‘Blood Batteries’ Drive America’s Frantic EV Ambitions

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The U.S. government has wide-ranging influence and billions of dollars in the rush to secure and build America’s electric vehicle and battery supply chains. But desperation is leading it astray.

Last week, the US State Department quietly released a memorandum of understanding it signed in December to support a commitment between the Democratic Republic of Congo (DRC) and Zambia to create a “productive supply chain from mine to assembly line”. In theory, the agreement aims to drive investment and ensure a “level playing field” for the private sector in projects.

It turned to Africa for obvious reasons: the abundance of raw materials. Nearly 70 percent of the world’s cobalt, a key ingredient in some types of batteries, is mined in the Democratic Republic of the Congo, which holds nearly half the world’s reserves. Zambia is one of the largest producers of copper, which is used in other vital components. The U.S. also imports copper from the Democratic Republic of Congo, the third-largest metal producer.

However, as stated in the State Department’s country report, the U.S. government happens to fail to mention that cobalt from Congo has been at the center of child labor abuse. A press release announcing the MOU left it on “corruption,” noting that it “commits to comply with international standards to prevent, detect and take legal action against corruption throughout the process.”

This move is hypocritical. Now that the U.S. needs cobalt and copper as part of its supply chain push, it is willing to do business and urge private investors to do business in the DRC, ignoring one of the most important issues there.

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Worse, this comes after intense criticism of China’s alleged violations. The U.S. Department of Labor added solar-grade polysilicon from Xinjiang Province to its 2022 list of goods produced by child or forced labor, along with cobalt from the Democratic Republic of the Congo (1). In the report, U.S. Labor Secretary Martin Walsh called abuses in the Chinese region “appalling, systemic, and persistent” and said “goods produced under these conditions have no place in the U.S. economy.” “.

The US then continued to ban goods from China’s western provinces and was willing to take tough measures — all because it viewed China as a strategic threat. In 2021, an amendment to the U.S. Innovation and Competition Act (entitled “Securing U.S. Strategic Metals and Minerals Supply Chains”) expressed concerns about Chinese control.

That doesn’t seem to apply to the Democratic Republic of the Congo — an unstable country in a troubled region. The insurgency in the east has displaced more than 450,000 people. This makes cobalt the equivalent of blood diamonds in batteries.

Over the years, the United States has committed approximately $250 million to approximately $300 million annually in economic support and foreign aid for health programs in the Democratic Republic of the Congo. It renewed its development cooperation agreement, securing $1.6 billion over the next five years. These are noble but by no means the right way to secure cobalt and copper resources and promote industrialization there. Setting terms and conditions for aid would be a starting point.

Cobalt-related abuse is not a secondary concern. For example, Mercedes-Benz goes to great lengths to disclose its use to ensure transparency. The automaker conducts assessments and audits of its battery suppliers to prevent child and forced labor. The agreement to source these components requires disclosure across the cobalt supply chain. Even Tesla Inc. CEO Elon Musk, who came under heavy criticism a few years ago for using battery materials in the company’s vehicles, dropped this key element entirely.

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It would be a mistake to try to secure cobalt supplies and promote its importance and encourage private investment into the DRC.

This approach highlights a deeper flaw in America’s botched attempt at industrial policy. It focuses primarily on its foreign affairs rather than what might actually be or help at home. If it does want to sign up for the goods it needs now, it should take a position on who it does business with and on what terms.

What’s more, cobalt’s days may be numbered. With all the complex supply issues surrounding it, companies are increasingly forgoing this element and the type of battery it uses. Lithium iron phosphate use continues to rise sharply as manufacturers scale up the safer, cleaner-produced chemical, reducing emissions by nearly 30%. This is part of the reason why cobalt demand for power packs is expected to decline significantly over the next decade. That’s why it’s hard to imagine companies doubling down on their bets.

The State Department’s memorandum of understanding states that the pledge is for the greater good of climate change and will work to limit temperature rise to 1.5 degrees Celsius, which will “help the international community reduce emissions”. Yet, with a laudable incentive, no one even begins to question what America’s multibillion-dollar battery production plant construction boom means for greenhouse gas emissions. (I’ll cover that in a future column). Studies have shown that cobalt-containing cathodes are the largest contributors. It may be worthwhile for the United States to invest in improving viable, cleaner technologies.

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It is easy to bash China, Elon Musk and his large private sector counterparts and take a higher moral stand. Harder to introspect, isn’t it?

More views from Bloomberg:

• Loopholes in US China-style EV policy: Anjani Trivedi

• Climate fight emerges as geopolitical power game: Liam Denning

• Glencore’s great game is avoiding US sanctions: Chris Bryant

(1) The Bureau of International Labor Affairs (ILAB) maintains a list of goods, and their countries of origin, which, as required by the Trafficking Victims Protection Reauthorization, are reasonably believed to have been produced by child labor in violation of international standards or Forced Labor Production Act 2005 (TVPRA) and subsequent reauthorizations. ILAB maintains this list primarily to raise public awareness of forced and child labor around the world and to facilitate efforts to combat them; it is not intended to punish, but to facilitate more strategic and Focus on coordination and cooperation.

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

Anjani Trivedi is a Bloomberg Opinion columnist. She covers sectors such as policy and companies in the machinery, automotive, electric vehicle and battery industries in the Asia-Pacific region. Previously, she was a columnist and financial and markets reporter for The Wall Street Journal.Before that, she was an investment banker in New York and London

More stories like this can be found at bloomberg.com/opinion

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