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00:00",[],[561],{"slug":562,"name":563,"content":564},"matthew-bird","Matthew Bird",{"job_title":565,"image":566,"bio":568,"linkedin":569},"Senior Editor - Supply Chains & Data Visualisation",{"filename":567},"https://a.storyblok.com/f/287943243085208/512x512/14738033ec/matthew-bird.jpeg","Matthew writes, edits and produces content for Benchmark Intelligence and Benchmark Source across the whole mine to grid supply chain. He also acts as a liaison to the press. He has a PhD in electrochemistry from the University of Nottingham.","https://www.linkedin.com/in/birdmatthew/",{"type":571,"content":572},"doc",[573,580,585,590,595,600,604,608,611,616,621,628,633,638,643,646,651,656,661,666,671,676,681,686,691,696,701,704,709,714,719,724,727,732,737,740,745,750,755,760,765,768,773,778,783,788,793,798,803,808,813,818,821,826,831,836,841,846,851,856,861,866,871,876,879,884,889,894,899,904,909,914,919,924,929,934,939,944,949,954,959,964,967,972,977,982,987,992,997,1002,1007,1012,1017,1022,1027,1032,1037,1042,1047,1050,1055,1060,1065,1070,1075,1078,1083,1088,1093,1098,1103,1108,1113,1118,1123,1128,1133,1138,1146],{"type":574,"attrs":575,"content":576},"paragraph",{"textAlign":49},[577],{"text":578,"type":579},"As new battery technology transforms consumer markets, there is a growing realisation that the transition to electric is not without social and environmental risks in the countries where battery materials – specifically cobalt, lithium, nickel, graphite and manganese – are mined and chemically processed into battery grade materials.","text",{"type":574,"attrs":581,"content":582},{"textAlign":49},[583],{"text":584,"type":579},"These risks present significant reputational, legal, compliance and commercial concerns for major industries harnessing the battery revolution including automotive, electronics and utilities infrastructure.",{"type":574,"attrs":586,"content":587},{"textAlign":49},[588],{"text":589,"type":579},"Companies within these sectors are faced with the twin challenge of mitigating the major sourcing risks across these battery metals while simultaneously responding to the rising external pressure factors compounding their impact.",{"type":574,"attrs":591,"content":592},{"textAlign":49},[593],{"text":594,"type":579},"RCS Global explores this twin challenge and, for the first time, provides a coherent picture of the responsible sourcing challenge the battery industry faces over the next decade.",{"type":574,"attrs":596,"content":597},{"textAlign":49},[598],{"text":599,"type":579},"The lithium-ion (Li-ion) battery is set to fuel a revolution in electric vehicles (EV), home energy storage and even the powering of entire cities. Yet, increasing demand for the li-ion battery is revealing and amplifying a wide spectrum of risks associated with the materials that make up the battery itself.",{"type":574,"attrs":601,"content":602},{"textAlign":49},[603],{"text":578,"type":579},{"type":574,"attrs":605,"content":606},{"textAlign":49},[607],{"text":584,"type":579},{"type":574,"attrs":609,"content":610},{"textAlign":49},[],{"type":574,"attrs":612,"content":613},{"textAlign":49},[614],{"text":615,"type":579},"Companies within these sectors are faced with the twin challenge of mitigating the major sourcing risks across these battery minerals while simultaneously responding to the rising external pressure factors compounding their impact.",{"type":574,"attrs":617,"content":618},{"textAlign":49},[619],{"text":620,"type":579},"This paper explores this twin challenge and, for the first time, provides a coherent picture of the responsible sourcing challenge the battery industry faces over the next decade.",{"type":622,"attrs":623,"content":625},"heading",{"level":624,"textAlign":49},3,[626],{"text":627,"type":579},"The battery story",{"type":574,"attrs":629,"content":630},{"textAlign":49},[631],{"text":632,"type":579},"While some analysts question the Li-ion battery’s long-term market position, its dominance over the next decade is assured due to significant recent progress on price and performance.",{"type":574,"attrs":634,"content":635},{"textAlign":49},[636],{"text":637,"type":579},"The cost of a lithium-ion battery cell has plummeted from $1300/kWh in 2011 to between $250/kWh and a low of $139/kWh today while mass market producers are securing lithium-ion batteries at an even lower