Australia: Renewable energy, rechargeable batteries and cobalt: clean, renewable, but what about modern slavery?

Last Updated: 19 September 2018
Article by Abigail McGregor and Jacob Smit

Introduction

With the introduction of Modern Slavery legislation in Australia and with it a requirement to report publically on the risk of Modern Slavery in supply chains, a key modern slavery risk for energy companies lies within the cobalt used in batteries. The labour required to mine and supply cobalt is often characterised by modern slavery practices such as forced labour, and the worst forms of child labour.

Reliable energy storage for renewables energy producers is key, and batteries can be a reliable solution. South Australia is building a $1 billion solar farm and battery project and plans for several others to follow.1 These battery packs, like almost every other electronic devices on the market, use lithium-ion batteries.2 The key component contained within them, cobalt, makes the battery lighter, smaller, and more reliable than traditional lead-acid batteries. Such is the global demand that a 2.5 million tonne deficit is forecast for 2020.3 Some companies are going as far as securing a 10-year contract for cobalt supply in order to maintain reliable supply.5

Despite the market demand, cobalt operations are largely unregulated. Unlike gold, coltan and tin, cobalt is not covered under existing conflict mineral regulations such as the Securities and Exchange Commission's disclosure requirements, which require companies to establish a due diligence program for suppliers.

Approximately 60% of the world's cobalt is mined in the Democratic Republic of Congo (DRC), where a significant number of modern slavery instances, including human trafficking, coercion and exploitation, have been reported to be connected with the labour used in cobalt mining.5 Children as young as seven work in perilous conditions, particularly in informal or artisanal mines where cobalt is extracted from rocks by hand without protective equipment, for up to 12 hours a day. Many miners, both adults and children, later experience potentially fatal health effects from the prolonged exposure to cobalt dust. Violence from supervisors and mine collapses are common. Once mined, the cobalt passes "downstream" in the supply chain through traders, subcontractors, smelters and importers, before it reaches the manufacturer. The global and complex nature of this process means it is often several layers removed from the corporate purchaser and any modern slavery risks are obscured by the numerous and opaque supply chain links.

Supply chain management

Companies are accelerating their efforts to address the risks posed by cobalt mining. Some initiatives include:

  • business-led creation of a body called the Responsible Cobalt Initiative which conducts due diligence along the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas;
  • a pilot scheme using blockchain for the first time to track cobalt from its source being launched this year.7 Each sealed bag of cobalt from an artisanal mine is expected be given a digital tag that will be entered on a blockchain ledger along with details of the weight, date and time. A trader buying the bag would record those details on the same ledger and so on, until it arrives at the corporation with an unalterable record of every source. One of the risks of this system however is the possibility of 'clean' cobalt being mixed with unethically mined cobalt before it is bagged;
  • introduction of software programs which monitor and certify all raw material suppliers including cobalt, in corporate procurement.8 Suppliers are required to comply with regular site inspections and also reporting requirements; and
  • a greater emphasis is being placed on recycling cobalt from used smartphone batteries, or moving to invest in recycling technologies and research.9

What does this mean for Australian companies?

With the introduction of the Modern Slavery Act Bill 2018 in the Commonwealth Parliament, and the passing of the Modern Slavery Act 2018 in NSW, businesses will be required to report publically on where there is a risk of slavery in their operations and supply chain and the steps taken to eliminate that risk. For energy and technology companies, supply chain review will ultimately require consideration of the source of the cobalt used in batteries.

In contrast to the UK Modern Slavery Act 2015, the Australian Modern Slavery Act will require reporting entities to specifically address mandatory criteria, including:

  • describe the risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities that the reporting entity owns or controls;
  • describe the actions taken by the reporting entity and any entity it owns or controls, to assess and address those risks, including due diligence and remediation processes

Businesses may expose themselves to a damaging reputational backlash if they are not alert to these risks and do not properly address them in their modern slavery statements. Under the NSW Law, there are penalties of up to $1.1million for misleading information contained in a modern slavery statement. Australian businesses publishing misleading reports that misdescribe their modern slavery risk may also contravene the Australian Consumer Law.

