It’s turning to Africa for obvious reasons: An abundance of raw materials. Almost 70% of the world’s cobalt — a key ingredient in certain types of batteries — is mined in the DRC, where nearly half of the world’s reserves are located. Zambia is one of the largest producers of copper, used for other important components. The US also imports copper from the DRC, the third-largest producer of the metal.
However, the US government conveniently failed to mention that cobalt from the Congo has been at the center of child labor abuses, as the State Department’s country report states. The press release announcing the MoU left it at “corruption,” noting that it was “committing to respect international standards to prevent, detect, and take legal action to fight corruption throughout this process.”
The move is hypocritical. Now that the US needs the cobalt and copper as part of its supply-chain push, it is willing to go into business and urge private investors to work in the DRC, overlooking one of the most significant issues there.
What’s worse, it comes after strong criticism around China’s alleged infractions. The US Labor Department put solar-grade polysilicon from Xinjiang province on a 2022 list(1) of goods produced by child or forced labor — alongside cobalt from the DRC. In the report, US Labor Secretary Martin Walsh called the abuses in the Chinese region “egregious, systemic and ongoing” and said that “the goods produced under these conditions have no place in the US economy.”
The US then went on to ban goods from the western Chinese province and was willing to take strong measures — all because it saw the country as a strategic threat. In 2021, a tabled amendment to the US Innovation and Competition Act (titled “Securing United States Supply Chains of Strategic Metals and Minerals”) expressed concern around Chinese control.
That doesn’t seem to apply to the DRC — an unstable country in a volatile region. An insurgency in the eastern part has displaced over 450,000 people. That makes cobalt the blood diamond equivalent in batteries.
The US has, for several years, committed foreign aid to the DRC for economic support and health programs of around $250 million to as much as around $300 million annually. It renewed its development cooperation agreement that ensures $1.6 billion dollars over the next five years. All noble, but by no means a justifiable path to secure cobalt and copper resources and boost industrialization there. Putting terms and conditions on the aid would be one place to start.
The abuses associated with cobalt are not peripheral issues. Mercedes-Benz AG, for instance, goes to great lengths to disclose its use to ensure transparency. The carmaker assesses and audits its battery-cell suppliers to prevent child and forced labor. Agreements for procuring these parts require disclosure from the entire cobalt supply chain. Even Tesla Inc. Chief Executive Officer Elon Musk, who came under heavy criticism a few years ago for use of the battery material in his company’s vehicles, has walked away from the crucial element altogether.
Trying to secure cobalt supplies and elevating its importance, along with encouraging private investment to go into the DRC, is misguided.
The approach highlights the deeper flaws with the US’s botched attempt at industrial policy. It’s been largely focused on its foreign affairs, not on what’s actually possible, or helpful, domestically. If it does want to sign up for the goods it now needs, then it should take a stand on who it will do business with, and on what terms.
What’s more, cobalt’s days may be numbered. With all the complex supply issues around it, companies are increasingly shifting away from the element and the types of batteries it goes into. The use of lithium iron phosphate has continued to rise sharply, as manufacturers scale up the safer chemistry which is cleaner to produce, with almost 30% lower emissions. It’s part of the reason why demand for cobalt in powerpacks is expected to fall sharply over the next 10 years. That’s why it’s hard to imagine companies doubling-down.
The State Department’s MoU states that the commitment is for the greater good of climate change and will go toward limiting temperature increases to 1.5 degrees Celsius, which is “helping the international community reduce emissions.” Commendable motives, however, no-one has even begun to question what the multi-billion-dollar factory-building boom in the US to produce batteries will mean for greenhouse gases. (I’ll get to it in a future column). Research has shown that cobalt-containing cathodes are the biggest contributors. It may be worthwhile for the US to invest in improving viable, cleaner technologies.
It’s easy to lash out and walk a higher moral ground with China, or Elon Musk and his large, private sector peers. Tougher to be introspective, isn’t it?
More From Bloomberg Opinion:
• The Holes in America’s China-Style EV Policy: Anjani Trivedi
• Climate Fight Arises as a Geopolitical Power Play: Liam Denning
• Glencore’s Great Game Is Avoiding U.S. Sanctions: Chris Bryant
(1) The Bureau of International Labor Affairs, or ILAB, maintains a list of goods and their source countries which it has reason to believe are produced by child labor or forced labor in violation of international standards, as required under the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2005 and subsequent reauthorizations. ILAB maintains the List primarily to raise public awareness about forced labor and child labor around the world and to promote efforts to combat them; it is not intended to be punitive, but rather to serve as a catalyst for more strategic and focused coordination and collaboration among those working to address these problems.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Anjani Trivedi is a Bloomberg Opinion columnist. She covers industrials including policies and firms in the machinery, automobile, electric vehicle and battery sectors across Asia Pacific. Previously, she was a columnist for the Wall Street Journal’s Heard on the Street and a finance & markets reporter for the paper. Prior to that, she was an investment banker in New York and London
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