The number of EVs sold in 2018 hit 5.6 million and it’s expected to rise to 250 million by 2030. Given the amount of minerals used in making an EV, that’s great news for the mining industry. Or is it?
Miners have been forced to grapple for years with the darker underbelly of increased demand: mineral provenance. Many of the minerals critical to the production of EVs are located in countries with questionable labor practices. The growth of this market is heightening the need to know the circumstances under which minerals are sourced and extracted.
The issue of provenance has always been a priority for mining companies, but it isn’t limited to mining. More and more consumers want to know where their food comes from and how their clothes are made. Shareholders are responding to public pressure to guarantee that every component of a product is responsibly sourced. This extends especially to the batteries so critical to consumer electronics and now increasingly to EVs and intermittent generation systems such as solar and wind.
Reputable mining companies who want to ensure ethical practices in the industry can join schemes such as the Responsible Cobalt Initiative (RCI), dedicated to exposing problematic cobalt sourcing.
Yet there are always bad actors who obscure provenance or purposely look the other way. With today’s long supply chains it can be a challenge to keep track of where minerals come from and how they are obtained. Miners and stakeholders alike must find innovative alternatives to minerals with problematic provenances.
This is where innovation can play a pivotal role. Car makers and their suppliers are working to develop batteries that use far less—or even no—cobalt. Last year Tesla announced that their next generation of batteries will be cobalt-free.
Blockchain is an advanced technology that could help securely trace a mineral from origin to destination. The incorruptibility of blockchain applications that makes it so appealing for banking and cryptocurrency to record, view, and secure transactions can also be used for mining. It can provide the transparency that shareholders and end users demand.
Some companies that source product from potentially questionable locations or practices, such as diamond dealers, have started using blockchain to build trust in their supply chains. Under particular pressure from a public increasingly aware of conflict minerals, diamond merchants are working to develop markers that are then used to securely catalogue diamonds using blockchain. This tamper-proof register makes the origin of a stone transparent and can be shared throughout the supply chain to help prevent fraud.
Such innovations are still in nascent stages. But as mining companies lead the way with further investment in innovation and research—supported by stakeholders all along the supply chain—such advanced technologies can offer viable solutions to pressing industry problems. Given all the efforts being thrown at the problem of provenance, we are confident solutions will be found by the time EVs really hit scale.
Tim Biggs is Deloitte’s Mining & Metals Leader for EMEA.
Tim is the EMEA and UK Mining & Metals sector leader and a partner within the UK Audit & Assurance practice based in London. He graduated as a Chartered Accountant in 1989 in Brisbane and became a partner of Deloitte Australia in 2000. Before taking up his current role in Deloitte UK, he served as audit partner in Adelaide and a managing partner in Queensland. Tim has had significant experience with accounting and audit engagements for large clients—predominantly FTSE 100 and FTSE 250 mining and metals clients with operations across the globe.