Set up in 2012, along the principles of the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct and Responsible Mineral Supply Chains, the Cobalt Framework aimed to prevent and mitigate risk in the cobalt supply chain, with a strong focus on human rights violations, child labour and business ethics, linked to the sourcing of cobalt from, among others, the Democratic Republic of Congo (DRC).
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Since then, the company has expanded its Cobalt Framework with a broader ESG focus to include, but not limited to, CO2 emissions, waste, water, health and safety, and community engagement. We report annually on our due diligence practices for sourcing cobalt, through a publicly available compliance report.
Achieving the application of these processes to nickel and lithium will be an important proof-point in its 2030 RISE strategy, of which a key pillar is an ambition to be a ‘Sustainability Champion’ in its own operations and value chain, as well as supporting our suppliers and customers on their sustainability journey.
Identifying and mitigating risks in extracting lithium and nickel
Currently, much of the world’s lithium comes from the salt flats of South America, where it is extracted by pumping and evaporating mineral-rich brine. Australia is also one of several countries where Lithium is sourced , and here it is ‘hard rock’ extracted from mines containing the mineral spodumene. Nickel is found in many parts of the world, with Indonesia being a fast-growing exporter. Nickel concentrates are often found in remote forested areas of the country.
For both metals – and as with cobalt – there are risks associated with their extraction that the company needs to identify and manage through its responsible sourcing frameworks. For example, for lithium extracted from brine, it may pay particular attention to water use and how this may impact local communities. In the case of lithium from spodumene, one issue of concern, among others, is the CO2 footprint. For nickel mining in Indonesia, Umicore concentrate on the risks associated with deforestation and biodiversity.
By working with suppliers and other stakeholders in all these areas, the company aims to mitigate risk as much as possible and work towards truly responsible value chains.
“The first step is to establish supply chain visibility and traceability, to track the materials back to the mines of origin,” explained Barbara Cooreman, Program Lead for Responsible Sourcing. “We then work on risk assessment, building a detailed picture of risks, in the countries of origin and transit, risks related to the specific material itself and risks related to the supplier in question. When risks have been identified, we develop plans together with the supplier to prevent and mitigate them. The final stage is reporting on our actions taken and ensuring that our processes are third-party certified.”
From April 1, 2023, the new frameworks are applicable to Umicore’s nickel and lithium suppliers. To begin, suppliers will be expected to complete self-assessment questionnaires, giving a detailed overview of, among other things, their business activities, ESG policies and due diligence. As well as using this information, Umicore will also use a supplier screening process, informed by its own research and that of stakeholders.
As issues arise, Umicore will engage with suppliers and work together on remediation measures. These could include setting up policies and processes or organising training and capacity building. Umicore will also perform regular site visits to understand what’s happening on the ground and, when required, audits may be performed.
Ultimately, suppliers will be asked to work with third parties to achieve official certification against recognized responsible sourcing and ESG standards by 2025 latest. Throughout its due-diligence efforts, the company aims to maintain good relationships with suppliers and work together on its journey.
With the new frameworks for lithium and nickel adding to cobalt, our customers will have full confidence that the battery materials provided by Umicore are sourced responsibly, ethically, and sustainably.
Cooreman concluded, “As we showed with our work on cobalt, we aim to develop a best-in-class approach that goes beyond legal compliance and aims at real impact. We work closely with people on the ground in a mutually beneficial relationship based on strong ethical business standards, trust and shared commitments.”