Tesla plans to use Glencore cobalt in new Gigafactories

Key Points
  • Elon Musk's car company is expanding its relationship with mining giant Glencore. 
  • Tesla is planning to use cobalt from Glencore's mines in the Democratic Republic of the Congo to make lithium-ion batteries at Gigafactories in Berlin and Shanghai. 
Tesla Motors CEO Elon Musk speaks to the media next to its Model S.
Nora Tam | South China Morning Post | Getty Images

Tesla plans to use cobalt from Anglo-Swiss mining giant Glencore to build lithium-ion batteries at its new factories, according to industry sources.

The carmaker intends to use Glencore's cobalt in its new Berlin "Gigafactory" as well as upcoming manufacturing sites that are yet to be announced.

Glencore, which is the largest industrial supplier of cobalt in the world, could provide Tesla with up to 6,000 tons of cobalt a year under the long-term partnership.

The financials of the deal are unknown but a ton of cobalt is worth about $30,000, down from $95,000 in May 2018.  The news was first reported by the Financial Times and both Tesla and Glencore declined to comment when contacted by CNBC.

Elon Musk's electric car company already uses Glencore's cobalt in its Shanghai Gigafactory.

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The cobalt will come from the Democratic Republic of the Congo, where Glencore has been operating a copper mine in the Katanga region since 2008 that produces it as a byproduct.

The African nation supplies more than two thirds of the world's cobalt but human rights groups have raised concerns that the industry relies on child workers.

Last week, Tesla defended its cobalt sourcing in a company report.

"Because Tesla recognizes the higher risks of human rights issues within cobalt supply chains, particularly for child labor in the Democratic Republic of Congo (DRC), we have made a significant effort to establish processes to remove these risks from our supply chain," the report reads.

Tesla added that it reviews information provided by suppliers for "red flags and risks associated with ethical sourcing."

Cobalt has become one of the modern world's most important minerals as it's also used to make the lithium-ion batteries found in smartphones and laptops.

However, the extraction of cobalt has been plagued by concerns around illegal mining, human rights violations and corruption. The cobalt producing mines in the DRC have been under scrutiny for years now.

Last month, researchers found that cobalt miners are being exposed to dangerously high levels of toxic pollution that is causing birth defects in their children.

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Mark Dummett, head of business, security and human rights at Amnesty International, said: "When we first went into mines in 2015 we saw how men, women and children were working without even the most basic protective equipment such as gloves and face masks, and miners told us about health conditions they experienced, including coughing, pain in their lungs and urinary tract infections." 

"In one village we visited, people showed us how the water in the local stream that they drank that they said was contaminated by the discharge of waste from a mineral processing plant," he said.

Tesla is currently being sued along with Apple, Google, Microsoft and Dell for the deaths and injuries of child miners in the DRC, which is one of the poorest countries in the world. 

A case filed by International Rights Advocates on behalf of 14 Congolese families accuses the tech firms of knowing that cobalt used in their products could be linked to child labor.