Daimler joins China's Responsible Cobalt Initiative

LONDON (Reuters) - German carmaker Daimler has joined the Responsible Cobalt Initiative, a program established under a Chinese industry body to tackle risks in the cobalt supply chain arising from artisanal mining.

FILE PHOTO: The Daimler logo is seen before the Daimler annual shareholder meeting in Berlin, Germany, April 5, 2018. REUTERS/Hannibal Hanschke

Cobalt consumers are under pressure to ensure the material they use is not tainted by child labor in the Democratic Republic of Congo, the source of about 60 percent of the world’s cobalt.

Amnesty International says about a fifth of the country’s cobalt production is mined by hand by informal miners including children, often in dangerous conditions.

Daimler, owner of the Mercedes Brand, joined the RCI at the start of April, RCI Chairman Sun Lihui told Reuters.

“With the Responsible Cobalt Initiative (RCI), Mercedes-Benz Cars is taking steps to combat the social and environmental risks in the cobalt value chain,” a Daimler spokesperson said.

“Transparency and governance will be improved and the risks of child labor diminished”

The RCI, which groups high-profile cobalt users such as Apple Inc, Sony Corp and Volvo, was established under the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters in 2016.

Sun said the RCI plans to set standards for a clean supply chain for cobalt, adding that firms in the industry should be given time to resolve problems associated with artisanal mining.

“Our red line of artisanal mining standards is zero child labor,” Sun said. “The improvement of the supply chain cannot be done by one or two companies. It requires the whole supply chain and consumers’ joint effort.”

The RCI last week held a meeting in Paris with the Organisation for Economic Cooperation and Development, where it presented its draft audit standards for cobalt refiners.

The draft, which is open for public consultation until May 9, includes requirements such as the avoidance by cobalt refiners of cash transactions where practicable, and conducting a risk assessment “on all cobalt material sourced”.

Participants at the Paris meeting included producers, consumers, non-governmental organizations and representatives of the DRC.

Cobalt is a key ingredient in rechargeable lithium-ion batteries used for electric vehicles.

It has increasingly come under the spotlight as automakers lay out plans for huge investments in electric vehicles, demand for which is accelerating as governments around the world move to cut noxious emissions from carbon fuels.

These plans have fueled expectations of cobalt shortages and spurred a price rally to near $44 a lb from below $10 in December 2015.

Sources say the price surge will encourage artisanal mining.

“The supply chain will respond by producing more artisanal material,” one cobalt industry source said.

Additional reporting by Tom Daly and Edward Taylor; Writing by Pratima Desai; Editing by Dale Hudson