Glencore to supply Tesla with Cobalt

Glencore is apparently going to supply Tesla’s Gigafactory in Shanghai and the planned plant in Brandenburg with cobalt from the Congo. A recent article in the Financial Times already mentions concrete quantities to be delivered to Tesla.

The Financial Times report refers to insiders regarding the information on the deal between Tesla and Glencore. Although Tesla uses less cobalt in its battery cells than competing electric car manufacturers, the contract with Glencore could cover up to 6,000 tons per year. The cobalt for Tesla is mined in the Democratic Republic of Congo.

The financial scope of the agreement is not mentioned in the report. If one takes as a basis the 30,000 dollars per tonne of cobalt mentioned by the report, this would correspond to a volume of 180 million dollars per year.

Tesla stated last week when the Impact Report was released that it supports procurement from the Democratic Republic of Congo, one of the poorest countries in the world, “where we can be sure that minerals, including cobalt, come from mines that meet our social and environmental standards”.

The local government is also working on this by tightening the regulations for cobalt mining. A certification system designed to curb child labour, poor working conditions and environmental damage is to be extended to cobalt. This was reported by the German Press Agency (dpa) with reference to the Federal Institute for Geosciences and Natural Resources (BGR), which advised the Congo Ministry of Mining in the trial. By the end of 2020, ten plants are to be audited according to the new requirements, including a cobalt mine.

“We want only minerals mined under dignified conditions to be certified and sold abroad in the name of Congo,” Congolese mining minister Willy Kitobo told the dpa. The aim is to ensure that the mining of raw materials “no longer destroys Congolese society”.

In the Impact Report, Tesla writes, among other things, that “considerable efforts have been made to set up processes” to eliminate the risk of child labour. “We recognise that responsible and ethical mining is an important part of the economic and social well-being of these communities,” Tesla said.

By purchasing directly from Glencore, Tesla is able to trace the cobalt supply chain from the mine in the Congo, through raw materials, to installation in the vehicle. For similar reasons, BMW has also changed its strategy for purchasing raw materials: In future, the Munich-based company will purchase critical materials such as lithium and cobalt itself. The company sources its cobalt from mines in Morocco and Australia before making it available to its own cell suppliers. Unlike Tesla, the battery cells are not produced in-house.

In March this year, BMW initiated the organisation PartChain that uses blockchain technology to increase transparency in worldwide supply chains regarding raw materials and components. Interested companies were invited to join the initiative. BMW is not alone with the idea of a blockchain for supply chain transparency. Volvo and Volkswagen have also already presented their own projects to enable them to trace the sources of their cobalt precisely with the help of the blockchain.

Cobalt from Glencore is used in many battery cells. Last December a deal for 30,000 tons of the material was announced with SK Innovation. In February, it became known that the Korean competitor Samsung SDI is also sourcing up to 21,000 tonnes of cobalt from Glencore’s industrial mining operations in the Democratic Republic of Congo.

With additional reporting by Carrie Hampel

ft.com (paywall), heise.de, automobilwoche.de (both in German)