rate.",{"type":574,"attrs":639,"content":640},{"textAlign":49},[641],{"text":642,"type":579},"This price drop has been matched by a major technological breakthrough with the new range of lithium-ion batteries finally allowing electric cars to reach the symbolic mark of 200 miles (320km) per charge.",{"type":574,"attrs":644,"content":645},{"textAlign":49},[],{"type":574,"attrs":647,"content":648},{"textAlign":49},[649],{"text":650,"type":579},"Major producers such as Volvo have announced that by 2019 all new vehicles will be at least part electrified.",{"type":574,"attrs":652,"content":653},{"textAlign":49},[654],{"text":655,"type":579},"Overall, growth in the electric car market is projected to increase to 140 million units by 2030 with the wider li-ion battery market expected to more than double by 2025 due to EV demand complemented by the growth of the residential and utility scale battery storage market.",{"type":574,"attrs":657,"content":658},{"textAlign":49},[659],{"text":660,"type":579},"The development this year of the world’s largest lithium-ion battery in South Australia marks the first of several utility and residential storage projects currently in progress globally.",{"type":622,"attrs":662,"content":663},{"level":624,"textAlign":49},[664],{"text":665,"type":579},"Deconstructing lithium ion",{"type":574,"attrs":667,"content":668},{"textAlign":49},[669],{"text":670,"type":579},"What materials are in play when discussing the lithium-ion battery? The anode in most lithium-ion batteries is predominantly made up of graphite which acts as host for the lithium ions.",{"type":574,"attrs":672,"content":673},{"textAlign":49},[674],{"text":675,"type":579},"For example, there are 54 kg of graphite in the battery anode of each Tesla Model S. In contrast, the make-up of the cathode varies widely with mineral compositions changing as researchers look to improve energy efficiency and safety.",{"type":574,"attrs":677,"content":678},{"textAlign":49},[679],{"text":680,"type":579},"But while multiple variations exist, there are currently three typical lithium-ion batteries used commercially, see table above. In the three types of battery outlined above, and in the varying other versions on the market, five prevalent materials emerge, which we refer to as the core “battery minerals and metals” :",{"type":574,"attrs":682,"content":683},{"textAlign":49},[684],{"text":685,"type":579},"Using these five ‘battery metals’ as the core focus, this paper unpicks the risks in these supply chains and outlines how they can be identified, managed and mitigated.",{"type":622,"attrs":687,"content":688},{"level":624,"textAlign":49},[689],{"text":690,"type":579},"Due diligence risk and impact, upstream to midstream",{"type":574,"attrs":692,"content":693},{"textAlign":49},[694],{"text":695,"type":579},"Responsible sourcing is becoming a focal point for battery buyers, investors, regulators, and the advocacy community as demand for the product increases. Yet the complexity and multiplicity of Li-ion battery supply chains makes the process hugely challenging.",{"type":574,"attrs":697,"content":698},{"textAlign":49},[699],{"text":700,"type":579},"The graphic below shows the supply chain of just one of these battery metals – cobalt – from source to battery and illustrates this complexity. The presence of ‘due diligence risk’ occurs at ALL levels of the supply chain and is compounded by market forces and public scrutiny.",{"type":574,"attrs":702,"content":703},{"textAlign":49},[],{"type":574,"attrs":705,"content":706},{"textAlign":49},[707],{"text":708,"type":579},"What is more, there is no easy, one size fits all solution. We define ‘due diligence risk’ as any combination of negative reputational, commercial, legal, and operational consequences associated with the issues described below.",{"type":622,"attrs":710,"content":711},{"level":624,"textAlign":49},[712],{"text":713,"type":579},"Potential non-compliance risks",{"type":574,"attrs":715,"content":716},{"textAlign":49},[717],{"text":718,"type":579},"Stringent sourcing and upstream production standards and market expectations have emerged in recent years driven by the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas. The Guidance emphasizes :",{"type":574,"attrs":720,"content":721},{"textAlign":49},[722],{"text":723,"type":579},"Most sustainable mining standards, including the International Council on Mining and Metals (ICMM) 10 Principles, also focus on