How to prepare for the Modern Slavery Act reporting requirements?

To prepare, businesses that have not already done so should consider the following steps:

Mapping supply chains and organisational structure on a global basis, including subsidiaries and related entities, to identify high-risk areas.

  • Implementing software to enable on-going evaluation of performance against clearly defined targets.
  • Assessing the human rights risk of potential subcontractors or suppliers through a questionnaire or vetting procedure before contracting. Considering information provided by suppliers in relation to cobalt and how the risk of modern slavery is being managed.
  • Increasing engagement with suppliers to monitor the accuracy of any self-reporting, or negotiating for contractual warranties as to ongoing compliance before committing to long-term arrangements.
  • Comparing the company's current practices with established international standards such as the Voluntary Principles on Security and Human Rights.
  • Developing a plan for reporting and corrective action where human rights abuses are identified.
  • Addressing which business functions will have the overall responsibility and accountability of such issues and training staff accordingly.

Commencing this process early is essential to ensure compliance with the reporting requirements. At least for energy storage, batteries are likely to be one of the highest risk elements of the supply chain.

Batteries can overcome many of the issues with reliable storage of renewable energy. However, their use comes with corresponding human rights challenges - challenges that Modern Slavery transparency laws will inevitably uncover.

Footnotes

1 The Guardian, South Australia to get $1bn solar farm and world's biggest battery (30 March 2017) https://www.theguardian.com/environment/2017/mar/30/south-australia-to-get-1bn-solar-farm-and-worlds-biggest-battery; Renew Economy, Musk says storage orders surge on success of Tesla big battery (8 February 2018) https://reneweconomy.com.au/musk-says-storage-orders-surge-on-success-of-tesla-big-battery-63587/.

2 Hermes Investment Management, Modern slavery: the true cost of cobalt mining (16 January 2018) < https://www.hermes-investment.com/ukw/blog/perspective/modern-slavery-true-cost-cobalt-mining/ >.

3 Mining Weekly, Zinc price on the up as supply tightens; cobalt forecast revised upwards as demand intensifies (26 September 2017) < http://www.miningweekly.com/article/zinc-price-on-the-up-as-supply-tightens-cobalt-forecast-revised-upwards-as-demand-intensifies-2017-09-26 >.

4 Financial Times, BMW on verge of multiyear lithium and cobalt deal (13 February 2018) < https://www.ft.com/content/95ed34f0-10da-11e8-940e-08320fc2a277 >.

5 Amnesty International, DEMOCRATIC REPUBLIC OF CONGO: "THIS IS WHAT WE DIE FOR": HUMAN RIGHTS ABUSES IN THE DEMOCRATIC REPUBLIC OF THE CONGO POWER THE GLOBAL TRADE IN COBALT (19 January 2016) < https://www.amnesty.org/en/documents/afr62/3183/2016/en/ >.

6 Business Insider Australia, This child being abused in a cobalt mine is why Apple is trying to fix the mining business (15 May 2017) < https://www.businessinsider.com.au/apple-cobalt-mine-child-labor-2017-5?r=UK&IR=T >.

7 Barbara Lewis, Blockchain to track Congo's cobalt from mine to mobile (2 February 2018) Reuters < https://www.reuters.com/article/us-mining-blockchain-cobalt/blockchain-to-track-congos-cobalt-from-mine-to-mobile-idUSKBN1FM0Y2 >.

8 Samsung SDI Co. Ltd, '2016 Progress Report on Responsible Supply Chain' (April 2017) < https://www.samsungsdi.com/upload/download/sustainable-management/Samsung_SDI_-_2016_Progress_Report_on_Responsible_Cobalt_Supply_Chain_V12.pdf >.

9 Bloomberg, Samsung SDI Turns to Used Phones for Cobalt as Prices Surge (12 February 2018) < https://www.bloomberg.com/news/articles/2018-02-12/samsung-sdi-turns-to-used-phones-for-cobalt-as-prices-surge >.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Abigail McGregor
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions