Apple may buy cobalt direct from mining companies, protecting both parties

Apple may buy cobalt direct from mining companies, protecting both parties

A confidential source, speaking to Bloomberg, claimed that Apple is seeking to establish contracts to secure several thousand metric tonnes of cobalt per year for the next five years or more. To show its commitment, the iPhone maker has worked closely with China-based cobalt supplier Huayou Cobalt to address child labor in its supply chain.

Locking in cobalt supplies has become a dominant theme as it is also used in batteries to power electric vehicles whose rapid growth is revolutionizing the motor industry, which is also looking to agree on long-term supply deals. Bloomberg reports that smartphone batteries use around eight grams of refined cobalt, but a battery for an electric vehicle needs more than a thousand times that amount.

The iPhone maker is one of the world's largest end users of cobalt for the batteries in its gadgets, but until now it has left the business of buying the metal to the companies that make its batteries. Reports indicate that now about a quarter of all cobalt mined globally is used in smartphones and the demand for cobalt is expected to boom by 2030.

Cobalt demand from the electric vehicles industry is also forecast to grow from to 95,000 tonnes by 2026 from 12,000 tonnes a year ago, according to consultancy CRU.

So far, no major deals have been announced, although BMW's head of procurement told German daily newspaper Frankfurter Allgemeine Zeitung in early February that it was close to securing a 10-year supply deal.

But Apple declined to comment. Glencore, the mining multinational that operates in about 50 countries, has named Apple as one of the main customers it was talking to about cobalt, according to Bloomberg. Relying on anonymous sources, Bloomberg reports that Apple is in talks to buy long-term supplies of the metal.

The price of cobalt has more than tripled in the past 18 months to trade at more than US$80,000 a metric tonne.

"The problem has nothing to do with the amount of cobalt in the ground but rather the number of mines now producing cobalt", said Trent Mell, CEO of First Cobalt Corp, the world biggest cobalt exploration company. Cobalt is key in the production of the lithium-ion batteries found in phones, laptops and tablets. According to Amnesty International, about 20 percent of the cobalt mined in Congo is extracted by hand by informal miners including children, often in risky conditions.

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