Despite backdrop of ethical conundrum, Tesla goes to the Congo, Glencore for cobalt

An interesting article in the Financial Times this week explores the conundrum electric car makers have in balancing their ethical policies with the need to source critical raw materials, like cobalt, to produce the most powerful version of today’s electric vehicle (EV) batteries.

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The article reports that Chinese EV battery manufacturers like CATL have largely favored the slightly less powerful lithium-iron-phosphate (LFP) cells. However, the holy grail for EV carmakers is range, and few can challenge Tesla’s models for the furthest distance on a single charge.
To achieve this, carmakers like Tesla use cobalt in their battery cathode (along with nickel and manganese). But something over half of the world’s cobalt supply is sourced from the Democratic Republic of the Congo (DRC), a country with an appalling record on human rights, child labor, and minerals extracted in the midst — and often with the support — of conflict (yielding so-called conflict minerals).
That isn’t to say there are not responsible firms operating in the DRC. There are plenty of Western and some local firms operating with high standards of good governance, but the activities of as many as 150,000 artisanal miners around the Kolwezi area alone — the regional capital in southern DRC, where controls are nearly non-existent — makes all material arising from the country suspect.
Minerals from the DRC have become a byword for exploitive, unethically supplied metals, as a result, the good get tarnished by the bad.
Not surprisingly, most battery and automakers prefer to steer well clear of the country, likely paying a premium to take supplies from refiners in the West (on whose supply chain assurances they rely if challenged).
So, it could be seen as a brave move by Elon Musk and Tesla to go direct for cobalt supplies needed by their current Shanghai and future Berlin battery plants. Teaming up with Glencore, who produces about a fifth of the country’s cobalt output, negates allegations of sourcing conflict minerals. It is true Glencore’s governance has been challenged and the miner is being investigated by the U.S. Department of Justice. However, to date, the worst that process has thrown up is an association with discredited individuals and old accusations of money laundering, referring to cases not just in the DRC but also Nigeria and Venezuela going back to 2007.
While the DOJ and British SFO investigations are ongoing, the fact remains if you need cobalt, you need the DRC. If you are going to deal in the DRC, you need a well-established Western supplier, like Glencore, not despite the unsavory nature of the DRC market but precisely because of it.
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Firms like Tesla will not like the connotations that buying from the DRC entails. Cutting-edge tech firms like Tesla would hate the association with such a notorious supply base, but they appear to have taken the pragmatic decision that to ensure critical raw material supply, they have to find the most professional partner they can and hold their nose.