UK firm pilots using blockchain to help BMW source ethical cobalt

LONDON (Reuters) - Automaker BMW is working with a London-based start-up to use transaction-recording technology blockchain to prove batteries for its electric vehicles will contain only clean cobalt, the start-up’s CEO said.

The competition is intensifying to use blockchain, the technology that underpins cryptocurrencies such as Bitcoin, to try to eliminate battery minerals produced by child labor.

Cobalt is in focus because around two thirds of the world’s supplies are from Democratic Republic of Congo, where roughly one fifth of cobalt is mined in unregulated artisanal mines.

One organization has begun a project to work with the artisanal miners to use blockchain to prove they are not using child labor.

The start-up Circulor is meanwhile working on a pilot for BMW to map cobalt that is already assumed to be clean because it comes from jurisdictions such as Australia and Canada or from industrial production in Congo, Circulor said.

   A BMW spokesman said the firm could not comment at this stage.

“We believe it makes economic sense to start with sources that aren’t a problem,” Circulor CEO Douglas Johnson-Poensgen told Reuters in an interview.

“Once the system is proven and operating at scale, one can tackle the harder use cases like artisanal mines.”

The pilot shows it is possible to give clean cobalt a barcode and enter the main stages of its journey on to an immutable ledger using blockchain technology, Johnson-Poensgen said.

Because that is an efficient way to prove cobalt is clean, he said it had the potential to cut regulatory compliance costs, although the economics still needed to be proved.

Johnson-Poensgen was an army engineer, involved in activities such as bomb disposal in Sierra Leone and Bosnia, and has also worked for big corporations, including BT and Barclays Bank.

He founded Circulor last year with a view to tackling the need for automakers to reduce costs to make electric vehicle manufacturing is profitable.

Glencore dominates industrial production in Congo. It has said it would never use child labor, while declining to comment on blockchain.