Major Metal and Mining Companies Use Blockchain to Trace Cobalt for Electric Vehicles

Some top metal and mining companies have come together to trace cobalt used in electric cars with the help of blockchain technology. 

Tracing Cobalt With Blockchain 

According to an official announcement on Thursday (May 20, 2021), Switzerland-based commodity trading and mining company Glencore, along with leading miners Eurasian Resources Group (ERG), CMOC, and battery material supplier Umicore will pilot a blockchain-based solution Re|Source. 

Re|Source was founded by ERG, Glencore, and CMOC in 2019, with Umicore later joining, along with an anonymous electric vehicle producer and a battery company. The solution was developed with the aim of improving cobalt value chain transparency. 

The blockchain solution will trace cobalt from production facilities in the Democratic Republic of Congo (DRC) to production sites of electric vehicles. In addition to the aforementioned companies, a major battery maker and a global electric vehicle pioneer would also be involved in the pilot. 

The DRC produces over 70 percent of the world’s cobalt supply. Also, the increase in demand for electric cars has led to a surge in cobalt demand. However, human rights activists have over the years decried the risks and inhuman conditions in which cobalt is mined. 

Apart from the impact of cobalt mining on the environment, there has also been the use of child labor for these mining operations. Reports reveal that children as young as seven years mine cobalt under hazardous conditions. 

In order to ensure that cobalt mined is not gotten through inhumane conditions, the major players utilize blockchain, as they believe immutable technology to ensure transparency. According to Glencore’s CEO, Ivan Glasenberg:

Blockchain technology offers us an unprecedented ability for traceability in the supply chain. Through this pilot, we are supporting the development of this tool for our customers who seek to understand and demonstrate the origin of the cobalt units in their products”

Meanwhile, Glasenberg said that traceability was not sufficient, as other players in the industry should be responsible for improving the cobalt supply chain.

Other companies have also a blockchain for cobalt tracing. As reported by BTCManager back in February, Polstar, a Swedish automotive brand, announced that it was using blockchain technology to trace cobalt in its car batteries. Other major auto manufacturers like Volvo and Mercedes-Benz employ blockchain for improved cobalt tracking. 

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Polestar Using Blockchain Technology to Track the Cobalt Supply Chain

Swedish automotive brand Polestar is utilizing blockchain technology to ensure traceability and transparency for cobalt in its batteries.

Using Blockchain for Cobalt Tracing

According to The Next Web on Monday (Feb. 8, 2021), Frederika Klarén, the head of sustainability at Polestar, noted that the electric vehicle was the first to employ blockchain to trace cobalt in the car’s batteries. The Swedish car brand believes that blockchain would bring about transparency and promote the ethical use of batteries in the electric vehicle manufacturing industry. 

Cobalt is an important element for batteries used in electric vehicles. While the majority of the world’s global cobalt production comes from the Democratic Republic of Congo (DRC), there have been reports about children in DRC involved in cobalt mining.

A report by The Next Web stated that about 35,000 children were mining the element under harmful conditions. This has caused the manufacturers of electric vehicles and consumers to seek better alternatives to address the situation. 

Meanwhile, the company is utilizing blockchain because of its immutability, as information stored on the blockchain cannot be changed. Polestar back in 2020 inked an agreement with two of its battery supplies in China and South Korea, to employ DLT for cobalt tracking. 

Speaking on the need for distributed ledger technology (DLT) to track the cobalt supply chain, Klarén said:

“It was important to us to start with cobalt when piloting this innovative technology. We need many tools to fight the cobalt supply chain risks relating to child- and human rights violations. Supporting communities through programs such as Better Mining, increasing the use of recycled content, and implementing responsible sourcing practices are some of them. And now we can also add blockchain to the list.”

Back in 2019, Volvo, the owner of Polestar, partnered with blockchain company Circulor, to monitor the cobalt supply chain and also ensure that supplies were not coming from child labor.

A Japanese non-profit organization Action against Child Exploitation (ACE), also used DLT for a similar objective. Mercedes-Benz in February 2020 utilized blockchain to trace carbon dioxide emissions in its cobalt supply chain.

Meanwhile, the World Economic Forum (WEF)in December 2020 developed a blockchain-powered proof-of-concept solution for carbon tracing called COT. 

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These Two Firms Want to Upgrade Crypto Infrastructure for Banks and Exchanges

Announced Tuesday, METACO and Cobalt are launching a software-as-a-service (SaaS) offering that covers the full gamut of institutional trading requirements for digital assets. In short, it brings a combination of bank-grade custody and post-trade settlement to crypto. 

“There is very little institutional-grade infrastructure within digital, in fact, I’m gobsmacked at how little there is,” said Cobalt chairman Adrian Patten. “Also, I’ve noticed that in the crypto world, everyone concentrates on the coin, the crypto bit. They forget the dollar. Whether that’s from a risk management perspective, management of collateral, or settlement, that’s always the thing that holds them back.”

Specifically, the partnership involves integrating METACO’s institutional operating system for digital assets, SILO, with Cobalt’s interoperable FX and digital assets platform to offer a fully integrated end-to-end SaaS solution for the storage, limit allocation and intraday settlement of digital assets, per a press release.

“There’s a lot of friction in the market still,” said Seamus Donoghue, VP of sales and business development at METACO. “When you trade on exchanges or with counterparts in general, you have to pre-fund those positions. That’s capital intensive, there’s a counterparty risk there as well, and it’s just not a very efficient market.” 

Between them, the two firms have a hand in most of the major crypto banking plays happening in Europe right now. METACO is working on crypto custody with Standard Chartered, BBVA, DBS Bank and Gazprombank Switzerland. Cobalt is also involved with Standard Chartered, and has other projects in the pipeline involving the likes of ErisX and LMAX Digital. 

Cobalt’s Patten pointed out that banks and many regulated buy-side firms need certain processes and ways of doing things. “You can’t go settling a transaction on the back of emails. Which is what happens,” he said.

But it’s not just institutions looking for better digital asset trading infrastructure, many of the largest crypto exchanges are in talks with the firms too, Patten said.

“Over 75% of our pipeline is crypto firms looking to upgrade their processes,” Patten said. “They’re having massive increases of volume and volatility, and they realize you can’t carry on doing it in this way. We’re going to be signing a bunch of these firms up in the first quarter.”



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