CFO study: Cobalt is deficient
Since the beginning, cobalt has been used in the production of lithium batteries and a substitute has been sought since the beginning because of its high price, toxicity and safety reasons.
Cobalt, with lithium and other metals, is an ingredient of the cathodes in the cells of the most widely used batteries (e.g. NMC, NCA). Without it, the batteries would not have the performance we know.
However, cobalt is scarce and concentrated mainly in one country (to 60%), the Democratic Republic of Congo, the crisis state per excellence, where political insecurity, violence, exploitation and corruption prevail. Moreover, the processing of the minerals happens mainly in China, by far the largest producer of cobalt for batteries. All this makes cobalt very expensive and accounts for the unpredictability of its price. It is predicted that as of 2025, the demand for cobalt will double, so the supply capacity must be increased to meet the growth in demand. The alternatives for action: find a substitute, use less cobalt, explore recycling methods.
Part of the cobalt extracted in Congo comes from illegal small-scale mining, which is characterized by human rights violations, child labor and environmental pollution. In artisanal mining, children, about 40,000, are exploited and working conditions are disastrous: the raw material is extracted by hand, without any protective clothing with obvious health effects (see report by Amnesty International and African Resources Watch). Of course, it cannot be said that the battery market is based only on child labor. But if even a fraction of the cobalt comes from artisanal mining in Congo (about 20%) and today 30% of the world's production is for batteries, there is a risk that about 3% of the cobalt in a battery is dirty.
Since it seems unlikely that the local government will eliminate the problem of exploitation, the OEMs or automakers must actively eliminate the dirty raw material from their own supply chain.
Result of the survey (106 participants)
Amnesty International has proposed the introduction of a certificate attesting to the way cobalt is extracted. Do you think such an intervention could effectively counteract the problem?
