For industry, diamonds have nothing on cobalt
Add cobalt to the list of things impacted by the burgeoning demand for electric vehicles.
Along with lithium and graphite, the metal is a core ingredient of the lithium-ion batteries that power our smartphones, laptops, and electric vehicles.
But while cobalt mining and exploration activities are increasing, supply is limited. That’s led to the highest cobalt prices since 2008 — and triple the price of two years ago.
The location of the world’s biggest cobalt deposits also adds to the supply chain risk.
The instability of the Democratic Republic of Congo — the largest producer of cobalt by far with of global production — is prodding some manufacturers to explore different sources. And as cobalt is largely mined by hand, manufacturers are also shifting toward countries that have tougher child labor and worker safety laws.
As Tesla plans to produce their own batteries through its Gigafactories in North America, cobalt sourcing is a clear point of emphasis. They aim to “establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost.”
VW is also moving to secure responsible cobalt supplies to feed its planned creation of three million EVs by 2025. Like Tesla, VW has cited sustainability and the ethical sourcing of materials as important factors when determining where they’ll source cobalt.
Mining exploration companies are already looking at Europe and Canada — breathing new life into near-dormant mining communities, including the place where the mineral got its name: Cobalt, Ontario.
So how can automotive and electronic companies ensure their cobalt comes from the right place?
That’s where blockchain can make a difference — by creating a permanent record that can’t be altered and is fully traceable.
Most people associate blockchain with financial services. But supply chain is the next most likely application for the technology, said Jerry Cuomo, IBM’s vice president for blockchain.
Blockchain can help solve visibility issues by tracking high-value goods from mines to factories. Blockchain, connected to IoT and external information like weather data, would “provide permissioned parties in the inbound chain to the plant with an accurate and transparent end-to-end view of part location, quantity, status and other useful information,” said Matthew Jones, Blockchain Leader at IBM.
And companies are already using the technology to trace the origins of opaque diamond and food contamination routes.
With as much as 65% of a product’s value coming from suppliers, supply chain managers can spot and prevent potential disruptions before it hits their bottom line.