‘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 US government is reaching far and wide, making billions in promises. But desperation misleads it.

Last week, the State Department quietly released a Memorandum of Understanding it signed in December to support a commitment between the Democratic Republic of Congo, or DRC, and Zambia to build a “productive supply chain, from mine all the way to the assembly line.” The agreement, in theory, is meant to encourage investment and ensure that the private sector has a “level playing field” in projects.

It turned to Africa for obvious reasons: An abundance of raw materials. Nearly 70% of the world’s cobalt — a key ingredient in some 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, which is 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 is at the center of child labor abuses, as the State Department’s country report claims. The press release announcing the MoU left it on “corruption,” noting that it is “committed to respecting international standards to prevent, detect, and take legal action to fight corruption throughout this process.”

The move is hypocritical. Now that the US needs cobalt and copper as part of its supply-chain push, it is ready to get into business and encourage private investors to work in the DRC, overlooking one of the most important issues there.

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What’s worse, this follows heavy criticism of China’s alleged violations. The US Labor Department placed solar-grade polysilicon from Xinjiang province on a 2022 list(1) of products made by child or forced labor — along with cobalt from the DRC. In the report, US Labor Secretary Martin Walsh called the abuses in the Chinese region “egregious, systematic and persistent” and said that “goods made under these conditions have no place in US economy.”

The US continued to ban goods from China’s western province and was prepared to take drastic measures — all because it saw the country as a strategic threat. In 2021, a proposed amendment to the US Innovation and Competition Act (titled “Securing United States Supply Chains of Strategic Metals and Minerals”) expressed concern about Chinese control.

That doesn’t seem to apply to the DRC — an unstable country in a volatile region. An insurgency in the east displaced more than 450,000 people. That makes cobalt the diamond equivalent of blood in batteries.

The US has, for several years, provided foreign aid to the DRC for economic support and health programs of about $250 million to nearly $300 million annually. It renewed a development cooperation agreement that secured $1.6 billion dollars over the next five years. All noble, but by no means a rational path to secure cobalt and copper resources and boost industrialization there. Putting the terms and conditions on the help is a place to start.

Cobalt-related abuses are not peripheral issues. For example, Mercedes-Benz AG strives to disclose its use to ensure transparency. The car maker checks and tests its battery cell suppliers to prevent child and forced labour. Agreements for the acquisition of these components require disclosure from the entire cobalt supply chain. Even the Chief Executive Officer of Tesla Inc. that Elon Musk, who came under heavy criticism a few years ago for using battery material in his company’s cars, has completely moved away from the essential element.

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The effort to secure cobalt supplies and elevate its importance, along with encouraging private investment to enter the DRC, is wrong.

The strategy highlights deeper flaws in the US’s misguided attempts at industrial policy. It is more focused on its external affairs, not on what is actually possible, or helpful, domestically. If it wants to sign up for the goods it needs now, it must be firm about who it will do business with, and on what terms.

Furthermore, cobalt’s days may be numbered. With all the complicated supply issues around it, companies are increasingly moving away from the element and the types of batteries it goes into. The use of lithium iron phosphate continues to increase dramatically, as manufacturers increase the safer chemistry that is cleaner to make, with about 30% lower emissions. This is part of the reason why demand for cobalt in powerpacks is expected to drop dramatically 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 “helps the international community reduce emissions.” The laudable motives, however, no one has begun to question what the multi-billion dollar factory development in the US means to produce batteries for greenhouse gases. (I’ll get to this in the next column). Research has shown that cobalt containing cathodes are the biggest contributors. It may be beneficial for the US to invest in improving viable, cleaner technologies.

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It’s easy to get angry 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 Opinion:

• The Holes in America’s China-Style EV Policy: Anjani Trivedi

• Climate Fight Rises as a Geopolitical Power Play: Liam Denning

• Glencore’s Big Game Is Avoiding US Sanctions: Chris Bryant

(1) The Bureau of International Labor Affairs, or ILAB, maintains a list of products and their source countries that there is reason to believe were 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 of forced labor and child labor worldwide 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. He covers industries including policies and companies in the machinery, automotive, electric vehicle and battery sectors across Asia Pacific. Previously, he was a columnist for the Wall Street Journal’s Heard on the Street and a finance & markets reporter for the paper. Before that, he was an investment banker in New York and London

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

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