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Ryan, when you hear the word cobalt, what's the first thing that pops into your mind?

Really? Really? Well, honestly, it's a guy called Dag Hammarskjöld.

Dag what?

Dag Hammarskjöld. He was a United Nations Secretary General, so the top bureaucrat, and he died in a mysterious plane crash in Congo in 1961.

But what does that have to do with cobalt?

Well, his plane fell out of the sky, or maybe it was shot down. Oh my God. That's the thing we don't know. And it was during a dispute over cobalt mining rights, and it's been a true unsolved mystery for six decades, the poor guy.

That really sounds like a spy thriller.

It really was. It was Cold War meets colonialism meets billion-dollar treasures hidden in the jungle.

Oh my gosh. Well, I mean, my thought is way less dramatic. Cobalt makes me think of cobalt blue, like that color, that intense blue color in blue and white porcelain from ancient China.

Yeah, well, that's cute too.

Cobalt. Cobalt. Cobalt. Cobalt. Are we starting to see somewhat of a gold rush for this mineral? Yeah, we are.

From Politico, this is Global Translations. I'm Louisa Savage.

And I'm Ryan Heath.

Last episode, we investigated critical minerals. We're in a world where these raw materials move across the globe to distant plants and factories, where they're transformed into products essential to modern life and to security.

But this episode is all about the cobalt. Cobalt. Cobalt. Cobalt. The mining of cobalt has a long and violent history. In Congo, it's been at the center of an independence battle, and the United Nations even worried that it would trigger another world war in the 1960s. But more recently, it's received a lot of attention for its role in emerging technologies like smartphones and electric vehicles.

Apple and Tesla are among companies refusing to use what they term unethical cobalt in their batteries.

Much of that news has been splashy and positive.

On the other hand, there's been plenty of coverage of its dark side, too. The backbreaking work going on there is being done by children. Child labor, exploitation, conflict, and pollution in the Democratic Republic of the Congo make cobalt a mineral with a lot of reputational baggage.

It's also key when it comes to national security. Manufacturing and clean energy.

But access to cobalt is only getting dicier. As trade tensions build with China and the pandemic continues to disrupt supply chains, countries and corporations are trying to figure out how they'll get the mineral flows they need.

There's also a pressing environmental factor. Climate change. The world needs more green energy. More electrification. As the demand for electric vehicle batteries grows, so does demand for the cobalt that's an essential part of those batteries.

So today, we're digging into cobalt. Because in some ways, it's a case study that showcases why globalization is under so much pressure today. It shows the vulnerabilities that businesses and governments are feeling, sparking a rethinking of our global systems.

So cobalt is a metal. So most of the cobalt that you would get, it comes as a byproduct of copper, which everybody knows it's used for electricity, transmission, etc., and nickel. And so it's recovered further downstream.

That's Dr. Nadal Nassar from the U.S. Geological Survey again.

Most of cobalt is currently produced in the Democratic Republic of the Congo, DRC. So a lot of it leaves the DRC and gets shipped to China for further processing refining.

So can you talk about what the cobalt extraction process looks like, and what the supply chain around cobalt looks like? How does it go from deposits in the ground to our cell phone battery?

Typically, it's either open pit or underground mining. So there's a significant production that goes on in terms of extracting a product.

Many times, cobalt comes as a byproduct of other metals mining. In African countries like Zaire, Zambia, and the DRC, it's a byproduct of copper mining. In places like Russia, Cuba, and New Caledonia, a French territory in the South Pacific, it tends to be the result of nickel mining.

And so what happens is you mine an ore. That ore then goes through a concentration process. So it's like a froth-flotation process.

Froth-flotation means that liquid is used to separate the parts of the material.

You get a concentrate out of it. That concentrate then either can go through various routes, either through the chemical refining...

or metal refining. For those of us who aren't engineers, those refining processes will either involve liquid or heat.

First you get your intermediate, and then you get your final product, which is ultimately used in the products. They'll have to go through a fabrication stage, and then go to the manufacturers. Most of the refining happens in China. About two-thirds of global refining production is in China. The other one-third is in Western countries, OECD countries.

Okay, we have that basic primer now, what cobalt is and how it's obtained. But why does it matter? Why is this mineral the subject of so much desire and hand-wringing? I spoke with Bryce Crocker, CEO of Gervois Mining. He's an Australian who has made cobalt mining his life. And Crocker is an example of a broader trend, a movement to bring more critical mineral mining back to the United States. His company is currently building a new cobalt mine in the state of Idaho. And I've asked him what he's seeing in terms of the demand for cobalt over the last few years.

