‘Blood Batteries’ Drive America’s Frantic EV Ambitions

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In its rush to secure and build America’s battery and electric vehicle supply chains, the US government is reaching far and wide, pouring billions into its promises. But desperation drives her out of the way.

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

He returns to Africa for obvious reasons: the abundance of raw materials. About 70% of the world’s cobalt – a key ingredient in some types of batteries – is mined in the DRC, which is home to almost half of the world’s reserves. 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 metal’s third largest producer.

However, the U.S. government conveniently did not say that cobalt from the Congo has become the focus of child labor abuses, as the State Department’s country report states. The press release announcing the Convention left it on “corruption”, noting that it is “committed to respecting international standards to prevent, detect and take legal measures to fight against corruption throughout the process.”

The behavior is hypocritical. Now that the United States needs cobalt and copper as part of its supply chain, it is ready to get into business and invite private investors to work in the DRC, forgetting one of the most important problems there.

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Worse, it comes after sharp criticism of China’s alleged abuses. The US Department of Labor has placed solar grade polysilicon from Xinjiang province on a 2022(1) list of goods produced by child or forced labor – along with cobalt from the DRC. In the report, the US Secretary of Labor, Martin Walsh, described the violations in the Chinese region as “extensive, systematic and continuous” and said: “Those things that are produced under these conditions do not belong in the US economy. .”

The US then moved to ban goods from the western Chinese province and was prepared to take strong measures – all because it saw the country as a strategic threat. In 2021, an amendment to the US Innovation and Competition Act (titled “Securing US Strategic Metals and Minerals Supply Chains”) addressed concerns about Chinese control.

That doesn’t seem to apply to the DRC – an unstable country in a volatile region. An uprising in the east displaced more than 450,000 people. This turns the cobalt into a blood diamond in the battery.

The United States, for several years, has provided foreign aid to the DRC for economic support and health programs of about $250 million to $300 million annually. It renewed a development cooperation agreement that guarantees $1.6 billion over the next five years. All excellent, but by no means a reasonable way to secure cobalt and copper resources and strengthen the industry there. Setting conditions on aid would be one place to start.

Exploits related to cobalt are peripheral issues. Mercedes-Benz AG, for example, goes to great lengths to disclose its usage to ensure transparency. The automaker evaluates and controls battery cell suppliers to prevent child labor and forced labor. Contracts for the purchase of these parts require disclosure of the entire cobalt supply chain. Even the CEO of Tesla Inc., Elon Musk, who came under heavy criticism a few years ago for using the battery material in his company’s vehicles, completely avoided the important element.

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The effort to secure cobalt supplies and increase its importance, along with encouraging private investment to move into the DRC, is misguided.

The approach highlights deeper flaws in the US’s failed attempt at industrial policy. He is focused on his external affairs, not on what is actually possible, or helpful, on the inside. If he wants to sign up for what he needs now, then he needs to take a stand on who he will do business with and on what terms.

In addition, cobalt’s days may be numbered. With all the complex supply issues surrounding it, companies are increasingly shying away from the components and types of batteries they go into. The use of lithium iron phosphate continues to increase, as manufacturers develop safer chemistry that is cleaner to produce, with almost 30% less emissions. That’s part of the reason why demand for cobalt in power is expected to decline sharply over the next 10 years. So it’s hard to imagine the stock doubling.

The State Department’s Foreign Policy Agreement states that the commitment is for the greater good of climate change and will lead to limiting the increase in temperature to 1.5 degrees Celsius, which “helps the international community to reduce emissions.” However laudable the motives, no one has even begun to question what the multi-billion-dollar factory-building boom in the United States for battery production will mean for greenhouse gases. (I’ll get to that in a future column). Research has shown that cobalt-containing cathodes are the biggest contributors. It may be worth it for the US to invest in improving sustainable, cleaner technologies.

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It’s easy to take the moral high ground with China, or Elon Musk and his big, private sector friends. It’s harder to be honest, isn’t it?

More from Bloomberg Opinion:

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

• Climate War Emerges as Geopolitical Power Game: Liam Denning

• Glencore’s Big Game Avoids US Sanctions: Chris Bryant

(1) The International Labor Relations Bureau, or ILAB, maintains a list of goods and their countries of origin, which it has reason to believe have been produced by child labor or forced labor in violation of international standards, as defined in the Victims of Trafficking Protection Act. is required. Act (TVPRA) of 2005 and subsequent amendments. ILAB maintains the List primarily to raise public awareness of forced labor and child labor worldwide and to promote efforts to combat it; it is not intended to punish, 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 editorial opinion of Bloomberg LP or its owners.

Anjani Trivedi is a columnist for Bloomberg Opinion. It 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 financial and 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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