‘Blood Batteries’ Drive America’s Frantic EV Ambitions

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In its rush to secure and build America’s electric vehicle and battery supply chains, the U.S. government is reaching far and wide with billions in commitments. But despair leads it astray.

Last week, the State Department quietly released a memorandum of understanding it signed in December to support a commitment by the Democratic Republic of Congo, or DRC, and Zambia to create a “productive supply chain from mine to assembly line.” In theory, the agreement is intended to encourage investment and provide the private sector with a “level playing field” in projects.

It is 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 almost half of the world’s reserves are located. Zambia is one of the largest producers of copper, which is used in other important components. The US also imports copper from the DPRK, 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, according to a State Department national report. A press release announcing the MoU left it at “corruption”, saying it was “committed to international standards to prevent, detect and take legal action to combat corruption throughout the process”.

The move is hypocritical. Now that the US needs cobalt and copper as part of its supply chain push, it is ready to go into business and encourage private investors to work in the DRC, ignoring one of the most significant problems.

Worse, it comes after strong criticism of China’s alleged wrongdoing. The US Department of Labor placed Xinjiang province’s solar polysilicon on its 2022 list of goods produced by child or forced labor, along with cobalt from the DRC(1). In the report, US Labor Secretary Martin Walsh called abuses in the Chinese region “egregious, systemic and persistent” and said “goods made under these conditions have no place in the US economy”.

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The US then banned goods from China’s western province and was prepared to take tough measures as it viewed the country as a strategic threat. A 2021 amendment to the US Innovation and Competition Act (titled “Securing the Supply Chains of United States Strategic Metals and Minerals”) raised concerns about Chinese control.

This does not seem to be the case for the DRC, an unstable country in an unstable region. Rebels in the east have displaced more than 450,000 people. This makes cobalt the equivalent of blood diamonds in batteries.

The United States has for several years provided foreign aid to the DRC for economic support and health programs ranging from about $250 million to about $300 million a year. It renewed a development cooperation agreement that provides $1.6 billion over the next five years. All a noble, but by no means unjustifiable way to secure cobalt and copper resources and promote industrialization. The terms and conditions for support would be one place to start.

Cobalt-related abuse is not a peripheral problem. For example, Mercedes-Benz AG does its best 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 purchase of these parts must provide information from the entire cobalt supply chain. Even Tesla Inc. CEO Elon Musk, who was criticized a few years ago for using battery material in his company’s vehicles, has completely abandoned the crucial element.

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The attempt to secure cobalt supplies and increase its importance, as well as to encourage private investment in the DRC, is misguided.

This approach highlights the deeper flaws in the US’s failed attempt at industrial policy. It has mainly focused on its foreign affairs rather than what is actually possible or useful domestically. If it wants to register for the goods it needs now, it needs to take a stand on who it will do business with and on what terms.

In addition, cobalt’s days may be numbered. With all the complex supply issues that come with it, companies are increasingly moving away from the cell and the types of batteries that use it. The use of lithium iron phosphate has continued to grow rapidly as manufacturers scale up a safer chemistry that is cleaner to produce with almost 30% less emissions. This is part of the reason why demand for cobalt in power units is expected to decline sharply over the next 10 years. Therefore, it is difficult to imagine that companies will double.

The State Department’s Memorandum of Understanding says the commitment is aimed at the greater good on climate change and will limit temperature increases to 1.5 degrees Celsius, which “helps the international community reduce emissions.” Laudable motives, but no one has even begun to question what the multibillion-dollar factory construction boom in the US to make batteries will mean for greenhouse gases. (I will cover this in the next column). Studies show that cobalt-containing cathodes are the biggest contributors. Perhaps the US would benefit from investing in the development of viable, cleaner technologies.

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It’s easy to have fun and walk the moral high ground with China or Elon Musk and his big, private-sector peers. It’s harder to be introspective, isn’t it?

More from Bloomberg’s opinion:

• Holes in America’s China-style EV policy: Anjani Trivedi

• The fight against climate is emerging as a geopolitical power play: Liam Denning

• Glencore’s big play 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 are reasonably believed to have been produced using child labor or forced labor in violation of international standards, as required by the Trafficking Victims Protection Reauthorization. Act 2005 (TVPRA) and subsequent reauthorisations. 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 a punishment, but rather to serve as a catalyst for more strategic and focused coordination and cooperation among those working to address these issues.

This column does not necessarily reflect the views of the editorial board or of Bloomberg LP and its owners.

Anjani Trivedi is a columnist for Bloomberg Opinion. She covers industries including policy and business 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 and a financial and markets reporter for the paper. Before that, she was an investment banker in New York and London

More stories like this are available at bloomberg.com/opinion

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