It's rising quickly. The demand for super alloys has always been strong. Obviously, aerospace is an evolving industry. The military aspect is obviously growing. But what's transforming the cobalt industry is just the sheer scale of electric vehicles and what it will do to the market. So for context today, the global market is around 120,000 tonnes, of which approximately half goes into batteries. In 2030, that number will probably be threefold, of which the vast majority of the growth is electric vehicles. Electric vehicles, it's real. It's going to happen. All the major OEMs are now on board.

OEMs stands for Original Equipment Manufacturers. They make the parts that other companies will transform into planes and defence equipment and electric cars.

The constraining factor on electric vehicle adoption is ultimately going to be raw materials. There's simply not enough raw materials for all the OEMs, all the vehicle makers, to roll out their development plans over the next 10 to 15 years based on the availability of cobalt, given the supply constraints we see today.

The promises of electric vehicles seem endless. Using electricity generated by wind, sun, or water, they could potentially remove personal transportation from the global warming equation.

So Bryce says we don't have anywhere close to the raw materials we need to keep up with demand. And the demand isn't slowing down anytime soon.

Our central planning case includes hundreds of millions of electric vehicles up from single digits today in just the next 20 years.

Getting that cobalt is another story. China's near domination of the cobalt mining and processing industries is a big pain point.

For those of us in the industry, we've been looking at it for a long time and telling politicians and regulators that they've got a problem. We see firsthand how China's behaving. We know we can't complete with how people are behaving in the Democratic Republic of Congo anyway. And we've looked at how China's increasingly dominating the space. China's not processing that refined cobalt to export to the United States to support your electric vehicle revolution. They're going to make cheap cars themselves. And the best you can hope for is that they'll export cheap cars to you. So those of us in the industry have been talking to regulators and politicians for a long time. But the level of traction now, it's different. I mean, Washington is genuinely paying attention. There's substance behind the words, a significant amount of substance. And I think there's a growing realisation. Obviously, there's a broader trade issues with China. But I think there's a growing realisation that perhaps the strategies of the past haven't been as effective in terms of engaging China and coercing or encouraging and rewarding right behaviour. And as it pertains to cobalt, as I said, if cobalt was easy to substitute, if it wasn't important, we wouldn't be having this conversation. But it is significant.

What does it mean, then, if the cobalt supply chain is upended? Many factors can lead to instability. War, natural disasters, labour disruptions, disputes with the countries that control the mines and the processing.

Let's turn back to Dr. Nassar, the expert from the U.S. Geological Survey. Could you sketch out a scenario in which something would disrupt the supply of cobalt? What might that be? And what kinds of factors could lead to a disruption?

Typically, we categorise them as two kinds of factors. They're man-made and then they're natural. So the man-made might be there's political unrest, instability in the country, a civil war. There could be the country deliberately deciding to stop supplies. So it could be intentional or unintentional. On the natural side, it could be an earthquake or any other natural disaster.

On top of the more predictable cobalt supply disruptors, now there's coronavirus. The pandemic has wreaked havoc on all sorts of other supply chains around the world. So what does it do?

to extraction and processing of this critical mineral?

COVID actually has interesting implications on both the demand side as well as the supply side. So if you think about it from cobalt's perspective, cobalt's not only used in batteries, but it's also used in jet turbine blades, so for your aircraft. So the decreased demand for travel is obviously causing a decreased demand for new aircraft, which decreases the demand for cobalt in turbine blades. And so on the demand side, we've seen that COVID-19 has impacted in terms of lowering the demand. On the supply side, there have been mines that have temporarily shut down. They're shutting down voluntarily or because the governments are requiring them to shut down.

In some cases, the pandemic has disrupted the supply of inputs, such as the chemicals that are necessary for the mining process.

So some of the reagents are required for the concentration process. They might not be able to obtain it. Another concern that has come up, especially in the case of cobalt, is logistics. So the logistics of being able to take the cobalt out of DRC and ship it to China, it typically had to go through South Africa. But South Africa had like a two-month quarantine period or something to that effect. And so suppliers had to find an alternative route. My understanding is that they're going now through Mozambique or Tanzania to be able to get the cobalt out of the DRC.

I asked Dr. Nassar, what happens if COVID continues through 2021? What ripple effects could we see?

