Cobalt is the new oil. Car companies and battery manufacturers are all rushing to secure multiyear contracts with mining companies for their lithium-ion batteries. According to a Bloomberg report, Apple is also participating in this game as the company wants to secure its long-term supplies.
The company has never done this before with cobalt. Apple relies on a ton of suppliers for all the components in its devices — including for batteries. And yet, cobalt prices have tripled over the past 18 months. Chances are Apple will secure a contract much more easily than a battery supplier.
While an Apple Watch battery is an order of magnitude smaller than a car battery, Apple sells hundreds of millions of devices every year. All those iPhone and Mac batteries represent quite a bit of cobalt.
But the issue is that car manufacturers are putting a ton of pressure on cobalt suppliers. BMW and Volkswagen are also looking at signing multiyear contracts to secure their supply chains. And other car manufacturers are probably also paying attention to cobalt prices.
As a side effect, buying cobalt straight from the mines makes it easier to control the supply chain. It’s hard to know where your cobalt is coming from when you buy batteries from third-party suppliers. And in that case, it can be a big issue.
Amnesty International published a report in January 2016 about cobalt mines, saying that tech companies and car manufacturers aren’t doing enough to prevent child labor in the Democratic Republic of the Congo — the country is responsible for 50 percent of global cobalt production.
A couple of months ago, Amnesty International published an update, saying that Apple is more transparent than others. The iPhone maker now publishes a list of its cobalt suppliers. But there’s still a long way to go in order to make sure that mining companies respect basic human rights.
But let’s be honest. In today’s case, Apple mostly wants to be able to buy enough cobalt at a fair price for its upcoming gadgets. And the company has deep enough pockets to sign this kind of deal.