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5. Challenges and solutions for EV deployment |
Lithium
In Lithium Triangle: water-related conflicts, local
Social challenges (indigenous) community’s underbenefitting from the activity, corruption.
Cobalt(1)
20% of mining in DRC is artisanal, which is associated with health and safety concerns for miners, plus child labour. Cases of corruption in both artisanal and largescale mining.
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Nickel |
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Copper |
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Same social |
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problems as for |
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Conflicts with |
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cobalt in the DRC |
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and some local |
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local (indigenous) |
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communities |
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communities due |
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oppose new |
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to environmental |
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mining activities |
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issues. |
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(water shortage |
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concerns) (Peru, |
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Chile). |
Notes: Mt = million tonnes; Gt = gigatonnes.
(1)Even though the trend for battery chemistry is to significantly reduce the amount of cobalt used, this transition will take some time and, even with relatively low cobalt content in batteries in the longer term, global cobalt demand is expected to soar with the growth of e-mobility as this sector will be one of the main drivers of cobalt use (see Chapter 3, Implications for automotive batteries).
(2)The most recent resource assessments for each mineral are considered relative to demand in the two scenarios. It is important to keep in mind that resources cannot necessarily be converted into reserves.
(3)These figures are based on a mix of 10% NCA, 10% NMC 433, 15% NMC 532 batteries, 25% NMC 622 and 40% NMC 811 by 2030 and associated mineral content (IEA, 2018a) and on EV uptake in the New Policies Scenario presented in Chapter 3.
(4)Today, most of the class I nickel comes from nickel sulphide ores mainly located in the Russian Federation and Canada (USGS, 2015) while laterite deposits (mainly located in Philippines and Indonesia) are mainly used to produce class II nickel (<99% Ni content). The latter is mostly driven by demand for stainless steel production. However, the growth of class I nickel demand for EV batteries may lead to growing production of class I nickel from laterite deposits.
(5)Additional to the environmental challenges outlined, material refining is often an energy-intensive process, with potentially
significant associated CO2 emissions depending on the power generation mix. For example, refining is responsible for about 60% of the life-cycle global GHG emissions from cobalt today (CDI, 2016).
Sources: USGS (2019a) (2019b); Mudd et al (2013); Mudd and Jowitt (2014); Yaksic and Tilton (2009), Speirs et al (2014), Hache, Seck and Simoenl (2018); Cyclope (2018); Home (2018); Schodde (2014); Drive Sustainability; The RMI; The Dragonfly Initiative (2018); Church and Crawford (2018), Kavanagh et al (2018); Amnesty International (2016); RCS GLOBAL (2016); BBC News (2014)
Solutions
Some of the challenges identified in Table 5.1 have already led to the development of a number of regulations that frame the activities of the mining sector (e.g. on workplace health and safety, water withdrawals, waste and effluent management, air emissions). These regulations, developed at national, regional and international levels, enable major mining companies to frame the development of their operations in a way that complies with safety, environmental and social requirements. They also help in the development of monitoring practices that are instrumental to identify and replicate good practices. The engagement of major mining companies to deal with the challenges extends beyond regulatory frameworks, through their participation in processes under the framework of the United Nations and other international fora. Overall, this is helpful to ensure that large-scale mining activities develop not only in a way that acknowledges the relevance of existing challenges, but also to have a proactive role to find solutions, including those that can help ensure that long-term supply for electric vehicle materials occurs with minimum adverse effects.
This section provides an overview of the response from various stakeholders, both public and private, along the EV material supply/value chains. This overview builds on existing high-level guidelines and best practices that target a traceable and sustainable approach of raw material supply chains. However, because of the significant geological, physical, economic and
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Global EV Outlook 2019 |
5. Challenges and solutions for EV deployment |
geographical diversity of the materials and their origin, plus their associated risks, detailed scrutiny and tailor-made solutions are needed to mitigate risks all along the chain down to the individual mine.
Towards sustainable minerals sourcing via due diligence principles
A number of stakeholders, from government, international organisations, non-governmental organisations (NGOs) and the private sector have looked and/or are increasingly looking into solutions to improve transparency of material supply chains and to mitigate risks associated with materials production. Action was initiated through the creation of guidance on due diligence in supply chains. One of the first major governmental actions on due diligence was the 2010 Dodd-Frank Act in the United States, requiring due diligence for conflict mineral sourcing. It focused on tin, tantalum, tungsten and gold (3TsG) (GlobalWitness, 2015a), all well known for being conflict minerals. They are used in electronic devices such as mobile phones. Several African countries with significant extractive activities such as the Democratic Republic of Congo (DRC) and Rwanda passed laws requiring companies to monitor their supply chain (GlobalWitness, 2015b). The Dodd-Frank Act contributed to the development of the Organisation of Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Mineral Supply Chains (OECD, 2019a). It is the leading international standard on the topic (currently in its third edition23), and provides detailed recommendations for enhancing supply chain transparency and mitigating risks mainly related to human rights (Box 5.1). In 2021, the European Union will enforce a regulation called the Conflict Minerals Regulation for 3TsG to ensure that importers from EU countries will reach the standards set by the OECD Due Diligence Guidance (EC, 2017b).