So you can imagine a scenario where COVID-19 persists, it even gets worse, especially potentially in countries in Central Africa that might not be necessarily well-equipped to handle large cases of COVID-19. If the production of cobalt ceases, there are very few alternatives outside of DRC in Zambia that would be able to produce enough cobalt. And what would happen is the refineries would not get the raw materials that they need. And so the cathode manufacturers, so this is the component of the batteries that uses the cobalt, would not be able to produce enough cathode. Ultimately, the battery manufacturers would not be able to produce the batteries. The vehicle manufacturers would thus not be able to produce the vehicles, or even not just the vehicles, but electronics that use lithium-ion batteries as well, or even power tools.

But if you're China and you keep access to the cobalt, then presumably your companies can keep producing.

Potentially. But again, China is dependent on the DRC to get its cobalt. Now, some companies have gone to other countries to make sure they secure their cobalt. And so if there's an impact in the DRC, potentially a company that is not dependent on the DRC would be able to be just fine. But the prices overall, because it's a globally traded commodity, the prices overall would be expected to rise anyway.

So what happens if the United States doesn't get the cobalt it needs for the auto industry? In some sense, we've been here before. Manufacturers have had to face cobalt shortages, or the threat of them, in the past.

The case of cobalt, for example, has a really interesting history, and it's actually tied to another set of commodities that has been in the news recently, rare earths. That's because in the 1970s, engineers developed a new kind of permanent magnet called samarium cobalt. So it uses samarium and cobalt. Now, samarium is one of the rare earths, and we'll get back to that in a second. But it was a much better magnet, but there was concern with it. One of the concerns was cobalt, because it was primarily mined in Zaire.

We now know Zaire as the Democratic Republic of the Congo. Back in the 1970s, manufacturers became nervous that the supply of cobalt from Zaire wasn't very stable.

So the uptake of this much better magnet was actually slow, because of this and other concerns. Now, those actually concerns were realized when rebels in neighboring Angola actually invaded the lower part of Zaire. It's a province called Katanga or Shaba. And this caused what was called at the time cobalt panic. The price of cobalt rose significantly to about, I think, $40 a pound. And manufacturers obviously did not want to use material that had unstable supply sources. And so in 1983, I believe with DOD funding, General Motors, and independently a Japanese company, invented a different kind of magnet material. It was called neodymium iron boron permanent magnets. And these were actually much better, and the uptake was really quick.

They hit trouble again. Neodymium is a rare earth metal. While it did a great job in the magnets, it was harder to get.

And so what happened was, it's actually a really interesting story, General Motors created a subsidiary to do its magnet production. That subsidiary ended up being bought out by an investment company, which at the time wasn't really well known, but it was backed by Chinese companies, investors, which would ultimately have ties to the Chinese government. There is the Committee for Foreign Investments in the United States, CFIUS, that required that the company stay in the United States for a period of time. As soon as that period of time expired, the company moved all of its production to China. And essentially, the United States lost its ability to manufacture these rare earth magnets.

And the U.S. used to have its own rich source for rare earths, the Mountain Pass Mine in Southern California. And the avocado was roider, But that mine... Shut down production in about 2002. And so all of a sudden, the U.S. did not have any more rare earth production or any magnet production.

but the forts were the代ução people who were made with Western States. the supreme Florida fractional limited to the local College of Perks and the puede to be stretched out through any perdition of the North Carolina.

In the last few years, a company called MP Materials has purchased and reopened the Mountain Pass site.

Over the years there was no longer delivering with the upper obscene and the devil that waselen takiego in America where we had at the time over the country of the flag. Now see, there's no evidence pass

The mine used to be the world's largest source of rare earths.

this to Choose a light where we meilleur and the döno community in Australia Evil is a 3-reve but the fundamental purpose

But it isn't back to anything near that level of output just yet.

that Johannes Rothsch operation has effectively evolved

MP Materials claims to produce 15% of the world's rare earth supply, with all of that output being processed in Asia.

photollen verm in Australia in Australia. the bottom of this social network can trust

And so that sort of gives you a hint of the story that has gone through with these magnets. But at the same time, now we're back to using cobalt, not for magnets, but more so for lithium-ion batteries. And so now we're dependent on Zaire again. We're repeating the story itself. So maybe the phrase that history doesn't repeat itself, but it rhymes, I think probably applies in the case of cobalt, where the story is repeating again. We are now dependent again on cobalt from DRC.

We'll be right back. Drought, flooding, wildfires. These are the stakes of climate change. To avoid disaster, many corporations, multinationals, and countries have committed to reducing greenhouse gas emissions to net zero by 2050. I'm Heather Clancy. On a special branded episode of Global Translations presented by Citi, we learn how the finance sector is helping facilitate a low-carbon transition through sustainable financing solutions.

