Apple is buying cobalt for iPhone batteries before Tesla takes it all

Joshua Bennett
February 22, 2018

Apple Inc (AAPL.O) is talking to major cobalt producers to secure supplies of the material vital for the lithium-ion rechargeable batteries that power its mobile phones, three cobalt industry sources said. 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.

Apple's reported move to buy cobalt directly from miners could bring efficiency to the Democratic Republic of Congo's troubled mining sector, but it will likely only muddle an already murky field.

About a quarter of global cobalt is used in smartphones.

The sources in the report claim that Apple is looking to sign contracts to secure several thousand metric tons of cobalt a year, for up to five years, or maybe even longer. One source told Bloomberg that the iPhone maker first started the discussion on the cobalt deals previous year, but that there are chances that talks may not go anywhere right now.

The Amnesty report noted that some tech companies reliant on lithium-ion batteries, including Apple, BMW, HP, and Tesla, have taken more action than others in recent years to verify that their cobalt components come from suppliers that watch out for human rights abuses.

While an Apple Watch battery is an order of magnitude smaller than a auto battery, Apple sells hundreds of millions of devices every year. South Korea's top oil refiner, SK Innovation Co., agreed to a deal this week of $3.9 billion with Australian Mines Ltd. BMW is also close to securing a 10-year supply deal.

The report does not say which miners Apple will be dealing with, and Apple refused to comment on Bloomberg's story. The price of cobalt has tripled in the last 18 months to $80,000 per metric ton.

Further complicating matters, Apple and Samsung have both been put under scrutiny for procuring cobalt from mines where child labor was found to have been used. Cobalt is also mined in China, Russia, Canada and Australia, but we guess that would be more pricey. Much of that bumper 44% dividend payout is due to the spike in cobalt, which saw a 108% increase on the average price, from $12 a pound to around $25 a pound previous year alone.

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