Volvo has launched its first fully electric car, the XC40 Recharge. © Volvo Car Corporation
Volvo has launched its first fully electric car, the XC40 Recharge. © Volvo Car Corporation

Volvo to use blockchain for cobalt supply chain

Volvo Cars has announced that it will use blockchain technology to bring responsible sourcing to cobalt, which is used in the production of electric vehicles’ (EV) batteries.

The carmaker has worked with its two battery suppliers, Chinese firm CATL and South Korean firm LG Chem, to set up blockchains which will track the global supply chains, starting this year. 

The blockchain captures data recorded at each stage of the supply chain, including the cobalt’s origin, details of size and weight, a chronological record of transactions and information showing how suppliers’ ethical practices are in alignment with OECD supply chain guidelines. 

Martina Buchhauser, head of procurement at Volvo Cars, said: “We have always been committed to an ethical supply chain for our raw materials. 

“With blockchain technology we can take the next step towards ensuring full traceability of our supply chain and minimising any related risks, in close collaboration with our suppliers.”

The supplier agreement with CATL and LG Chem covers supply of batteries for the next decade of production of EV models.

CATL piloted a supply chain blockchain with technology firms Circulor and Oracle in the summer of 2019, and LG Chem is currently setting up the technology with the Responsible Sourcing Blockchain Network and sourcing specialists RCS Global and IBM.

Volvo Cars expects 50% of its global sales to be fully electric cars by 2025, and recently launched its first fully electric car the XC40 Recharge, the first of a new all electric collection. 

According to Volvo Cars, it will be the first car manufacturer to trace cobalt used in batteries through a blockchain.

Cobalt is a raw material used in the production of lithium ion batteries. The raw material has been linked to unethical practices and Volvo Cars said traceability of cobalt is "one of the main sustainability challeneges faced by car makers".

Last year, The London Metal Exchange announced plans to introduce new cobalt auditing rules for listed producers sourcing at least 25% of the mineral from the Democratic Republic of Congo, due to concerns over forced and child labour.

In 2016, an Amnesty International report accused BMW, Fiat-Chrysler, General Motors, Renault-Nissan and Tesla of sourcing cobalt for use in electric cars from a smelter linked to child labour.

Separately, fashion retailer Ralph Lauren has implemented “digital product identification” through blockchain technology to create supply chain visibility and reassure consumers of authenticity.

A QR code will enable the public to gain access to “tens of millions of products”, sharing product details, styling tips, supply chain data, and real-time tracking of the product from manufacturer to store.

And freight specialist DHL Global Forwarding, a subsidiary of logistics firm DHL, has collaborated with Hewlett Packard Enterprise (HPE) to roll out a blockchain system that has automated administrative and shipping processes for improved productivity and savings in the supply chain.

The blockchain-enabled system simplifies the shipping approval process, provides insight and assistance with payment processes, and gives “a single source of transparency for all parties”.

Kim Masone, vice president of Global Logistics at HPE, said: “Based on the initial results, HPE has observed a number of inherent benefits, including 100% invoice accuracy and paid on agreed terms, less days payment ageing, and little to no manual intervention.”

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