It's clear that that's where we are headed. That's where we have to head. For a bank like Citi, that involves developing and executing on pretty ambitious plans on both the opportunity and the risk sides. Tune in December 16th, wherever you listen to this podcast.

So how do we wean ourselves off of our reliance on cobalt? Some of the efforts so far have been quite... Explosive.

Home Beach man says he suffered second-degree burns when his Samsung Note 7 exploded in his pocket. This morning, an urgent new message from Samsung. Turn off your Galaxy Note 7s immediately.

Here's cobalt mining CEO Bryce Crocker again.

If cobalt was easy to substitute, it would have been done. It's there. Once you go below 20% cobalt in the cathode, you have what's called the risk of thermal runaway, which is your Samsung incident on the aircraft or the 787 Dreamliner. It's an exothermic reaction. You can't put water on it. You can't put carbon dioxide to put out the fire. It's a big deal. And obviously, an electric vehicle, safety is a critical aspect of that.

So in that incident, there wasn't enough cobalt in the battery? It became unstable and unsafe?

Cobalt's a stabilizer in the cathode. And so as you start to... Because of the issues around cobalt... So when I started selling cobalt into lithium-ion batteries, the dominant chemistry was what's called 111. So it's one part nickel, one part manganese, one part cobalt. So the cathode was one third cobalt. Now we're moving forwards. And because of the pressures around the DRC, et cetera, and everything I've mentioned, the chemistry which is likely to be rolled out in the next wave of electric vehicles is 811. So eight part nickel, one part manganese, one part cobalt. Once you go below 20% cobalt in the battery, it becomes unstable. So there's a very complex battery management system to kind of keep it safe. But in answer to your question around are there batteries without cobalt in it? I mean, the Chinese, for example, use what's called an LFP, lithium phosphate battery, in their buses. And the reason for that is, I mean, simplistically, the bigger the battery, if something goes wrong, the bigger the bang. So in a bus, for example, you'll never have an 811. You'll never have a low cobalt chemistry in a battery that large in a vehicle which is carrying passengers. It's just too dangerous.

Well, a relatively unknown Chinese electric car battery maker is aiming to be the next global auto powerhouse.

There's a type of cobalt-free battery called CATL that's attracting attention. But there's still a long way to go before cobalt-free batteries conquer the production lines.

If I want to change the chemistry in a battery, first I've got to discover that change. I have to write academic papers. It has to be tested. I have to go to the regulators. There's lots of steps that I go through before that battery gets rolled out commercially. Safety is a big deal because, obviously, if you have an incident, it's one thing to have an incident on a laptop, which is kind of sitting shut and not dangerous from a personal perspective. In a vehicle where you're driving your family to a hockey match, it's very, very different. So, A, there's strong regulatory pressures on the evolution of batteries to make sure it does happen in a measured, appropriate way. And then you've got also the natural company desire not to be at the cutting edge of battery technology and have an accident. There will be accidents and there are accidents. And China's the place where those accidents are going to happen because they're pushing the battery chemistries much more aggressively. They adopt, I guess, a less emotional response in terms of...

of how they do roll out chemistries. They have perhaps a net, it's a different philosophical response. We have a zero tolerance safety policy in the West that maybe isn't replicated. So in China, they are rolling out much more aggressively low cobalt chemistries.

There is a risk that manufacturers around the world could see cobalt supply challenges. Buyers are grabbing up a material that right now comes almost exclusively from one country, the Democratic Republic of the Congo, a country that has its own domestic problems, plus the industrial hand of China hovering overhead, and the way that it's mined brings its own set of concerns.

When we talk about mined materials, they are where they are, you know, and like some things where you can say it would be more convenient if that were five kilometers away. Mined materials are where they occur in the earth and cobalt is very limited in the places it exists on the earth. So that makes it a complexity.

This is Amy Boulanger, the executive director of the Initiative for Responsible Mining Assurance, or IRMA. IRMA works with governments, mining companies, and environmentally conscious organizations to create guidelines for mining that can be environmentally and socially sustainable, as well as profitable.

And one thing I had absolutely no idea about is that cobalt mining often isn't like the industrial scale mining common with other types of minerals. It can be quite artisanal.

Like artisanal, like an artisanal baguette.

You are not going to see it at your organic supermarket anytime soon. Let's put it that way.

