Fourteen NGOs oppose London Metal Exchange offers ban tainted cobalt

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LONDON (Reuters) – Fourteen non-governmental organizations (NGOs) including Amnesty and Global Witness have opposed plans via the London Metal Exchange to ban cobalt tainted by human rights abuses, a notice seen by Reuters showed.

Cobalt may be a key ingredient inside batteries that power electric vehicles, a fast-growing sector of the auto industry, and then in metal alloys utilized to make jet engines.

It was singled out in LME proposals to embed responsible sourcing principles into metal brands deliverable against its contracts, which feature copper and zinc.

Most for the world’s supply hails from the Democratic Republic of Congo, often from artisanal mines where several organizations have cited human rights abuses.

The LME plan outlined last October involves suspending cobalt brands trading at the significant discount for their contract on the understanding that they may rise to the top as tainted.

Now, objections by NGOs with a consultation on its plans could leave the exchange in danger of legal challenges from banned cobalt producers, metal industry sources say.

The LME will publish its proposals this quarter.

“The LME received 39 responses for the recent discussion paper on responsible sourcing,” the exchange said.

“The LME’s role is becoming to identify a path forwards which balances the diverse views of their stakeholders (including civil society organizations), while having this LME’s stated objective helping the broader metals industry embrace key principles of responsible sourcing and environmental stewardship.”

The letter belonging to the NGOs said the LME must not immediately ban cobalt brands which should work together with firms that produce them to ensure responsible sourcing.

“It is usually short-sighted and irresponsible in the LME to pick cobalt and tin as the upper chances metals above others, or or single out (artisanal) material as implicitly higher risk,” the letter signed by 14 non-governmental organizations (NGOs) said.

All companies needed for the exchange should implement responsible sourcing practices as per the OECD Guidance, the letter dated Dec. 3 said.

The OECD Guidance says companies should report intimately about their supply chains and advises on techniques that they can uncover and address human rights and corruption issues.

“Heightened logistics due diligence on cobalt, do remember other LME metals, should be triggered by assessment of all supply chain risks, including corruption risks,” the NGO letter said.

Sources say the business associated with exchange would be to facilitate trade between consumers.

“The NGOs don’t are aware of the difference between end consumers and the LME. The LME is known as a market of last measure, you can’t choose metal to consider or reject,” a metallic trading source said.

“Consumers can come up where they source their cobalt from, people buying to the LME can’t, that’s why there is certainly such a deep discount between LME cobalt prices and (Fastmarkets MB)”

Cobalt prices authored by Fastmarkets MB at approximately $44,000 a tonne are $12,000 a tonne greater than those for that LME’s contract, that has been launched this season.

However, the NGOs say singling out low-priced cobalt typically generated by artisanal miners ignores other “serious red flags” for example corruption by large-scale miners among all metals.

“Is the LME trying to build a reputational green wash that permits it to converse its members source responsibly given that they tick some boxes,” said Sophie Pickles, who leads Global Witness’ improve conflict mineral.

The director of “mines to market” at NGO Pact, Karen Hayes, said the LME’s plan lacked detail on implementation.

“I am more than willing to partner with the LME or any companies attempting to comply with the LME’s responsible sourcing standards,” she said.