Over the coming weeks Kumi Consulting will publish a series of articles exploring the social and environmental risks – and opportunities – associated with lithium-ion battery supply chains.
This year has seen a proliferation of ambitious electric vehicle (EV) production targets announced by major car manufacturers. Many commentators are talking about 2017 being a ‘watershed year’ for EVs. Not only does this signify a massive structural change in the vehicle market, it also signifies significant changes in the commoditised markets for key metals that are required to produce lithium-ion batteries: cobalt, lithium and nickel.
Whilst lithium-ion batteries are by no means the only end use for the so-called ‘battery minerals’ – batteries account for around 50% of cobalt consumption and around 40% of lithium consumption – the growth of EVs will be transformative for these supply chains for two reasons:
- The scale-up of physical demand for battery minerals will transform commercial relationships in the supply chain.
- The physical market for these minerals will become dominated by demand from global, reputation-sensitive, consumer brands (car manufacturers), rather than the more obscure alternative end-markets in alloys, industrial chemicals, glass production etc.
For companies in the battery minerals supply chain, this transformation creates both risks and opportunities – whether you are creating demand as a car manufacturer or responding to this demand as a materials producer or battery manufacturer.
In the articles that follow, we will offer some perspectives how companies may identify and manage the very significant social and environmental risks that are present in the supply chains of battery minerals. We will discuss how forward-thinking companies may be able to create commercial advantage through proactive responsible sourcing. And we will challenge some of the commonly held precepts on what companies should be doing to source battery minerals responsibly.
- In our first article, we explore the conversation around risks in the cobalt supply chain, and suggest that a ‘blinkered’ approach to management of these risks is a risk in and of itself. We discuss why companies – and their stakeholders – should avoid relying on a ‘comfort blanket’ of compliance auditing and focus instead on measures that will protect and enable companies’ long-term sourcing positions.
- Our second article will discuss the (currently) less high-profile battery minerals: lithium and nickel. Whilst these metals have had less air time than cobalt, they have significant risk factors of their own and are no less important to a responsible lithium-ion battery supply chain.
- Our third article will focus on what responsible sourcing means for the ‘middle tiers’ – those companies in the battery supply chain that are neither car manufacturers nor mineral producers. What should be expected of them and how do such companies, practically speaking, go about managing the sourcing risks that can impact their business and capitalising on the commercial opportunities that will be available for responsible businesses?
Our perspectives result from our practical experience of working on responsible sourcing at all levels of the minerals supply chain; from mine sites in the Democratic Republic of Congo (DRC) and other producing countries, to smelters and refiners across the world, and with global consumer brands (including car manufacturers). We hope that you find our perspectives useful. If you would like to talk about how Kumi can support your business, please contact us.