{"id":23832,"date":"2017-11-15T16:05:23","date_gmt":"2017-11-15T21:05:23","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/cleaning-up-cobalt-who-is-responsible\/"},"modified":"2017-11-15T16:06:34","modified_gmt":"2017-11-15T21:06:34","slug":"cleaning-up-cobalt-who-is-responsible","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/cleaning-up-cobalt-who-is-responsible\/","title":{"rendered":"Cleaning Up Cobalt: Who Is Responsible?"},"content":{"rendered":"

First Cobalt Corp has recently decided to forego operations in the Democratic Republic of the Congo (DRC) to refocus their efforts in Canada [1]. While the decision results from an assessment of cobalt mining potential in Canada, I would assert that concerns about the DRC supply chain are a greater contributor to their strategy [2]. In my estimation, First Cobalt is sacrificing long-term business performance due short-term supply chain concerns<\/strong> that could be resolved with a more strategic approach.<\/p>\n

Before discussing the strategy of First Cobalt specifically, it is important to explore cobalt\u2019s increasing demand and the DRC cobalt mining environment. The focus on transportation as a leading cause of global greenhouse emissions, accounting for 14% of global greenhouse emissions in 2010, has pushed the transportation sector towards electric vehicles as an alternative to traditional vehicles [3]. When you couple the climate change implications of electric vehicles with the moderate success of certain electric automakers, it is unsurprising that there are projected increases in demand for critical components utilized in electric car production. One such material is cobalt, a mineral that is used in electric car batteries, whose demand is projected to increase significantly in the coming years as electric car manufacturing scales [4].<\/p>\n

One of the difficulties associated with meeting this demand, however, is that \u201cmore than 50% of the world\u2019s cobalt supply originates in the Democratic Republic of the Congo [5].\u201d<\/strong> While that fact in it of itself does not cause supply issues, the nature of cobalt mining in the DRC does. A significant percentage (~20%) of the cobalt mining in the DRC is done by artisanal miners working in tandem with corporations [6]. And again, while artisanal miners in a vacuum do not present issues, the makeup of the labor force and practices employed by these miners do. There are multiple examples of poor working conditions, insufficient tooling, and child labor exploitation in the DRC cobalt mines [7] [8]. These supply chain issues when combined with the general political instability prevalent in DRC are leading to supply generation difficulties for the cobalt mining companies.<\/p>\n

Given the projected demand for cobalt and the supply chain difficulties in the DRC, many companies, including First Cobalt Corp, have chosen to explore alternative sources of cobalt. First Cobalt Corp specifically decided against an investment in DRC mining operations, instead focusing on a city in Canada that historically had rich cobalt reserves [9]. In the near term, First Cobalt is focusing on gauging the cobalt levels, projecting the volume of cobalt available for mining, and beginning their mining operations [10]. Long-term, First Cobalt Corp believes a focus on Canada will not only be able to satisfy increasing cobalt demand but helps avoid many of the aforementioned DRC supply chain issues [11].<\/p>\n

While the relocation strategy may pay off for First Cobalt Corp, I would argue there are addendums to this strategy that can satisfy not only long-term business profitability but help solve the systemic issues in the DRC. <\/p>\n

First, I do agree First Cobalt Corp should look to execute on the Cobalt, Canada plant<\/strong> in the near and medium term. Operational efficiencies will be easier to come by in the Canadian factory and should provide sufficient resources to fund the business given price trends for cobalt. <\/p>\n

Secondly, First Cobalt Corp should rededicate themselves as a company to their initial mining project in the DRC<\/strong>. I firmly believe that the increase in electric vehicles as a response to climate change will necessitate a greater amount of supply than the Canadian plant will be able to provide. As a result, First Cobalt Corp will be more well-positioned in a cobalt-heavy environment by tapping into the richest global source of cobalt. <\/p>\n

