BMW to buy cobalt to offset child mining fears

BMW will buy cobalt directly from mines in Australia and Morocco to ensure the metal purchased for its electric vehicles is sourced ‘responsibly’, according to the head of procurement at the German car maker.

The measure comes as the London Metal Exchange carries out a supply-chain review to address concerns that cobalt stored in its warehouses may be linked to child labour. The supply of the commodity, mostly mined in the Democratic Republic of Congo, faced scrutiny in recent years as humanitarian groups said that it is being produced in unethical conditions.

The newly sourced metal will be used in BMW’s next generation of electric vehicles that will be built from 2020, Andreas Wendt said at a briefing in Paris.

The company won’t buy directly from small-scale Congolese mines in the short-term, he said. Mines in Morocco and Australia “operate in line with our sustainability standards and there are no issues with working conditions such as child labour”, Mr Wendt said. Congo last year produced more than two thirds of the world’s cobalt.

While the commodity is mainly extracted from large industrial mines by companies including Glencore, about 17% is dug by hand by thousands of miners operating in the southeastern Katanga region, before being sold on to intermediaries, according to trading house Darton Commodities.

Glencore will supply cobalt to BMW from its Murrin Murrin mine in Australia, a spokesman for the mining and trading group said, declining to elaborate on volumes and other terms of the contract. This deposit is the largest source of mined cobalt in Australia, yet its production was less than a 10th of that from Glencore’s deposits in Congo last year, according to Darton.

The situation at non-mechanised Congolese sites, known as artisanal mines, is “simply not compatible with our sustainability standards”, Mr Wendt said.

Belgian battery-materials manufacturer Umicore said earlier this week that an inflow of cheap, artisanal cobalt from mines that use child labour is distorting market prices and putting the company at a competitive disadvantage.

- Bloomberg

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