miners’:",{"type":574,"attrs":725,"content":726},{"textAlign":49},[],{"type":574,"attrs":728,"content":729},{"textAlign":49},[730],{"text":731,"type":579},"Based on information reported in the public domain , RCS Global primary research and expert insight, and information obtained as part of engagements in mineral supply chain due diligence, we have mapped and codified the risks related to the six areas outlined above and ranked the potential likelihood of them being present in each battery material supply chain.",{"type":574,"attrs":733,"content":734},{"textAlign":49},[735],{"text":736,"type":579},"Clearly product, brand, or supplier-specific investigations may reveal different risk levels. Furthermore, none of the supply chains highlighted below – with the exception of cobalt – have been fully investigated by any research organisation or advisory firm; the more investigation happens, the more risks will likely emerge.",{"type":574,"attrs":738,"content":739},{"textAlign":49},[],{"type":574,"attrs":741,"content":742},{"textAlign":49},[743],{"text":744,"type":579},"Yet this grid represents the first attempt to map the full spectrum or due diligence risks associated with the main inputs in a lithium ion battery. Many of the risks emphasized by internationally recognized standards are present in li-ion battery metal supply chains.",{"type":574,"attrs":746,"content":747},{"textAlign":49},[748],{"text":749,"type":579},"The most prevalent are environmental risks, followed by poor community relations, poor OHS conditions, and provenance from highrisk countries. Child labour and human rights abuses exist in cobalt supply chains, while there is the possibility that they may also surface in nickel and manganese.",{"type":574,"attrs":751,"content":752},{"textAlign":49},[753],{"text":754,"type":579},"These issues have received overwhelming media attention in recent months. Thus, while they may not be present in all battery supply chains, stakeholders will likely demand relatively greater due diligence on these perceived risks.",{"type":574,"attrs":756,"content":757},{"textAlign":49},[758],{"text":759,"type":579},"Given that cobalt is the ‘riskiest’ battery metal, while at the same time being the only one with a well investigated supply chain, it is likely that the risk levels associated to the other battery metals will change in the future – including a potential increase in publicly perceived risk.",{"type":574,"attrs":761,"content":762},{"textAlign":49},[763],{"text":764,"type":579},"In terms of the metals, cobalt remains the primary risk within the lithium-ion battery supply chain as highlighted in the RCS Global 2016 paper on “The Emerging Cobalt Challenge”. Across most metrics, it scores poorly.",{"type":574,"attrs":766,"content":767},{"textAlign":49},[],{"type":574,"attrs":769,"content":770},{"textAlign":49},[771],{"text":772,"type":579},"This may simply be due to the fact that cobalt has a more investigated supply chain as a result of the growing awareness around upstream risks associated with that metal. Yet risks loom across all five metals.",{"type":622,"attrs":774,"content":775},{"level":624,"textAlign":49},[776],{"text":777,"type":579},"Risks in context",{"type":574,"attrs":779,"content":780},{"textAlign":49},[781],{"text":782,"type":579},"Artisanal and Small-scale Mining (ASM) refers to mining by individuals, groups, families or cooperatives with minimal or no mechanization, often in the informal sector of the market.",{"type":574,"attrs":784,"content":785},{"textAlign":49},[786],{"text":787,"type":579},"It is estimated that there are around 100 million artisanal miners globally. This informal and largely ungoverned and unregulated nature of ASM poses myriad social risks, including forced labour, sexual violence, and ease of capture by corrupt elite interests or non-state groups.",{"type":574,"attrs":789,"content":790},{"textAlign":49},[791],{"text":792,"type":579},"ASM is particularly prevalent in cobalt and cobalt occurs as a by-product of nickel. Thus, ASM production of cobalt and nickel is likely to reach market, while there are also reports of manganese deposits in the Democratic Republic of Congo (DRC) that are artisanally mined.",{"type":574,"attrs":794,"content":795},{"textAlign":49},[796],{"text":797,"type":579},"Child labour risks exposed in the DRC’s cobalt sector over the past year have inflicted reputational damage on brands and have led companies to terminate business relationships with potentially