Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
US Senator Marco Rubio is seeking information from Volkswagen AG about a pair of planned joint ventures with companies accused of having a record of alleged human rights violations such as forced labor and human trafficking.
Rubio, a Florida Republican known for his hawkish stance on China, wants the German automaker to explain its decision to seek partnerships with the two Chinese companies to supply nickel, cobalt, lithium and other materials used to make batteries for electric vehicles, according to a letter viewed by Bloomberg News.
Addressed to VW Chief Executive Officer Herbert Diess, the senator’s April 27 inquiry cites Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group Co., the world’s largest producer of nickel, as being companies accused of ethically dubious operations in Africa and Southeast Asia.
The probe is part of a broader debate over humanitarian issues in supply chains for materials needed in clean energy technology. Many of the inputs are reliant on China or require metals sourced from environmentally-sensitive areas or countries where child labor in cobalt mines has been an issue.
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“As you may know, Huayou has been credibly implicated in the forced labor and human trafficking of child laborers in its cobalt mines” in Democratic Republic of Congo, Rubio wrote in the letter. “Meanwhile, Tsingshan operates lithium and nickel mines in Indonesia, which require the destruction of the rainforest ecosystem, and is considered a major risk to biodiversity.”
Rubio also implicated Volkswagen for what he claimed were benefits it receives from forced labor involving the Uyghur Muslims ethnic minority in China’s Xinjiang Uyghur Autonomous Region. Suppliers to Volkswagen and other major automakers have been criticized for alleged links to controversial labor programs in Xinjiang, but China has repeatedly and strongly denied these involve forced labor.
VW confirmed receiving the two-page letter and a spokesperson said in an emailed statement Thursday it would respond to the senator “in an appropriate and timely manner.” The company did not directly address the specific allegations other than to say it takes environmental sustainability and human rights seriously and has found no evidence its suppliers in China’s Xinjiang region use coercive labor programs.
Huayou Cobalt said the allegations were “wholly inaccurate” with the company undergoing regular third-party audits on responsible sourcing standards. It also works with partners like the Responsible Cobalt Initiative in Congo, a key producer, to improve worker conditions.
“The issues and risks involved in mining in jurisdictions such as the DRC are well known and acknowledged,” the company said. “Huayou Cobalt — much like many of our downstream customers — believe a policy of engagement and continual improvement in standards is a better approach than disengagement from communities who rely on the revenue from mining.”
Tsingshan, which is led by Chinese tycoon and nickel market speculator Xiang Guangda, didn’t immediately comment on the matter when reached by phone.
Huayou has faced accusations of complicity in the use of child labor in the DRC and of doing too little to help improve working conditions while Tsingshan has seen opposition from some concerned over the impact of development projects in Indonesia on the environment and in remote communities.
Volkswagen, which is working on the industry’s biggest rollout of electric models, announced its intention to form strategic partnerships with the two Chinese firms earlier this year, saying the prospective deals would help cut costs for the lithium-ion battery cells core to powering EVs.
The company has previously discussed efforts to improve safety and working practices in its metals supply chains.
(By Keith Laing and Elisabeth Behrmann)
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