BMW to Secure Cobalt Supply from Australia, Morocco

Carmaker BMW (OTC Pink:BYMOF,ETR:BMW) will buy cobalt directly from mines in Australia and Morocco, taking a major step to ensure its supply of the raw material is sourced responsibly.

The new supply of cobalt, a key element in lithium-ion batteries, will be used in the carmaker’s next generation of electric vehicles in 2020, Andreas Wendt, the BMW board member responsible for procurement, said at a briefing in Paris on Tuesday (April 23).

He added that the carmaker won’t buy from small-scale mines in the Democratic Republic of Congo (DRC) in the short term.

Instead, BMW will buy directly from mines in Morocco and Australia. “[These mines] operate in line with our sustainability standards, and there are no issues with working conditions such as child labor,” Wendt said.

More than 50 percent of the world’s cobalt supply comes from the DRC, the world’s top cobalt-producing country, with about 20 percent of the DRC’s cobalt being extracted by artisanal miners, which carry a higher risk of using child labor.

Top cobalt producer Glencore (LSE:GLEN,OTC Pink:GLCNF) will supply cobalt to BMW from its Murrin Murrin mine in Australia, a spokesman for the miner told Bloomberg, without giving any further details.

The Australian mine produced a total of 2,900 tonnes of cobalt last year — a small number compared to the 38,400 tonnes of cobalt produced by Glencore’s DRC assets, Katanga and Mutanda.

Wendt added that BMW believes the Australian and Moroccan cobalt will help the company “achieve better long-term supply security and price stability.”

Last year, Australia produced 4,700 metric tons of cobalt while Morocco’s output reached 2,300 metric tons, according to the US Geological Survey.

The BMW news comes right after the London Metal Exchange launched an initiative to ensure all brands listed on the exchange will comply with responsible sourcing guidelines set by the Organization of Economic Co-operation and Development by 2022.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.