affected suppliers.",{"type":574,"attrs":799,"content":800},{"textAlign":49},[801],{"text":802,"type":579},"It has also focussed attention on an uncomfortable truth: that child labour is still prevalent in minerals mining, especially in Africa and India. Reports about child labour in nickel-rich areas have started emerging as well and manganese’s exposure to ASM could also lead to child labour.",{"type":574,"attrs":804,"content":805},{"textAlign":49},[806],{"text":807,"type":579},"For downstream companies, the issue of provenance from high-risk countries is fundamentally an issue of assurance against minimum standards of production and trade and reputation.",{"type":574,"attrs":809,"content":810},{"textAlign":49},[811],{"text":812,"type":579},"Companies are linked and responsible (either legally or via reputation/ their own commitments) to the issues at source in a high-risk country even if they source from regions within those countries that may not be affected by instability.",{"type":574,"attrs":814,"content":815},{"textAlign":49},[816],{"text":817,"type":579},"This may expose other risks listed here as well as perceived links to disreputable governments such as Zimbabwe (lithium), Afghanistan (lithium), Madagascar (cobalt), the DRC (cobalt), or Mozambique (graphite). For example, the resurgence of violent conflict in Mozambique’s graphite mining region may raise concerns. Links to ‘conflict minerals’ have not yet been found.",{"type":574,"attrs":819,"content":820},{"textAlign":49},[],{"type":574,"attrs":822,"content":823},{"textAlign":49},[824],{"text":825,"type":579},"The challenge of environmental damage spans across all battery metals supply chains and all geographies. It can incorporate water, air and soil pollution, waste management and longer-term issues such as reclamation.",{"type":574,"attrs":827,"content":828},{"textAlign":49},[829],{"text":830,"type":579},"Examples include air pollution in India and China water contamination in the South American ‘lithium triangle’ and in Guatemala and Indonesia due to nickel mining. Illegal deforestation also often occurs to make room for nickel mines as happening in the Philippines.",{"type":574,"attrs":832,"content":833},{"textAlign":49},[834],{"text":835,"type":579},"Environmental damage often serves as a flashpoint for community grievances and if unaddressed can lead to other serious impacts based on conflict including human rights abuses.",{"type":574,"attrs":837,"content":838},{"textAlign":49},[839],{"text":840,"type":579},"Another issue that has been flagged is the high carbon footprint of lithium mining and processing. Environmental issues can be particularly damaging to li-ion battery supply chains due to the perceived ‘green credentials’ of EVs.",{"type":574,"attrs":842,"content":843},{"textAlign":49},[844],{"text":845,"type":579},"The World Bank’s recent report ‘The Growing Role of Minerals and Metals for a Low-Carbon Future’ underlines this point, calling for a debate on how to balance the potential low-carbon gains from lithium ion with the potential socio-environmental impact of rising battery metal demands.",{"type":574,"attrs":847,"content":848},{"textAlign":49},[849],{"text":850,"type":579},"Mining operations can violate indigenous peoples’ rights and/or traditions, as occurring in the lithium-rich areas of Argentina, for instance.",{"type":574,"attrs":852,"content":853},{"textAlign":49},[854],{"text":855,"type":579},"Forced evictions around cobalt mines in the DRC or local community protests over manganese mining in Burkina Faso are further examples. Poor community relationships can contribute to a loss of mining companies’ social license to operate, making it more costly or impossible for companies to guarantee the security of operations.",{"type":574,"attrs":857,"content":858},{"textAlign":49},[859],{"text":860,"type":579},"OHS problems feature prominently in many companies’ battery supply chains. Inadequate protective equipment or exposure to pollution can cause workers’ health problems and deadly accidents.",{"type":574,"attrs":862,"content":863},{"textAlign":49},[864],{"text":865,"type":579},"Poor OHS conditions have been highlighted in graphite mining and processing in China, nickel transportation in the Philippines, and manganese mining in Namibia . Additionally, strikes due to poor working conditions can have negative impacts on large miners’ bottom lines and supply