January 16, 2019 / 5:10 AM / a year ago

Ford and IBM among quartet in Congo cobalt blockchain project

LONDON (Reuters) - Carmaker Ford (F.N), technology giant IBM (IBM.N), South Korean cathode maker LG Chem (051910.KS) and China’s Huayou Cobalt (603799.SS) have joined forces in the first blockchain project to monitor cobalt supplies from Democratic Republic of Congo.

The pilot, overseen by responsible-sourcing group RCS Global, aims to help manufacturers ensure that cobalt used in lithium-ion batteries has not been mined by children or used to fuel conflict.

Companies are under pressure from consumers and investors to prove that minerals are sourced without human rights abuses, but tracking raw materials throughout their journey is challenging.

The project announced on Wednesday has been quietly under way since December. Starting with industrially mined cobalt in Congo, it is monitoring supplies all the way to lithium-ion batteries for Ford vehicles.

Supplies of cobalt, expected to be needed in huge quantities for electric vehicles and electronic devices, are concentrated in Congo, a sprawling, volatile nation that has been racked by civil war and political tension.

The outcome of elections in December, which had been intended to be Congo’s first democratic transfer of power in six decades, is contested. [nL8N1ZB393]

RCS says the IBM blockchain platform could be used to include other minerals and to allow artisanal miners, which analysts say are the biggest issue with regard to ethical sourcing, to join a blockchain-based network of validated participants.

Blockchain, famed as the technology behind cryptocurrency bitcoin, works by providing a shared record of data held by a network of individual computers rather than a single party.

For the pilot project, which should be completed around the middle of the year, cobalt from Huayou’s industrial mine will be placed in secure bags, entered into a blockchain and traced from the mine and smelter to LG Chem’s cathode and battery plant in South Korea and then on to a Ford plant in the United States.

Because minerals are often combined with metals from various sources when they are smelted, they are particularly difficult to track.

The RCS project seeks to enforce best practice by using guidelines drawn up by the Organisation for Economic Cooperation and Development.

IBM said it was exploring the potential of chemical analysis using artificial intelligence to pinpoint the origin of cobalt and ensure so-called clean cobalt was not smelted with minerals sourced less responsibly.

“There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy,” Manish Chawla, general manager of IBM’s mining and industrial sector business, told Reuters.

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“Blockchain has been proven to be a very effective technology in raising the bar.”

IBM has already worked with retailers including Walmart (WMT.N) and Carrefour (CARR.PA) to trace food through supply chains. [nL4N1WK2YO]

In the mining sector, meanwhile, Anglo American’s (AAL.L) De Beers has begun using blockchain to track diamonds. [nL8N1WE4YQ]

Reporting by Barbara Lewis; Editing by David Goodman

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