And finally, and perhaps most importantly, as a part of their re-dedication effort to the DRC, First Cobalt Corp should look to lead the revolution to eliminate unsafe supply chain practices in the DRC<\/strong>. There are many major corporations First Cobalt Corp could partner with in this effort \u2013 many with significant financial and political capital to expend towards resolving the rampant issues currently plaguing the DRC [12]. While the road may be arduous and difficult to navigate, there are pivotal moments in every company\u2019s history that define their future market potential. I view this as one of those moments for First Cobalt Corp. By doing the right thing, First Cobalt Corp has the ability to capitalize on both a business and societal level.<\/p>\n

There are fundamental questions that arise from this thesis, however. First, what responsibility do corporations have to enact societal justice when it runs counter to their preferred strategy<\/strong>? And secondly, if a company\u2019s motivation to enact societal change is also tied to their future economic benefit, does that call the strategy into question<\/strong>?<\/p>\n

Word Count: 792<\/p>\n

References:<\/p>\n

[1] \u201cFirst Cobalt Exits Congo to Focus on Canada,\u201d press release, September 18, 2017, on First Cobalt Corp website, https:\/\/firstcobalt.com\/2017\/first-cobalt-exits-congo-focus-canada, accessed November 2017.<\/p>\n

[2] Collins, Terry; Tibken, Shara, \u201cReport: Tech giants can do more to keep kids from cobalt mines,\u201d CNET, November 14th, 2017, https:\/\/www.cnet.com\/news\/tech-companies-apple-dell-amnesty-international-cobalt-mining\/, accessed November 2017.<\/p>\n

[3] Environmental Protection Agency, Global Greenhouse Gas Emissions Data, pg. 1, https:\/\/www.epa.gov\/ghgemissions\/global-greenhouse-gas-emissions-data, accessed November 2017.<\/p>\n

[4] Smee, Jess, \u201cCobalt mining conditions cast shadow over electric transport dreams,\u201d Deutsche Welle, November 14th, 2017, http:\/\/www.dw.com\/en\/cobalt-mining-conditions-cast-shadow-over-electric-transport-dreams\/a-41370039, accessed November 2017.<\/p>\n

[5] Amnesty International, \u201cTime to recharge: Corporate action and inaction to tackle abuses in the cobalt supply chain,\u201d pg. 4, Amnesty International, November 15th, 2017, https:\/\/www.amnesty.org\/en\/documents\/afr62\/7395\/2017\/en\/, accessed November 2017.<\/p>\n

[6] Ibid.<\/p>\n

[7] Ibid.<\/p>\n

[8] \u201cElectric Vehicles Demand & Ethical Concerns of Congo Present Opportunity for Cobalt Companies Focused on North America,\u201d press release, November 9th, 2017, PR Newswire, http:\/\/www.prnewswire.co.uk\/news-releases\/electric-vehicles-demand–ethical-concerns-of-congo-present-opportunity-for-cobalt-companies-focused-on-656355773.html, accessed November 2017.<\/p>\n

[9] Bochove, Danielle, \u201cThe Canadian ghost town that Tesla is bringing back to life,\u201d Bloomberg, October 31st, 2017, https:\/\/www.bloomberg.com\/news\/features\/2017-10-31\/the-canadian-ghost-town-that-tesla-is-bringing-back-to-life, accessed November 2017.<\/p>\n

[10] First Cobalt Corp, \u201cInvestor Presentation,\u201d https:\/\/firstcobalt.com\/pdf\/First-Cobalt-Presentation.pdf, accessed November 2017.<\/p>\n

[11] Ibid.<\/p>\n

[12] Collins, Katie, \u201cApple, Samsung and Sony under fire over child miners in Africa,\u201d CNET, January 19th, 2016, https:\/\/www.cnet.com\/news\/apple-samsung-and-sony-under-fire-over-child-miners-in-africa, accessed November 2017.<\/p>\n

Main Image Source: http:\/\/csglobe.com\/wp-content\/uploads\/2016\/02\/Apple-and-Microsoft-Using-Batteries-Made-With-Cobalt-Mined-By-7-Year-Old-Children-In-The-DRC.jpg<\/p>\n","protected":false},"excerpt":{"rendered":"

Risky and unethical practices continue to plague the cobalt mines of the Democratic Republic of the Congo. 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