commitments.",{"type":574,"attrs":867,"content":868},{"textAlign":49},[869],{"text":870,"type":579},"Should those impacts be reported on, as they have in graphite, manganese and cobalt, they can cause substantial harm to the companies purchasing from those entities.",{"type":622,"attrs":872,"content":873},{"level":624,"textAlign":49},[874],{"text":875,"type":579},"Battery materials snapshot",{"type":574,"attrs":877,"content":878},{"textAlign":49},[],{"type":574,"attrs":880,"content":881},{"textAlign":49},[882],{"text":883,"type":579},"The above non-exhaustive map offers a global snapshot of incidents related to the abovementioned risks covered by mainstream media outlets over the last two years.",{"type":574,"attrs":885,"content":886},{"textAlign":49},[887],{"text":888,"type":579},"Purely showing some of the kinds of incidents which have reached public attention over this period – the map illustrates the multiplicity in geography and risk type that companies are facing.",{"type":574,"attrs":890,"content":891},{"textAlign":49},[892],{"text":893,"type":579},"What this means for companies in the battery supply chain: Incidents are occurring in battery supply chains that are in noncompliance with recognized industry standards on responsible sourcing. We project that as lithium-ion demand grows, so will the volume of incidents and issues within the core battery metal supply chains.",{"type":622,"attrs":895,"content":896},{"level":624,"textAlign":49},[897],{"text":898,"type":579},"The ‘China processing risk’",{"type":574,"attrs":900,"content":901},{"textAlign":49},[902],{"text":903,"type":579},"But risk is not only present in the upstream. The pivotal role China plays as the fulcrum for virtually all lithium-ion battery production has significant implications for downstream industry compliance.",{"type":574,"attrs":905,"content":906},{"textAlign":49},[907],{"text":908,"type":579},"There are a group of responsible sourcing risks associated with the minerals processing and industrial sector in China:",{"type":574,"attrs":910,"content":911},{"textAlign":49},[912],{"text":913,"type":579},"Some Chinese mines have even been shut down due to growing scrutiny around environmental and labour practices.",{"type":574,"attrs":915,"content":916},{"textAlign":49},[917],{"text":918,"type":579},"For example, in 2013, up to 55 graphite processors and miners in the province of Shandong – making up 20% of China’s graphite supply – were ordered by the local government to halt production on environmental grounds.",{"type":622,"attrs":920,"content":921},{"level":624,"textAlign":49},[922],{"text":923,"type":579},"An improving risk environment",{"type":574,"attrs":925,"content":926},{"textAlign":49},[927],{"text":928,"type":579},"However, the China story is nuanced. Far from being completely regressive, China has also seen advances in responsible sourcing and production across several areas.",{"type":574,"attrs":930,"content":931},{"textAlign":49},[932],{"text":933,"type":579},"For instance, the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) launched the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains in 2015 and was instrumental in launching the Responsible Cobalt Initiative (RCI) in 2016.",{"type":574,"attrs":935,"content":936},{"textAlign":49},[937],{"text":938,"type":579},"From an RCS Global perspective, we have also seen a significant increase in engagement from Chinese producers and processors aiming to bring company practices in to line with global good practice standards.",{"type":574,"attrs":940,"content":941},{"textAlign":49},[942],{"text":943,"type":579},"RCS Global is currently advising the CCCMC and the RCI on the development of responsible sourcing audit protocols. What this means for companies in the battery supply chain: Given that it is extremely difficult to avoid China due to its dominance in the processing and manufacturing market, it is difficult to avoid the ‘China processing risk’. This means ongoing and significant engagement with Chinese manufacturers and the government is needed to achieve responsible sourcing objectives.",{"type":622,"attrs":945,"content":946},{"level":624,"textAlign":49},[947],{"text":948,"type":579},"The dangerous unknowns of battery metal supply chains",{"type":574,"attrs":950,"content":951},{"textAlign":49},[952],{"text":953,"type":579},"As demand for battery metals increases, it is likely that there will be a growing number of new companies entering the market