Analysis
14 Dec 17

How ethically is lithium sourced by OEMs?

Batteries in cell phones and basically every electronic device that can be recharged use lithium ion as a source of energy. So do most hybrid and electric vehicles on the market today. With the exponential growth that is expected to take place in the next couple of years, mining of lithium will take even greater proportions than it does today.

The price of lithium carbonate has risen 46 percent since 2015, and with demand increasing, the curve will probably not flatten out soon. Lithium can be found in large quantities in Argentina and especially Chile, but the People’s Republic of China is where most OEMs expect to strike gold. It holds large lithium reserves and offers the most promising perspectives in terms of EV sales.   

Joint ethical commitment

But how ethical are these mining practices and what are OEMs doing to make sure they source lithium in a socially responsible way? It’s not just about lithium alone, incidentally. Cobalt and graphite, too, will be in greater demand, but these minerals are far less ubiquitous. Moreover, most of the world’s cobalt is produced in the Democratic Republic of Congo, where economic and political instability reign and children are forced to work in the cobalt mines.

In late November, 10 car makers and truck manufacturers including Volkswagen, Volvo, Daimler, BMW and Toyota – which are all betting big on EVs – pledged at a conference in Berlin to maintain the highest standards in this respect. Under the “Drive Sustainability” initiative, they will jointly identify and address ethical, environmental, human and labour rights issues in raw materials sourcing.

The alliance "will assess the risks posed by the top raw materials (such as mica, cobalt, rubber and leather) in the automotive sector," said Stefan Crets of the CSR Europe business network (source: Reuters). "This will allow Drive Sustainability to identify the most impactful activities to pursue to address issues within the supply chain.”

Volkswagen takes things very seriously

There is no need to explain that upholding ethics has become an obsession with Volkswagen. The Group is taking its sourcing policy very seriously, imposing strict compliance on is suppliers, all the way down to raw materials.

"We expect our suppliers to ensure maximum transparency and provide information on compliance with the agreed sustainability standards. We will consistently pursue any infringements or irregularities ," said Mr. Garcia Sanz, Member of the Board of Management of the Volkswagen Group responsible for Procurement. "To put it quite clearly, if any supplier or any subcontractor of any supplier does not adhere to these rules and initiate the necessary action, we will be forced to stop dealing with the supplier in case of doubt."

Picture copyright: Volkswagen, 2017

Authored by: Dieter Quartier