It can be mined both using large-scale industrial mines owned by large multinational corporations, but also by individuals out with pick-and-shovel, far more non-mechanized mining. That kind of what's called artisanal scale mining can be a wonderful thing in terms of being an economic opportunity for many people in a community who are the same way we might think of subsistence farmers as opposed to large agriculture. There is this small-scale, non-mechanized mining that occurs as well, but it can be quite informal and unorganized and not easily regulated and still have environmental impacts, and it can also feed into conflict. You can have people who are being controlled by others or crime and influence over individual miners. You know, you have issues of conflict and violence. So there is a broad range of both social issues at play as well as environmental issues at play.

And those environmental issues can translate to not-so-great chemicals and silt leaching into the water, erosion, waste, and the transformation of entire landscapes.

With mining, you're digging materials out of the earth, and so you've got the issue of how far down are your materials, how hard are they to access, what comes out, where do you take the waste, which is all this rock and earth that's above and around and surrounding what you have so you can see. If you and I were just going out, you could imagine, you know, you've got all this digging you're doing. So you've got the hazards and the noise of digging and of disrupting a natural environment and opening it up to try to get to whatever your target is, whether that's cobalt or gold or iron or something else. You're moving earth from one place to another. But again, too, it's not that one mineral is either necessarily harder to get out of the earth or creates more of an impact itself because it's gold, for example, or because it's cobalt. It tends to be either the geochemistry or the political and socioeconomic context in which that material exists.

Let's get real for a moment. When we think about mining, we think dirty rather than sustainable, and we certainly don't connect it to stopping climate change. But we have to think about those connections because clean energy, for now at least, is a paradox. To get the materials needed to produce electric cars and solar panels and wind turbines, the main ways are digging into the earth using abrasive methods.

It's an irony that an energy transition towards new technologies that we hope will be more sustainable and better for our climate future are at the top of the supply chain creating more demand for mined material. That even as we build wind turbines and solar panels and we use rechargeable batteries in our devices, that these things themselves require materials that are mined from the earth and that we might be creating more of that demand and that harm. So that's all the more the reason why we're saying a few things. One is we should make materials that are more durable. We've become quite a disposable society and so you'll hear a number of groups saying we should make things that last longer. We should make things that are more efficient and use our materials more efficiently. We should do more recycling, retrieving our materials, right, and putting them back to use so we don't have to do new mining. And then when new mining is going to happen.

There.

that we use best practices for this extraction because we know that this extraction leaves harm behind that lasts not just decades, but often hundreds of years. The waste piles we build up, the risks to water, we're needing to manage these long-term environmental and social impacts for centuries ahead. And so there were 50 NGOs who signed a letter to the World Bank last year in 2019 asking for exactly these things, saying, look, we know we need to transition the types of energy that we use to be responsive to this moment in climate history. But as we do, we need to approach that with an eye that any new mining that this drives should be using best practices. It shouldn't be done as a status quo, business of usual, with the mistakes we've made over the last 100 years.

Cobalt is just one of many critical minerals and metals that we need for our high-tech future. whether for electric vehicle batteries or cell phones.

So how do we go forward in our quest for secure, stable flows of cobalt and other critical minerals? What are the solutions for overseas supply chains that can falter? Can we get there before time runs out? Cobalt's supply is only getting harder to ensure. The current shape of globalization has created fragile circumstances that surround how we obtain it and can continue to get it in the future.

The current landscape is very unstable. At any time, a mass mining shutdown due to coronavirus cases in the DRC or a new trade spat with China could come along. A lot of leaders around the world are starting to talk about what would it take to bring these supply chains back to their own countries, and not just for cobalt, but other rare earths and minerals that are so important to the future tech economy. But there are trade-offs. If we don't mine it there, should we mine it here? Would we solve one environmental problem only to create a new one? And who's going to make it happen? How are we going to pay for it? And who gets to decide?

Well, until such time, as you can build things without minerals, without your mineral base, we're going to continue to need them. They are at the core of about everything that we have in modern society, and yet we so take minerals for granted. Stay with us.

That's all in the next episode. From Politico, this is Global Translations. Our producers are Annie Rees and Cara Tabor.

Our senior producer is Jenny Ament, and Irene Noguchi is the executive producer.

I'm Louisa Savage.

And I'm Ryan Heath.

Thanks to Bryce Crocker, Nadal Sarb, and Amy Boulanger for talking with us. Global Translations is presented by Citi, a leading global bank.

Subscribe to the show wherever you get your podcasts, and listen for a special branded episode from Citi coming December 16.

Then on January 6, Ryan and I will be back with another episode from Politico. Thanks for listening, and see you soon.