Starting January, the London Metal Exchange will require all companies that source at least 25% cobalt from mines in the Democratic Republic of the Congo to undergo a professional audit as it intensifies scrutiny amid growing concerns over the use of child labor in the electric car supply chain, the Financial Times reported July 2, citing sources.
According to the report, this was made amid concerns in 2017 that the exchange had allowed a Chinese company to sell untraceable supplies of the battery metal, known for its use in mobile phones and electric vehicles.
Over 60% of the world's cobalt comes from the Democratic Republic of the Congo, with about 20% of the supply coming from small-scale miners.
Advocacy groups, including Amnesty International, alleged that children as young as seven years old mine cobalt by hand in the Democratic Republic of the Congo, with the allegations putting pressure on companies sourcing the commodity to ensure it is traceable to reputable mines, the report added.
The report by the London-based news outlet said that the London Metal Exchange will introduce guidance on the responsible sourcing of different commodities, which will take into effect by 2020.
Growing concerns among traders about the London Metal Exchange's cobalt contract, which traded at a discount to global prices due to the uncertainty of the commodity's origin in its warehouses, resulted in the introduction of the guidelines for cobalt.
Miners that will fail to pass the audit may be delisted from the London Metal Exchange, disabling them from selling the commodity to the exhange.
A growing list of companies are making attempts to monitor small-scale mining in the Democratic Republic of the Congo, making sure the commodity meets the guidelines for responsible sourcing.