To improve the sustainability of its battery manufacturing process, Mercedes recently announced a transition towards responsible sourcing initiatives (RSIs), aimed at its cobalt and lithium supply chains. The company, via its parent, Daimler Group, is seeking to adopt the “Standard for Responsible Mining” as the framework for its supply chain analysis.
This framework has been developed by the Initiative for Responsible Mining Assurance (IRMA), a group which Mercedes is taking a leading role in promoting. Four elements are used to assess a project: business integrity, planning for positive legacies, social responsibility, environmental responsibility. In future, Mercedes group will only source cobalt and lithium from mines and suppliers that have fulfilled the criteria set down by IRMA.
In February, Daimler outlined that it was making investigations into the sustainability of the lithium supply chain by commissioning feasibility studies on lithium brine producers in Chile, aimed at examining their sustainability credentials. This shows that the group had already been attempting to reconcile the increased EV demand, brought on by more stringent automotive pollution regulations set by the European Union, with concerns around the sustainability of its battery supply chains.
Cobalt and lithium both have contrasting issues around the sustainability of their production. Lithium production’s sustainability concerns are largely environmental, with CO2 emissions and water use being the two most significant issues. Brine producers must contend with issues surrounding groundwater exploitation, requiring significantly more water than mineral producers. However, brine producers do have a significantly lower carbon footprint when compared to their mineral counterparts. Brine producers have an average carbon footprint of just 2.8t of CO2 per tonne of lithium carbonate equivalent (LCE), compared to 9.6t of CO2 at mineral producers.
Discussion around the sustainability of cobalt production is overwhelmingly dominated by artisanal small-scale mining (ASM) in the Democratic Republic of the Congo (DRC) and the negative social issues that have been associated with this sector. ASM cobalt represents an important swing producer of cobalt supply to the market during times of high demand. However, the ASM sector in the DRC has been plagued by social issues including the use of child labour and human rights abuses. A number of RSIs, such as the Responsible Sourcing Blockchain Network (RSBN), Global Reporting Initiative and IRMA, have been formed by stakeholders along the supply chain in an attempt to make cobalt procurement from the DRC more transparent and traceable.
The issue of sustainability has become a driving factor in investment decisions from the downstream sector in mining operations and projects, and with this has come a rise in “green funding”. However, with increased interest in sustainability has come the development several competing frameworks that organisations can take into consideration when examining the sustainability of their supply chains. Different commodities, particularly in the mining sector, face different ESG issues during production. A good framework should give appropriate weighting to environmental, social and governance factors. Whichever framework(s) become adapted as industry standard, they must be capable of providing a holistic insight into the ESG issues facing a supply chain. The pressure to adopt these standards will originate from downstream parties such as Mercedes, VW and other automotive and battery manufacturers.
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