BMW signs Eur100 million sustainable cobalt supply contract with Moroccan miner

New York — The BMW Group has signed a Eur100 million ($113.4 million) five-year sustainable cobalt supply contract with Moroccan miner Managem Group.

The car manufacturer said July 9 that the contract would cover about a fifth of its cobalt needs over the 2020-2025 period for the fifth generation of its electric drive trains, with the remaining four-fifths of its cobalt needs to be sourced from Australia.

The two companies had already signed a memorandum of understanding on the direct purchase of cobalt from Marrakesh in January 2019.

BMW management board member responsible for purchasing and supplier Network Andreas Wendt said the company's need for cobalt was expected to roughly triple by 2025.

"Cobalt is an important raw material for electromobility. By signing this supply contract with Managem today, we are continuing to secure our raw material needs for battery cells," he said.

"We are systematically driving electrification of our vehicle fleet. By 2023, we aim to have 25 electrified models in our line-up – more than half of them fully-electric. Our need for raw materials will increase in line with this," he added.

Wendt said that sustainability was an important aspect of the company's corporate strategy and played a key role in expanding electromobility.

"We are fully aware of our responsibilities. Cobalt and other raw materials must be extracted and processed under ethically responsible conditions," he said, adding that the highest sustainability standards applied to cobalt extraction at Managem.

BMW senior vice president purchasing indirect goods and services, raw material, production partner Ralf Hattler said compliance with environmental standards and respect for human rights was the top priority and BMW had a keen interest in battery cell supply chains that extended all the way down to the mines themselves.

"For us, with ethically responsible raw material extraction and processing starts at the very beginning of the value chain," he said.

BMW has made moves to ensure full transparency for its battery raw materials, publishing the countries of origins for cobalt used in its products and restructuring the supply chains for its fifth generation of battery cells.

The origins of cobalt are important to users, as the majority of the world's supply is mined in the Democratic Republic of Congo, which has a history of human rights abuse concerning mining of the metal.

From 2020, BMW has started ensuring it sources its lithium and cobalt directly, which it then makes available to its two battery cell manufacturers.

BMW has a Eur7.3 billion contract with CATL and a Eur2.9 billion contract with Samsung SDI over the 2021-2031 period to produce the battery cells for its fifth-generation electric drive trains to ensure the long-term supply.

At the end of June, the carmaker also announced that it would ensure its cell manufacturers only use green power to produce fifth-generation battery cells, a move that should save around 10 million mt of CO2 over the next decade.