With the world moving towards green solutions, European Union’s latest efforts to ethically source cobalt is facing headwinds that can make the key battery metal expensive for automakers looking to make the switch to electrical vehicles, reported Bloomberg.
Reports have expressed fear that in the Democratic Republic of Congo, where most of the world's supply for cobalt comes from, the exploration of the metal may lead to exploitation and damage the health of people and the environment. The regulators, meanwhile, are looking for ways to help the industry avoid damaging its reputation.
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However, experts fear the rules and "ambitious requirements might currently be too difficult". A report published by Elsevier Ltd’s Resources Policy journal in June even suggested a tightened market for responsibly-sourced cobalt.
"If, as proposed by the European Commission, due diligence on cobalt supply chain will be mandatory for batteries sold in the EU markets in the near future, the demand for the responsibly sourced cobalt will increase rapidly," Bloomberg quoted the study prepared by the EU’s Joint Research Centre.
Another fear is the rise in child labour, as most of the industrial miners for cobalt in Congo often work in dangerous conditions.
In Congo, which produces almost three-fifths of the world’s cobalt, miners had complained of low wages and mineral prices for reasons of dispute. The report also added that few Chinese firms sell processed cobalt to Europe mix certified streams of the metal with material sourced from unregulated mines.
Meanwhile, Glencore Plc, which operates two of the world’s biggest industrial cobalt mines in Congo, has assured the buyers, including Tesla, that only responsibly-sourced cobalt feeds would be supplied for its products.
Estimates state that by 2030, the economies of EU would need to secure over 64,000 tons of ethically-sourced cobalt beyond existing supply-chain constraints to fuel the transition to electric vehicles, whose current price would be around $3.2 billion. With the price of the metal mounting each day, firms are even mulling new reserves in Australia's deep seas.
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