News released by IBM on 16 January stated that a blockchain-based pilot scheme to trace and validate ethically-sourced cobalt had been initiated by car maker Ford Motor Company, in cooperation with cobalt miner and refiner Huayou, battery manufacturer LG Chem, Information Technology provider IBM, and responsible sourcing consultant RCS Global. The scheme is expected to be completed in the middle of 2019 and will be based on IBM’s blockchain platform, where the cobalt units mined and smelted at Huayou’s operation in the Democratic Republic of Congo (DRC) will be tracked all the way to LG Chem’s cathode and battery plants in South Korea, and eventually to the destination at Ford’s plant in the USA. Starting with large-scale miners (LSMs), it is hoped that the scheme will also extend its scope to artisanal and small-scale miners (ASMs) to help create better transparency in the sector.
As a technology enabler for the modern society, cobalt is becoming more crucial in new industrial applications such as electric vehicles (EVs), driven by global efforts to shift towards a low-carbon world, exposing industrial actors in the value chain to substantial cobalt supply risks. Cobalt supply chain risk derives largely from the DRC, a country long troubled with countless domestic issues. The DRC is the world’s largest supplier of cobalt and its dominance in the sector continues to grow. A substantial percentage of the DRC’s cobalt production is thought to originate from artisanal sources with alleged human rights abuses, including child labour.
Some individual due diligence work has been done openly, or secretly, since this topic came to the spotlight in 2016 following an Amnesty report alleging human rights abuses in the DRC artisanal cobalt industry. However, this collaboration is the first time that participants at all major stages of the cobalt supply chain have been involved in one scheme, showing the collective efforts to tackle ethical sourcing of cobalt. Notably, participation for Ford, which has been wary of going upstream for a long time, could be a game-changer in the long term.
While it is still questionable at this stage whether the technological approach of blockchain is a realistic solution to tackling the DRC’s problems, which are mainly social and political, the scheme at least provides a step in the right direction towards industry-wide practices compliant with the OECD and the new CIRAF guidelines.
Roskill’s Cobalt: Global Industry, Markets & Outlook report was published in May 2018. Click here to download the brochure or sample pages or access further information.