on the provisions," Garrett said. "We're physically in person in mines and factories where we apply a globally recognized framework and standard. This is really where the benefit lies in blockchain."
Blockchain is a decentralized public ledger that records online transactions. It's the record-keeping technology behind the bitcoin digital currency.
Equipment manufacturers and automakers pay into the consortium for access to the digital record that tracks the cobalt as it moves through the supply chain. Participants in the network are required to commit to guidelines outlined by the intergovernmental Organization for Economic Cooperation and Development, which include worker safety guidelines, environmental protection requirements and the prohibition of child and forced labor. RCS Global assesses the members annually.
For now, the network focuses on large-scale mining operations that account for about 80% of the cobalt production in the Congo. A pilot program launched in January traced the supply of cobalt produced at the industrial mine site of China's Huayou Cobalt Co. Ltd. there to South Korea's LG Chem Ltd. and Ford.
Ford referred comments on the project to IBM.
Fiat Chrysler and Switzerland's Glencore PLC, which has cobalt mines in Congo, said last week they were joining the consortium. The partnership allows Fiat Chrysler "to better manage the social and environmental impacts of our business," Carl Smiley, chief purchasing and supply officer of the Italian American automaker, said in a statement. All of the Detroit Three are members of the Responsible Minerals Initiative, which offers companies resources on responsible mineral sourcing.
In 2020, IBM and RCS are looking to add incentives for small-scale miners to join the network. That would be significant for the region's economy, because what is mined by hand that day can put dinner on the table for families employed by these operations, Rawles said.
The partnership may be a step toward addressing humanitarian and environmental concerns in the Congo, but some like Duranti say it is insufficient because it does not address the socio-economic challenges that lead to unethical labor practices.
"Saying it is just responsible to know it comes from a sanitized extraction site is not sufficient," Duranti said. "It reduces the risk (for companies), but it's not human rights-based. There should be a serious commitment and investment into the communities and environment overall."
Some companies already have made those investments: The Good Shepherd foundation partners with Daimler AG on community development in the Congo, including education and farming initiatives. The foundation along with Volkswagen AG and AB Volvo, which are members of the responsible sourcing network, also are part of the World Economic Forum's Global Battery Alliance, which works to find solutions for sustainable cobalt mining and the root causes of child labor, including poverty and limited opportunities.
One day consumers may be able to know from where the cobalt in their vehicle comes. IBM and RCS want to expand the network to include other consumer products like laptops and smartphones; other minerals such as mica, tungsten, tantalum, tin and gold; and recycled metals.
"Blockchain as a technology is not going to solve ... the human rights violations," Yadati said. "It will help us surface the issues, which helps us put the right standards and necessary governance around it."
©2019 The Detroit News. Distributed by Tribune Content Agency, LLC.