in the upstream and mid-stream. Already in lithium, most new supply is coming from smaller companies and non-mining companies.",{"type":574,"attrs":955,"content":956},{"textAlign":49},[957],{"text":958,"type":579},"Analysts fear that these comparatively smaller producers or traders either do not have the budgets to properly manage responsible sourcing challenges and compliance or simply do not have the will to respect regulation and good practice. This issue may be further exacerbated in areas where environmental codes and social conditions are not protective or inclusive.",{"type":574,"attrs":960,"content":961},{"textAlign":49},[962],{"text":963,"type":579},"Another important factor is the ‘quality’ of mining companies dominating each of these metals. Internationally-listed and reputable mining companies may at first glance decrease risk. However, there are no widely agreed upon responsible sourcing standards or reporting frameworks for battery materials (RCS Global is currently developing the first responsible sourcing framework for the cobalt industry with the Cobalt Development Institute). Thus, producers must be assessed against supply chain-specific criteria that may reveal due diligence challenges even in larger mining companies.",{"type":574,"attrs":965,"content":966},{"textAlign":49},[],{"type":574,"attrs":968,"content":969},{"textAlign":49},[970],{"text":971,"type":579},"At present – with the exception of cobalt – none of the above-mentioned battery metal supply chains have been fully investigated and some lack any tangible investigation at all.",{"type":574,"attrs":973,"content":974},{"textAlign":49},[975],{"text":976,"type":579},"The last year has seen significant progress in cobalt with RCS Global among organizations who have effectively completed investigated the cobalt supply chain. However, nickel and manganese, for instance, have virtually no comprehensive traceability.",{"type":574,"attrs":978,"content":979},{"textAlign":49},[980],{"text":981,"type":579},"As explained in the section on upstream risks related to conflict-affected countries, sourcing countries for battery metals include several developing countries with governance deficits and conflict potential.",{"type":574,"attrs":983,"content":984},{"textAlign":49},[985],{"text":986,"type":579},"Conflicts or hostile governments affecting mineral supply and natural resource governance can occur unsuspectedly in countries like Afghanistan (lithium), Zimbabwe (lithium), Madagascar (cobalt), Tanzania (graphite), or Mozambique (graphite).",{"type":574,"attrs":988,"content":989},{"textAlign":49},[990],{"text":991,"type":579},"Several producers of end products and battery components have started to examine ways to reduce their reliance on mining by increasingly sourcing from recycled material. However, working conditions and environmental issues relating to battery recycling are largely unknown to the public.",{"type":574,"attrs":993,"content":994},{"textAlign":49},[995],{"text":996,"type":579},"The lead acid battery recycling market is already under scrutiny for labour and environmental concerns and several analysts and campaigning organisation have begun to now look to the li-ion battery as well.",{"type":574,"attrs":998,"content":999},{"textAlign":49},[1000],{"text":1001,"type":579},"Further potential risks for recycling are the potential reliance on a small number of suppliers in the largely undeveloped recycling market and the absence of common industry standards and regulation.",{"type":574,"attrs":1003,"content":1004},{"textAlign":49},[1005],{"text":1006,"type":579},"Leading companies have started their own research for purposes of identifying the benefits of so-called ‘closed loop supply chains’. What this means for companies in the battery supply chain: The more you look into risks, the more issues you may find.",{"type":574,"attrs":1008,"content":1009},{"textAlign":49},[1010],{"text":1011,"type":579},"A company may not know what risks are hidden in its supply chain. There may be substantial risks beyond the ones identified earlier, including suppliers that refuse to be transparent on potential risks.",{"type":574,"attrs":1013,"content":1014},{"textAlign":49},[1015],{"text":1016,"type":579},"It is also premature to consider heavily relying on recycling for battery inputs in the short term. A gradual shift may be more recommendable.",{"type":622,"attrs":1018,"content":1019},{"level":624,"textAlign":49},[1020],{"text":1021,"type":579},"Risk