Box 5.1. OECD Due Diligence Guidance for Responsible Mineral Supply Chains
The guidance aims to help companies to assess the risks related to mineral sourcing in the conflicted mineral supply chain by providing a five step protocol.24 The five step framework is applicable to all minerals, with the guidance featuring more detailed supplements for the 3Ts and gold. The supplements are considered the first point of reference for other supply chains with similar characteristics.
Summary of the five step framework:
Step 1: Companies should strengthen their management systems to adapt their engagement with materials suppliers as outlined in the next steps.
Step 2: Companies should map the factual circumstances of their supply chain (according to their position along the supply chain), and identify and assess the risks of adverse impacts. Refiners and all companies further upstream are expected to map to the mine of origin of the raw material, and all companies downstream of the refiner are expected to map to the refiner.
23The first edition was adopted in 2011 (OECD, 2019b).
24Conflict minerals are defined as those for which companies involved in their supply chain risk to directly or indirectly contribute to violent conflict or human rights abuses (EC, 2017b). A definition given by the French Economics, Social and Environmental Council extends it to risks linked to the environment and to conflicts with local communities due to water resources and corruption (SaintAubin, 2019).
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Step 3: Companies should set up a”risk management plan” to prevent or mitigate the risks identified and monitor impacts along the supply chain.
Step 4: Companies should audit their due diligence practices in the supply chain.25
Step 5: Companies should make their due diligence standards and practices available to the public.
Besides these high-level principles, the guidance also provides best practice advice in its annexes. In particular, it provides a model of a supply chain policy for companies, which addresses the major impact areas from material sourcing to export, including for actions to avoid non-state armed groups being involved in extractive activities or human rights abuses. Annex III, titled ”Suggested measures for risk mitigation and Indicators for measuring improvement”, offers concrete measures for upstream companies to tackle several common risks, such as working closely with international organisations and encouraging efforts from governments to improve work and safety conditions in artisanal mines.
Although the focus until now has mainly been on the 3TsG, due diligence principles can be applied to any material. Additionally, increased scrutiny is now being placed on battery materials after the consumer electronics boom of the past decade. This has been particularly the case for cobalt, linked to calls from NGOs such as Amnesty International (Amnesty International, 2016). The risks of child labour and corruption have been widely communicated in the press (CBS News, 2018).
With the expected growth of EVs, it is essential that the automotive sector and its supply chains get increasingly familiar with the diverse challenges of battery material supply. In this context, a number of automotive battery manufacturers and OEMs have joined the Global Battery Alliance, formed by international organisations, governments, companies and NGOs as a public-private partnership and collaboration platform to catalyse, connect and scale up efforts with the goal that batteries power sustainable development, across the full battery value chain (GBA, 2019). Additionally, ten OEMS co-operate in the Drive Sustainability framework, founded to support actions to better supply chain sustainability.26 Its Material Change report identifies risks for several EV-related materials. The Alliance also provides a self-assessment questionnaire available on the website for companies to assess their sustainability performance, and training that covers topics such as social and environmental sustainability, business conduct and compliance (Drive Sustainability; The RMI; The Dragonfly Initiative, 2018). The expected size of the automotive battery market (1.3 terawatt-hours [TWh] of battery capacity by 2030 in the New Policies Scenario and 2.8 TWh in the EV30@30 Scenario, compared with 0.1 TWh of
25Only certain “control points” in the supply chain are required to undergo a third-party audit of their due diligence practices. Control points are key points of transformation of the materials in the supply chain where there is a risk to lose the traceability or to break the chain of custody information and such lost could be pursued further into the supply chain. For most mineral supply chains, this is the smelter/refining stage.
26BMW Group, Daimler AG, Ford, Honda, Jaguar Land Rover, Scania CV AB, Toyota Motor Europe, Volkswagen Group, Volvo Cars and Volvo Group. (Drive Sustainability, 2019).
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battery capacity demand for EVs in 2018)27 strengthens the case for accompanying this largescale transition by better practices and regulations surrounding supply chains transparency, and human and environmental sustainability.
In this context, in 2018 the European Commission adopted the Strategic Action Plan for Batteries developed by the European Battery Alliance (EBA) to develop a sustainable and competitive battery industry.28 One of its objectives is to secure access to raw materials for batteries. To do so, the two key actions are to encourage research on EU-based suitable extraction sites for critical materials and the use of trade policy instruments to reach sustainable procurement of raw materials from third countries and to promote responsible sourcing (EC, 2017a). The London Metal Exchange (LME), the main global trading platform for industrial metals, is also working on responsible sourcing standards building on the OECD Due Diligence Guidance for responsible sourcing of minerals. LME-listed brands will have to meet these standards to continue trading their product on this platform (LME, 2019). Given the relevance of the LME for the international trade of metals this could have a significant impact on responsible sourcing practices. Indeed, if extractive activities scale up significantly without an appropriate set of basic principles, it is likely that the risks outlined in Table 5.1 and their effects will be exacerbated, to the detriment of local communities, society and the environment. Very recently, the World Bank has also launched the Climate-Smart Mining Facility, the first fund dedicated to making mining for minerals climate-smart and sustainable. It aims to support the sustainable extraction and processing of minerals and metals used in clean energy technologies, including electric vehicles (World Bank, 2019).
