Cobalt is the new oil. Car manufacturers and battery manufacturers are rushing to get multi-year contracts with mining companies for their lithium-ion batteries. According to a Bloomberg report, Apple is also participating in this game because the company wants to secure its long-term supplies.
The company has never done this before with cobalt. Apple relies on a ton of suppliers for all components of its devices, including batteries. And yet, cobalt prices have tripled in the last 18 months. It is likely that Apple will get a contract much more easily than a battery supplier.
While an Apple Watch battery is smaller than a car battery, Apple sells hundreds of millions of devices each year. All these iPhone and Mac batteries are a little cobalt.
But the problem is that automakers are putting tremendous pressure on cobalt suppliers. BMW and Volkswagen are also considering signing multi-year contracts to secure their supply chains. And other automakers are probably also paying attention to cobalt prices.
As a side effect, buying cobalt directly into the mines facilitates control of the supply chain. It's hard to know where cobalt comes from when you buy batteries from third-party suppliers. And in this case, it can be a big problem.
Amnesty International publishes a report in January 2016 on cobalt mining, saying technology companies and automakers are not doing enough to prevent child labor in the Democratic Republic of Congo – the country is responsible for 50% of world production of cobalt.
A few months ago, Amnesty International released an update, saying that Apple is more transparent than others. The iPhone maker is now publishing a list of its cobalt suppliers. But there is still a long way to go to ensure that mining companies respect basic human rights.
But let's be honest. In the case of today, Apple especially wants to be able to buy enough cobalt at a fair price for its future gadgets. And the company has enough pockets to sign this kind of transactions.