Daimler Scrambles to Fix Child Labor Issues in Search for Cobalt

  • Daimler plans to spend $11B to expand its fleet of electric vehicles
  • The company is working with suppliers to increase its sustainability standards

The maker of Chrysler and Mercedes-Benz said it would ramp up its efforts to ensure child labor is nowhere to be found in its supply chain. This announcement came after CNN published a report showing Daimler’s dealers were buying cobalt without verifying where it came from. What will it take for the auto industry to clean up its supply chain?

Why This Matters: A war is brewing among automakers for dominance in the electric vehicle industry and the Democratic Republic of Congo (DRC) is at the center of it. Multiple brands have announced aggressive production plans for their lithium-ion powered vehicles. Volkswagen (VLKAY -0.59%) has plans to produce 1,500 electric vehicles daily. Daimler has pledged to spend $11 billion expanding its electric vehicle passenger fleet over the next few years.

Cobalt is a key ingredient in the manufacturing of lithium-ion batteries which car makers need for their electric vehicles. Prices for the rare earth mineral have surpassed $90,000 and are sure to continue climbing as demand for cobalt increases.

As many as 40,000 children are estimated to be mining the rare earth mineral in crude mines across the DRC. Daimler said it would raise its sustainability standards in partnership with its 1,500 suppliers around the world to ensure human rights abuses like child labor are not taking place in its supply chain.

Situational Awareness: Look out for companies to emerge with alternative solutions to the challenge automakers like Daimler are having with their cobalt supply chains. Cobalt Blockchain is a company using digital ledger technology to certify miners supply the rare earth mineral without committing human rights abuses.

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