Initiatives for better battery supply chain transparency and sustainable extractive activities
A number of automotive and battery companies seem to be placing increased attention on limiting risks associated with the production of automotive batteries feeding their existing and upcoming EV models This is key to provide vehicle customers with the insurance of a responsible product and is in the interest of the automotive industry for its corporate image.
A number of private sector companies have joined corporate initiatives such as the Responsible Mineral Initiatives (RMI) which helps companies to make choices to ensure a responsible supply chain. The RMI was initially formed by electronic companies that provide tools to identify and assess risks in supply chains. This is mainly based on the OECD Due Diligence Guidance and includes a database of validated material refiners based on their performance with regards to due diligence principles.29 Additionally, the RMI has worked with the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) on writing the Cobalt Refiner Supply Chain Due Diligence Standard based on the OECD Guidance (CCCMC, The RCI, The RMI, 2018)30 This is particularly relevant, as most of the cobalt refined in China was shipped from the DRC (Mining Technology, 2018).
Some automotive companies, in co-operation with other stakeholders, are taking concrete action against negative impacts of extractive activities, including to the level of the mine (Box 5.2). Most of these cases are at the pilot stage.
27See Chapter 3, Material demand for automotive batteries.
28The EBA, launched in 2017, is a co-operative platform of private and public sector stakeholders, including the European Commission, to develop a competitive battery manufacturing industry in Europe.
29This work was initiated for the 3TsG, but a database of cobalt refiners is under preparation.
30The Cobalt Institute is currently developing a cobalt-specific framework called CIRAF (Cobalt Industry Responsible Assessment Framework) which will help companies identify, assess and mitigate risks in accordance with the leading standards such as the OECD Due Diligence Guidance. (CDI, 2017).
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Box 5.2. Examples of local actions to mitigate negative impacts of extractive activities
Cobalt
The main issues with cobalt31 sourcing come from artisanal mining, closely related to child labour and safety risks of mining operations. The majority of cobalt is produced by industrial scale mining of copper and nickel; and the artisanal mining issue should be seen in this context, given it is largely a subsistence activity in the Democratic Republic of Congo (DRC). The analysis from the DoddFrank Act in the United States of the impact on local communities of 3TsG extraction led to the conclusion that boycotting artisanal mining has more adverse effects than benefits on local communities (Montejano and Matthysen, 2013). Products from artisanal mines enter the battery supply chain. Therefore, cross-industry projects in collaboration with NGOs develop onsite actions. For example, Trafigura,32 CHEMAF33 and PACT34 look at enhancing operation safety and efficiency in the DRC region of Mutoshi. They provide working clothing and helmets, as well as mechanised machinery to artisanal miners. Fences surround the site and each worker is registered, with identity and age checks at the site's entrance. Actions are also being developed with local communities outside the mine, providing training for workers, adequate medical support and better education opportunities for children. (Trafigura, 2019).
Lithium
Sustainable Lithium for a Responsible Energy Transition (LiFT) is a voluntary supply chain sustainability project, aimed at catalysing and accelerating action towards socially responsible, environmentally sustainable and innovative battery value chain. LiFT, a project of the NGO RESOLVE, seeks to optimise the contribution of sustainable lithium for a responsible global energy transition.35 The project is being initiated with lithium producers in Argentina, in partnership with the Cámera Argentina de Empresarios Mineros (CAEM) and with the support of the Mining Association of Canada (MAC). LiFT is designed to link existing mine site responsibility initiatives such as Towards Sustainable Mining (an insurance programme developed by MAC and adopted by CAEM), ICMM Performance Expectations and RMI, with the sustainability requirements of downstream manufacturers, and facilitate a multi-stakeholder dialogue that brings together lithium producers, downstream users, communities, regional governments and civil society. The project is now in a pilot stage of identifying risks, benefits and community concerns related to lithium production in the Lithium Triangle. (RESOLVE, 2019).
31The initiatives on cobalt and lithium are recognised by the Global Battery Alliance as contributing to the GBA’s goal.
32Trafigura is a multinational commodity trading company. They trade metals and minerals, among others. (Trafigura, 2019).
33CHEMAF is a mining and processing company that operates in the DRC (Trafigura, 2019).
34PACT is a NGO that tries to improve living conditions for poverty-stricken communities. Through this project, they support CHEMAF in the maintenance of the mine to meet the goal of a responsible mining site. (PACT, 2019).
35RESOLVE is an organisation that helps its partners to find solutions on natural resource conflicts, environmental and social challenges.
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