Volvo Cars to Use Blockchain to Track the Source of Cobalt for EV Batteries
As global automakers begin to electrify their model lineups, they are becoming increasingly dependent on rare earth materials such as cobalt for building lithium-ion electric vehicle battery packs. However, the world's biggest supply of lithium and cobalt mined comes from vast natural reserves in the Democratic Republic of Congo in Africa, where labor laws are often non-existent. The mines in Congo produce around 60% of the world's cobalt.
Automaker Volvo Cars is utilizing blockchain technology in an effort to ensure that raw materials for its EV batteries are sustainably sourced. The automaker will become the first carmaker to implement global traceability of cobalt used in its batteries by applying blockchain technology.
In cobalt mining operations in Congo, mine workers, including children, are often forced to toil away in dangerous conditions, sometimes using just hand tools to dig hundreds of feet underground with little oversight or safety protocols, according to workers, government officials and evidence uncovered by the Washington Post in 2016.
In additional to the hazardous mining conditions, mining activity exposes local communities to dangerous levels of toxic metals that appear to be linked to ailments that include breathing problems and birth defects, health officials say.
Volvo says that traceability of raw materials used in the production of lithium ion batteries is one of the main sustainability challenges faced by car makers. Volvo Cars want to ensure its customers that drive battery-powered Volvo models know that the material for the batteries has been sourced responsibly.
Blockchain technology is essentially a distributed ledger, which establishes a transparent and reliable shared data trail. Each step in the procurement and transportation of cobalt for example, is recorded on the blockchain. The technology allows Volvo to track the material's origin, which cannot be changed by third parties undetected.
Data in the blockchain include the cobalt's origin, attributes such as weight and size, the chain of custody and information establishing that participants' behavior is consistent with the Organization for Economic Cooperation and Development (OECD) supply chain guidelines. The OEDC works to promote sustainable development worldwide. This approach helps create trust between participants along a supply chain.
Within the supply chains, Volvo will be able to enforce a common set of rules for what data can be recorded. This allows all participants to verify and audit transactions independently.
"We have always been committed to an ethical supply chain for our raw materials," said Martina Buchhauser, head of procurement at Volvo Cars. "With blockchain technology we can take the next step towards ensuring full traceability of our supply chain and minimizing any related risks, in close collaboration with our suppliers."
Child labor is often used in Congo to mine the cobalt for lithium ion battery production. (Photo: Fortune Media)
Volvo Cars said it reached an agreement with two of its global battery suppliers, CATL of China and LG Chem of South Korea, and leading global blockchain technology firms to implement traceability of cobalt starting this year.
CATL and LG Chem have a long and successful track record supplying lithium ion batteries to the global automotive industry. The two companies fulfil Volvo Cars' strict sourcing guidelines of supply chains.
Technology firms Circular and Oracle will operate the blockchain technology across CATL's supply chain following a successful pilot earlier this summer, while the Responsible Sourcing Blockchain Network (RSBN), together with RCS Global and IBM, is rolling out the technology in LG Chem's supply chain.
Volvo Cars last month launched the XC40 Recharge, the first of an upcoming family of fully electric cars under the Recharge banner. By 2025, it expects half of its global sales to consist of fully electric cars, with the rest hybrids.
Last month, Volvo Cars also launched an ambitious climate plan, which includes a radical reduction of carbon emissions by 40 per cent per vehicle by 2025, as well as a continued commitment to ethical business across its entire operations and supply chain.
Other global automakers that contracted with CATL for EV batteries include Honda, Toyota, Hyundai and Volkswagen AG.
The agreements between Volvo Cars, CATL and LG Chem cover the supply of lithium-ion batteries over the coming decade for next generation Volvo and Polestar models.
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