The move means Apple will find itself in competition with carmakers and battery producers to lock up cobalt supplies. The challenge is that with the growth of electric and hybrid vehicles gobbling ever larger amounts of the metal, Cupertino fears a shortage that could hurt its sales figures.
After previously obtaining cobalt through intermediaries, Apple for the first time is in communications with cobalt miners to build long-term partnerships, Bloomberg reported Wednesday.
Apple in talks to buy key mineral used in batteries as China secures bulk of global supply
Apple is seeking contracts to secure several thousand metric tons of cobalt a year for five years or longer.
Cutting out the middleman, Apple reportedly wants to buy cobalt directly from miners, according to a report from Bloomberg on February 21. Bloomberg reports that smartphone batteries use around eight grams of refined cobalt, but a battery for an electric auto needs more than a thousand times that amount.
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Apple is not the only company seeking long-term cobalt supply deals: BMW has been seeking its own 10-year deal for its electric auto program.
About 62 per cent of the world's cobalt supply is now controlled by China, and more than 90 per cent of that comes from Congo, according to metals consultancy CRU.
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The automobile sector has certainly pushed up the demand for cobalt, but it has not peaked yet, according to Darton Commodities, which specializes in the sale of cobalt.
Mining giant Glencore has named Apple as one of several companies it is talking to about future supplies. Auto makers like BMW and Volkswagen are also looking to ink multi-year deals that would secure a constant flow of the rare metal. They're now embarking on research and development of cobalt-less batteries as a strategy to hedge against rising cobalt prices. Over the past eighteen months, the price of cobalt has tripled to more than $80,000 a metric ton. In a report in early 2016, Amnesty International alleged that Apple and Samsung Electronics Co.'s Chinese suppliers were buying cobalt from mines that rely on child labor.
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In recent years, Apple has stepped up its engagement with cobalt suppliers after the origin of the metal in its supply chain came under scrutiny from human rights groups.