Global trade has done wonders for investors and consumers by reducing prices and increasing returns.
By shifting production to low labour cost areas it has helped lift the poorest out of poverty. But in the headlong pursuit of lower costs and higher profitability responsibility to our fellow citizens should not be overlooked.
Take cobalt. Many people know this is a key metal in lithium ion batteries, powering our smartphones, electric cars and other devices. What fewer people know is that many of these devices are tainted with cobalt produced by child labour. Some 60% of the world’s cobalt reserves are found in the Democratic Republic of Congo (DRC, pictured).
While mainstream mining groups there adhere to the safeguards expected by consumers, so-called artisanal small-scale producers mine cobalt using children as young as four. Analysts expect a 12-fold increase in lithium ion battery capacity is needed to meet consumer demands and the promise of a low-carbon economy. The market is likely to reach $100bn by 2025. Batteries installed in homes and businesses will account for 57% of the world’s energy storage capacity by 2040.
Those of us at the sharp end, operating mines in some of the toughest regions of the world, in places where if you get bitten by the wrong insect you die, have a big role to play. As a global industry we should agree how to operate using a responsible value chain to supply the fast-growing battery market powering the technology and clean energy revolution. Amnesty International’s recent demand for transparency on cobalt sourcing is a step in making corporations accountable for their suppliers’ behaviour and the impact this can have on entire generations.
The internationalisation of media and consumer power can help bear down on the use of child labour. As big-brand apparel producers have discovered, once consumers realise how their pound, dollar or euro is being used they rapidly start to vote with their wallets. No consumer brand wants to suffer the financial and reputational impact of a buyers strike be it Apple, Zara or Japan Tobacco. The moment they realise the risk they are running they will spend the money to take back control of their supply chain.
Recently ERG and other established mining groups, with the support of UNICEF, Volkswagen, BASF and others, set up the Global Battery Alliance to ensure a sustainable supply of raw materials and responsible practices. Operating in this way has a short term cost impact but it will also give our customers reassurance about the provenance of our products. As a society we are becoming more socially and environmentally conscious, as an industry, we must set our sights and standards accordingly. Our investors need to see it the same way.
Dr Alexander Machkevitch is chairman of the Eurasian Resources Group