Conflict resource cobalt – Human rights in the supply chain.

02. October 2019
ca. 4 minutes

Different interest groups place a variety of different demands on the BMW Group. Electrifying our model line-up as quickly as possible is one of them. As a company committed to the principles of sustainability, it is up to us to resolve any human rights issues that stand in the way of swift electrification.

If there’s one thing this year’s Frankfurt International Motor Show (IAA) showed quite clearly, it was that electromobility is more than just a trend. In fact, it will soon account for a large share of future mobility. This is also underlined by the BMW Group’s stated goal of putting one million electrified vehicles on the roads by 2021. That’s good for the climate. End of story?

It's not quite that simple – and the BMW Group is certainly not taking the easy route. Without a doubt, plug-in hybrids, electric vehicles and cars powered by fuel cells will all play a part in making mobility CO2-free in the long term. However, the supply chain is a major challenge along the road.

Batteries are crucial to vehicle performance – but they also tend to be the bottleneck when it comes to truly sustainable mobility, i.e. in economic, ecological and social terms. Each of these three aspects is important and must be considered separately. The supply chain for sourcing raw materials poses a challenge for the BMW Group and all other manufacturers – because, with so-called conflict minerals, infringements of human rights or environmental standards cannot be ruled out.

This also applies to the Democratic Republic of Congo, one of the world’s main suppliers of cobalt. Trading human rights or other environmental standards for climate goals is not acceptable under any circumstances. The challenge lies in suppliers’ multi-layered upstream supply chain, where we as companies have only limited control. For example, a battery cell supplier may source materials from various providers who themselves are supplied by a large number of sub-suppliers. In Central Africa, in particular, full conformity with standards can no longer be guaranteed, even though BMW Group contracts require compliance with the UN’s Universal Declaration of Human Rights and the core labour standards of the International Labour Organisation (ILO) as a prerequisite for any dealings with partners.

We have therefore decided to take a step that will eliminate this kind of uncertainty. Starting next year, we will only source the raw cobalt for our electric vehicles directly – thereby getting rid of further substructures in our supply chain. We will then make the material available to our producers for manufacturing battery cells. In this way, the BMW Group can maintain full responsibility and transparency over where the raw material comes from. To rule out any remaining risk of human rights abuses in cobalt mining, the BMW Group has signed supply contracts with mines outside the Democratic Republic of Congo. However, we will also be taking things a step further as we practise and implement our basic value of being a reliable corporate citizen: Because, as the BMW Group sees it, switching to clean supply chains elsewhere does not solve the problem of human rights abuses at individual mines in the Congo.

In collaboration with the German Agency for International Cooperation (GIZ) and other industry partners, we have established the “Cobalt for Development” project, aimed at securing all three aspects of sustainability in the Congo over the long term. The objective of the project is to further develop non-industrial mines in the region, so that they meet the BMW Group’s high sustainability requirements and can again be an option for our supply chains over the long term This is the first time representatives from the chemical, consumer electronics and automotive industries are working together on a basic research project dedicated to cobalt. Work will focus on a pilot mine where cobalt is extracted using non-industrial methods. We deliberately chose this particular project to illustrate how we are transitioning to sustainable mobility, at the same time as enhancing value creation and improving working conditions in underdeveloped countries.

Sustainability is an important aspect of our corporate strategy and plays a key role in expanding electro-mobility. We are fully aware of our responsibility: Cobalt and other commodities must be extracted and processed under ethically responsible conditions

Dr. Andreas Wendt

Member of the Board of Management of BMW AG, responsible for Purchasing and Supplier Network

We will assess the progress made by “Cobalt for Development” internally on a regular basis and have its findings reviewed by a committee of local representatives, so that we can continuously refine the project’s approach. The results will serve as a foundation in the event that project activities are expanded to other mining locations.

Over the long term, we aim to reduce our dependence on scarce raw materials for vehicle batteries – because not consuming resources is always a better solution than minimising negative effects later. To achieve this and reduce their carbon footprint significantly, used batteries are being given a second life. Batteries from vehicles often still have sufficient capacity to be used as stationary storage units. They can, for instance, lower the costs of the energy transition. As stabilising the power grid becomes increasingly challenging, as more renewable energies feed electricity into the network and a significant number of electric vehicles join as additional consumers, stationary batteries can serve as a buffer.

Our goal for batteries that can no longer be used for stationary power storage is to recycle as much as possible of their valuable resources. Pairing with a university partner, the BMW Group has developed a method that targets a recycling rate of more than 90%, as opposed to the conventional rate of just over 50%. Our priority is to avoid downcycling to lower-quality secondary materials – and to generate as much recycled material as possible that is of suitable quality for production of new lithium-ion batteries.

Our new high-tech Battery Cell Competence Centre will officially open in November 2019. This will expand our research capacity and increase our expertise, especially in the fields of battery design and cell chemistry. You will find further information on this on the blog as the time nears.

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