multipliers",{"type":574,"attrs":1023,"content":1024},{"textAlign":49},[1025],{"text":1026,"type":579},"In addition to the risks identified above, there are rising external pressures that act as risk multipliers and are further bringing the issue of responsible sourcing into sharp focus and driving the need for action.",{"type":622,"attrs":1028,"content":1029},{"level":624,"textAlign":49},[1030],{"text":1031,"type":579},"Supply shortages & concentrated production",{"type":574,"attrs":1033,"content":1034},{"textAlign":49},[1035],{"text":1036,"type":579},"First, the growing demand and competition for battery metals, not least in cobalt and lithium, will further constrict downstream actors’ ability to be selective when establishing supply chains. Analysts project the cobalt supply deficit to increase by 83% to 5,340 tonnes between 2018 and 2020.",{"type":574,"attrs":1038,"content":1039},{"textAlign":49},[1040],{"text":1041,"type":579},"A compounding factor for supply bottlenecks is the long lead time in developing new mines (development can take up to 10 years ). Automotive industry representatives have also stated that supplies of lithium are of the greatest concern to carmakers, as production struggles to keep up with demand.",{"type":574,"attrs":1043,"content":1044},{"textAlign":49},[1045],{"text":1046,"type":579},"Annual lithium production would need to grow by 94% over the next 20 years to satisfy the projected demand from the EV market. What is more, lithium production is dominated by only four companies.",{"type":574,"attrs":1048,"content":1049},{"textAlign":49},[],{"type":574,"attrs":1051,"content":1052},{"textAlign":49},[1053],{"text":1054,"type":579},"Some experts see a potential risk of cartels developing in lithium and cobalt. Mismatches between supply and demand in the short- and medium-term could increase producer leverage while weakening the downstream’s ability to re-direct supply chains away from high-risk producers.",{"type":574,"attrs":1056,"content":1057},{"textAlign":49},[1058],{"text":1059,"type":579},"What is more, the production and reserves of battery metals are either concentrated in a small number of countries, come from countries that have been identified as sources of responsible sourcing risks in earlier (see map above), or both:",{"type":622,"attrs":1061,"content":1062},{"level":624,"textAlign":49},[1063],{"text":1064,"type":579},"Increasing public scrutiny",{"type":574,"attrs":1066,"content":1067},{"textAlign":49},[1068],{"text":1069,"type":579},"The lithium-ion battery market is also facing rising pressure directed at their responsible sourcing practices by the media, campaigning NGOs, a growing number of trade, regulatory and legislative bodies, and consumers themselves. And public scrutiny – and with-it stakeholder awareness – around the responsible sourcing risks associated with battery metals will continue to increase:",{"type":574,"attrs":1071,"content":1072},{"textAlign":49},[1073],{"text":1074,"type":579},"The first three steps are already happening in battery metals. It is thus likely that more standards and initiatives specific to battery metals will appear, followed by increased debate on legislation. What this means for companies: If sufficient due diligence is not conducted, a company may risk not complying with increasingly strict industry standards (which may result in loss of business relationships and reputational damage) or, worse, international and domestic laws (which may result in loss of business licenses or lawsuits).",{"type":574,"attrs":1076,"content":1077},{"textAlign":49},[],{"type":622,"attrs":1079,"content":1080},{"level":624,"textAlign":49},[1081],{"text":1082,"type":579},"Recap: A complex, self compounding risk environment",{"type":574,"attrs":1084,"content":1085},{"textAlign":49},[1086],{"text":1087,"type":579},"In summary, having assessed each of the five main battery metals, three risk levels emerge, all of which are amplified by growing external scrutiny and pressure: Many of the risks identified above are of a humanitarian nature and companies have a social responsibility to address them, but responsible sourcing is not only a corporate social responsibility (CSR) issue.",{"type":574,"attrs":1089,"content":1090},{"textAlign":49},[1091],{"text":1092,"type":579},"Not responding to these risks can have potential reputational, commercial, legal, and operational consequences