A major battery manufacturer has signed a deal with a mining group that could see ‘ethically’ sourced cobalt processed in North America for the first time. This comes on the same day that a group of tech companies survived an attempt to find them liable for rights abuses in the global critical mineral supply chain.
Electra Battery Materials Corporation and Eurasian Resources Group (ERG) signed a binding letter of intent yesterday (2 April). The agreement will last three years and see 3,000 tonnes of cobalt shipped to Canada for processing.
According to a statement from Electra, the deal “supports efforts to onshore the battery supply chain and reduce reliance on foreign refiners”.
Benedikt Sobotka, ERG CEO and co-chair of the Global Battery Alliance said: “Supplying ethically produced cobalt hydroxide to Electra meets our values and supports North America’s cobalt demand, as well as the region’s rapidly expanding battery supply chain.”
Toronto cobalt
Electra said its Toronto-based refinery complex would be the first in North America to process battery grade cobalt sulphate, when completed, and could produce enough of the metal for 1.5m vehicles annually.
The move could be important for global supply chains, said Roger Marshall, trade and customs specialist at the Institute of Export & International Trade (IOE&IT) and an expert in critical minerals.
“The news of the agreement between Electra Battery Materials Corporation and ERG is hopefully an indication of the move to transparent supply chains in the electric vehicle industry.
“With such a tie-up, it’s possible to identify and monitor both the supply source and the refining process to ensure an ethical supply chain. It also demonstrates the benefits of such transparency as its material qualifies for the Inflation Reduction Act funding for electric vehicles.
Friendly sources
Under the US Inflation Reduction Act, companies are incentivised to source critical minerals from ‘friendly nations’, as part of the effort to protect supply chains.
As the legislation extends to Canadian and Mexican companies – and the EU has introduced an European equivalent – there has been a move among global manufacturers to source minerals that meet the criteria.
This has been made more difficult by the fact that the US and UK have both struggled to produce many critical minerals, including cobalt and lithium, domestically, with several projects being delayed at the approval stage.
As such, there has been an emphasis on finding the right partner for many companies, as the mineral is used extensively in the technology and vehicle manufacturing sectors.
Marshall said that yesterday’s announcement could lead to similar agreements by other companies
“There should be an increase of such co-operations in the near future as other miners and producers attempt to attract a premium or subsidy for their products by having transparent supply chains.”
The Democratic Republic of Congo (DRC) is the world’s largest supplier of cobalt, owning around 75% of the market, although Indonesia is attempting to expand its market share.
Supply chain case
The news of the agreement between the two companies comes as large tech companies have successfully fended off a claim for abuses committed in the supply chain.
Apple, Tesla, Microsoft and other tech companies had been sued by a group of plaintiffs, including former child labourers and the relatives of those killed in the mines, who argued that the companies participated in a ‘venture’ under a US anti-trafficking law act, in which they had knowingly participated in abuses in the supply chain.
Circuit Judge Rao, delivering the opinion of a US Federal Appeals Court in Washington DC, upheld a lower court decision that the companies were not liable.
‘Murky’
In her judgement, Rao wrote:
“Purchasing an unspecified amount of cobalt through the global supply chain is not ‘participation in a venture’ within the meaning of the [Trafficking Victims Protection Reauthorization Act 2008].”
“The plaintiffs have not adequately alleged the tech companies participated in a venture because there is no shared enterprise between the companies and the suppliers who facilitate forced labour,” Rao said, adding that the companies had no interest in the suppliers.
However, Rao found that, “the cobalt suppliers and their subsidiaries actively solicit and force children to work in order to meet the tech companies’ growing demand for cobalt”, describing the supply chain as “murky”.
Rao was joined in the decision by chief justice Srinivasan and judge Pillard in affirming the original decision to dismiss the claim.