Africa is being turned to for obvious reasons: the 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 almost half of the world’s reserves are found. Zambia is one of the largest producers of copper used in other critical components. The US also imports copper from the DRC, the third largest producer of the metal.
But the U.S. government conveniently failed to mention that cobalt from the Congo was at the center of child labor abuses, according to a State Department country report. A press release announcing the memorandum of understanding refers to “corruption” and notes that it is “committed to international standards to prevent, identify and prosecute corruption throughout this process.”
This move is hypocritical. Now that the U.S. needs cobalt and copper as part of its supply chain, it wants to get into business and encourage private investors to work in the DRC, ignoring one of the most pressing problems there.
To make matters worse, it came after strong criticism of China’s alleged violations. The US Department of Labor has added solar-resistant polysilicon from Xinjiang province to the 2022 list, along with cobalt from the DRC. list of goods produced by child or forced labor(1). In a report, US Labor Secretary Martin Walsh called the abuses in the Chinese region “severe, systemic and persistent” and said “goods produced under these conditions have no place in the US economy”.
The US then banned goods from the western Chinese province and was ready to take tough measures because it saw the country as a strategic threat. in 2021 A proposed amendment to the US Innovation and Competition Act (titled “Securing the Supply Chains of United States Strategic Metals and Minerals”) expressed concern about Chinese control.
This does not seem to apply to the DRC, an unstable country in an unstable region. The rebellion in the east displaced more than 450,000 people. This makes cobalt the equivalent of blood diamonds in batteries.
The U.S. has provided foreign aid to the DRC for economic support and health programs for several years, starting at about $250 million. USD up to 300 million USD annually. It renewed a development cooperation agreement that provides $1.6 billion over the next five years. A perfectly noble but by no means justifiable way to secure cobalt and copper resources and encourage industrialization there. A start would be to establish the conditions for the provision of aid.
Cobalt-related abuse is not a peripheral issue. For example, Mercedes-Benz AG goes to great lengths to disclose its use in order to ensure transparency. The automaker evaluates and audits its battery cell suppliers to prevent child and forced labor. Contracts for the procurement of these parts require disclosure of information from the entire cobalt supply chain. Even Tesla Inc. CEO Elon Musk, who came under fire a few years ago for using battery material in his company’s vehicles, has completely abandoned the essential element.
Trying to secure the supply of cobalt and increasing its importance and encouraging private investment in the DRC is misguided.
This approach highlights the deeper flaws in the US’s failed attempt at industrial policy. The focus was on foreign affairs rather than what was actually possible or useful domestically. If she wants to register for the goods she needs now, she should decide with whom and under what conditions she will cooperate.
Also, Cobalt’s days may be numbered. With all the complicated supply issues, companies are increasingly giving up on the cell and the types of batteries it goes into. Use of lithium iron phosphate has continued to rise sharply as manufacturers ramp up the safer chemistry, which is cleaner and emits almost 30% less. This is expected to be one of the reasons why the demand for cobalt will drop sharply in the next 10 years. That’s why it’s hard to imagine companies doubling down.
The State Department’s memorandum of understanding says the commitment is for the greater good of climate change and will aim to limit temperature increases to 1.5 degrees Celsius, which “helps the international community reduce emissions.” But with laudable motives, no one has even begun to question what the billion-dollar battery factory boom in the U.S. will do to greenhouse gases. (I’ll talk about that in a future column). Studies have shown that cobalt-containing cathodes are the most influential. The US may benefit from investing in the development of promising, cleaner technologies.
With China or Elon Musk and his big private sector peers, it’s easy to take the moral high ground. It’s harder to look at yourself, isn’t it?
More from Bloomberg Opinion:
• Holes in America’s China-style Electric Car Policy: Anjani Trivedi
• Climate fight emerges as geopolitical power: Liam Denning
• Great game for Glencore avoids US sanctions: Chris Bryant
(1) The Bureau of International Labor Affairs, or ILAB, maintains a list of goods and their countries of origin that it believes have been produced using child or forced labor in violation of international standards, as required by the Victims of Trafficking Protection Reauthorization. in 2005 Act (TVPRA) and subsequent editions. ILAB maintains the list primarily to raise public awareness of forced labor and child labor around the world and to promote efforts to combat it; it is not intended to be punitive, but rather to act as a catalyst for more strategic and targeted coordination and cooperation among those seeking to address these issues.
This column does not necessarily reflect the views of the editorial board or Bloomberg LP and its owners.
Anjani Trivedi is a columnist for Bloomberg Opinion. It covers industries including politics and companies in the machinery, automotive, electric vehicle and battery sectors across the Asia Pacific region. She was previously a columnist for the Wall Street Journal’s Heard on the Street magazine and the paper’s finance and markets reporter. Before that, she worked as an investment banker in New York and London
For more stories like this, visit bloomberg.com/opinion