for businesses in the battery supply chain which can affect the bottom line:",{"type":574,"attrs":1094,"content":1095},{"textAlign":49},[1096],{"text":1097,"type":579},"Risk management options",{"type":574,"attrs":1099,"content":1100},{"textAlign":49},[1101],{"text":1102,"type":579},"As we have established, disengagement from specific battery metal supply chains is not an option given heightened demand and competition plus the comparatively concentrated supply. A company simply cannot redirect its supply chain away from high risk producers or regions in the upstream. Equally in the midstream, disengagement with China is also impossible given its dominance within battery metal processing. Companies have to act.",{"type":574,"attrs":1104,"content":1105},{"textAlign":49},[1106],{"text":1107,"type":579},"From an external stakeholder perspective, and that of a growing number of companies in the supply chain, basic “box ticking” and “just enough” approaches to compliance are no longer sufficient.",{"type":574,"attrs":1109,"content":1110},{"textAlign":49},[1111],{"text":1112,"type":579},"There is also an increasing gap between this approach and the consensus forming around adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.",{"type":574,"attrs":1114,"content":1115},{"textAlign":49},[1116],{"text":1117,"type":579},"The completion of relevant supply chain audits and initial mapping exercises remain critical processes. Indeed, they are the tool to prove core due diligence has been undertaken and an excellent foundation for building a more comprehensive future due diligence program.",{"type":574,"attrs":1119,"content":1120},{"textAlign":49},[1121],{"text":1122,"type":579},"For companies looking to begin participating in responsible sourcing – auditing and supply chain mapping is the gateway to doing so. But market expectations are moving towards more active engagement in the supply chain as evidenced by the trend in cobalt over the last year.",{"type":574,"attrs":1124,"content":1125},{"textAlign":49},[1126],{"text":1127,"type":579},"Equally, many companies are simply becoming jaded by due diligence processes that meet base-level compliance requirements but deliver little new information or structural improvement in the supply chain itself.",{"type":574,"attrs":1129,"content":1130},{"textAlign":49},[1131],{"text":1132,"type":579},"Having established compliance through industry audit programs and supply chain mapping, more and more companies are now looking to move beyond compliance, towards active participation.",{"type":574,"attrs":1134,"content":1135},{"textAlign":49},[1136],{"text":1137,"type":579},"Given this context, three broad stages or “steps” are emerging for downstream businesses looking to establish responsible sourcing, not least in battery metals.",{"type":574,"attrs":1139,"content":1140},{"textAlign":49},[1141],{"text":1142,"type":579,"marks":1143},"Contributor: RCS Global is a world leading advisory, audit and training company specializing in the responsible sourcing of natural resources. RCS Global hosted the Sustainable Souring Roundtable at Benchmark Mineral Intelligence’s Cathodes 2017, 8-10 October 2017.",[1144],{"type":1145},"italic",{"type":574,"attrs":1147,"content":1148},{"textAlign":49},[],"As new battery technology transforms consumer markets, there is a growing realisation that the transition to electric is not without social and environmental risks in the countries where battery materials – specifically cobalt, lithium, nickel, graphite and manganese – are mined and chemically processed into battery grade materials. These risks present significant reputational, legal, compliance […]",[1151],{"slug":562,"name":563,"content":1152},{"job_title":565,"image":1153,"bio":568,"linkedin":569},{"filename":567},"\u003C!--#storyblok#{\"name\": \"article\", \"space\": \"\", \"uid\": \"47b2bb37-e046-466c-8c3e-6b2829c61ea9\", \"id\": \"\"}-->","article",[1157,1160],{"slug":1158,"name":1159},"batteries","Batteries",{"slug":1161,"name":1162},"critical-minerals","Critical Minerals","private",{"id":49,"alt":1165,"name":1165,"focus":1165,"title":1165,"source":1165,"filename":1166,"copyright":1165,"fieldtype":1167,"meta_data":1168,"is_external_url":51},"","https://a.storyblok.com/f/287943243085208/559f4c6b66/bm-screen-shot-2017-11-27-at-093600.png","asset",{"alt":1165,"title":1165,"source":1165,"copyright":1165},"Nov 27, 2017","27th November 2017",[],[],1789982602887]