Electric vehicles (EV) - coupled with low-carbon electricity generation - are key in reducing our carbon footprint from transport. Some of the biggest manufacturers, including Volkswagen, Volvo and General Motors, have already announced plans to phase out internal combustion engines entirely to go "all electric".

But the success of the electric vehicle revolution will depend on the performance of EV batteries. The most common today are lithium-ion batteries, which rely on a combination of lithium, nickel, manganese and cobalt.

The World Bank estimates over a 1000% rise in demand for key minerals used in energy storage technologies under a 2 degree climate scenario, including aluminium, cobalt, iron, lead, lithium, manganese and nickel.

Lithium and cobalt in particular have attracted the most international attention as reports of use of child labour in cobalt mines in the Democratic Republic of Congo, as well as abuses of indigenous rights around lithium mining projects in South America have made global headlines.

Responsible sourcing campaigns specifically focused on batteries are already taking shape. For example, in March 2019 Amnesty International launched its ethical battery campaign, challenging EV leaders to produce the world's first completely ethical battery in five years' time.

Minerals required for electric vehicle technology

Our research focused on companies mining cobalt, lithium, manganese and nickel. Demand for these minerals is expected to rise in part due to their use in electric vehicle battery technologies.

Over 60% of known lithium reserves are located in the 'lithium triangle', an area spanning Chile, Argentina and Bolivia. Beyond ample reserves, the region has attracted investment because of its unique method of lithium mining: lithium is contained in salt water brines and extracted through an evaporation process that makes it significantly cheaper to mine compared to conventional hard rock mining.

As a result, water – an already scarce resource in the region – is a crucial component of this method of extraction. But there is little information available on natural water cycles, and companies operating in the lithium triangle have faced allegations of exceeding their legal salt water quota.

Indigenous communities around lithium mining operations in Argentina and Chile have raised concerns around lack of adequate consultations, unequal benefit sharing, and lack of remedy for the disruption to their livelihoods and the environment.

The biggest lithium producer in Chile, SQM, has faced allegations of corruption, tax avoidance and violating environmental regulations. The company was privatised under Pinochet’s military dictatorship and is still partly-owned by the former dictator’s family. Extensions of its concession agreements with the government were strongly opposed with demonstrations from indigenous and environmental protection groups. SQM has began further community engagement following these concerns. See information from SQM on its community engagement and environment programme here.

Community relations with Albemarle, a US-based company, are more favourable, according to some community members, as when it entered the region, it renegotiated agreements with local indigenous groups to improve local infrastructure and allocate a larger percentage of sales proceed to local communities. However, others disagree with this approach due to concerns about water resources. In addition, there is uncertainty around the future of these communities after mineral supplies are exhausted. In response to these concerns, Albemarle has highlighted that it is working closely with communities to fulfil its commitments. See here for further details from the company.

Human rights concerns around a lack of respect for indigenous peoples rights in lithium extraction in Argentina are also increasingly well-documented, and key to understand for companies or investors looking to enter the market.

The Democratic Republic of Congo (DRC) accounts for more than 60% of global cobalt production. Cobalt is often mined as a by-product of copper, both under large-scale commercial operations and artisanal mining.

The Business & Human Rights Resource Centre's Transition Mineral Tracker covers 5 companies mining cobalt in the DRC: China Molybdenum, Eurasian Resources Group, Gécamines, Glencore and Shalina Resources.

The conditions under which cobalt is mined in the country has attracted international attention due to the use of child labour in artisanal mining. But there are numerous allegations against conventional large-scale mining operations as well. In relation to cobalt mining in the DRC alone, the Business & Human Rights Resource Centre recorded 31 allegations of human rights abuse between 2007 and 2019. These allegations encompass a broad spectrum of issues, including environmental pollution, corruption, dangerous working conditions and displacement of local communities with insufficient consultation and compensation.

Glencore’s activities in the Democratic Republic of Congo illustrate that the scale of operation is not a guarantee of a clean human rights record. Katanga Mining, one of the company’s subsidiaries in DRC, was probed by Canada’s Ontario Securities Commission for misleading financial reporting, undisclosed compensation to executives, failures of internal control and risks associated with its business operation. The probe was eventually settled with a payment of $22 million to the Canadian authority. But the company also faces a potential investigation from the UK Serious Fraud Office and has been subpoenaed for records on its dealings in DRC by the US Department of Justice. A number of class action lawsuits have since been lodged by investors, an illustration of the financial risks that come with investing in opaque operations in high-risk countries.

These cases highlight the responsibility that investors bear when financing and profiting from these cobalt mining projects. To address these risks, the UN Principles for Responsible Investment produced guidelines to help investors promote responsible sourcing practices in the cobalt supply chain.