U.S. says Chinese lithium-ion batteries are made with child labour as trade war spills into EVs

The U.S. government tried to shift the EV supply chains away from China by tying a generous electric vehicle subsidy to inputs from friendly countries.

There are other strategies available to Washington. The Biden administration added Chinese batteries to the U.S. Labor Department's list of products derived from child and forced labour, an example of how the United States intends to offset Beijing's influence over a once-in-a-lifetime technological advancement.

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According to the Labor Department, China imports almost 90 percent of its cobalt from the Democratic Republic of Congo, where a significant amount of the mineral is produced through informal mines. The Labor Department said that the Asian powerhouse uses up to 80% of its cobalt imports to make battery chemicals and components.

This is the first time that the U.S. government has included Chinese batteries in the market. There is no danger of prosecution for companies that use products from the list.

Christine Feroli, a spokeswoman for the U.S. Labor Department, said that the compendium could be used to raise public awareness of labour exploitation.

The U.S. is looking to shift away from China, which has a strong grasp of the EV sector, and towards its allies, a trend known as "friendshoring." Canada's deputy prime minister emphasized the need to speed up the development of energy projects in Canada in a speech in Washington, D.C.

Simon Moores, CEO of Benchmark Mineral Intelligence, a research group based in London, said in an interview that it feels like the latest chapter in the U.S. versus China trade war has spilled over into the EV and battery market. The U.S. will still rely on supply chains that pass through China for its batteries until it builds its own economy.

More than 70% of the world's cobalt is produced in the Democratic Republic of the Congo, but not all of it is produced using illegal practices.

The International Energy Agency says that China accounted for half of all EV sales last year. The supply of metals used to make batteries for EV's is dominated by it.

Canada and other U.S. trading partners could benefit from alithium-ion economy.

According to Moores, steps like these could cause a "generational shift" and Canadian miners would have to be ready to take advantage because "Canada has the potential to be the gateway for the North America electric vehicle boom, a key pillar of the inflation reduction act."

Theo Yameogo, head of mining and metals at a global accounting firm, said the latest step was taken due to concerns about security of the battery minerals supply chain. The supply chain for minerals is very complex and focusing on cobalt alone would not solve the problem for the U.S.

The U.S. is taking steps todiversify and reduce its dependence on China, according to a company spokesman. The Labor Department decided to link Chinese batteries to child labour in Africa in order to encourage companies to move away from Chinese sources of critical minerals.

Racanelli doesn't think there's a correlation between the list and the inflation reduction act He said that the industry has been trying to deal with the labour exploitation in the informal mines of the country. Racanelli said that people wanted to make sure that there was no child labour involved when driving an electric vehicle.

A deal was recently signed to supply a global battery maker with 7,000 tons of cobalt from a refinery in Ontario and feed from mines in the Democratic Republic of the Congo that meet global ethical standards.

Toronto-based Sherritt International Corp. refines the metal in Canada. Lucy Chitilian, Sheritt's director of investor relations, said that while the step by the U.S. may give "greater impetus" for Canada to build its own supply chain, the company doubts that "singling out" China as a consumer ofcobalt mined by

As countries look to accelerate their net-zero climate plans, the demand for electric vehicles has increased. According to analysts from Benchmark Mineral Intelligence, the world will need more than 20 times the amount oflithium that was mined last year.

According to Freeland, democratic allies should embracefriendshoring, the practice of building supply chains through each other's economies.

"If we are to tie our economies even more closely together, we must be confident that we will all follow the rules in our trade with each other, even and especially when it would be easier not to."

Canada needs to show more generosity in its energy and mining projects for its allies that need to heat their homes and make electric vehicles, she said.

These examples show that friendshoring must be green. Many of the world's democracies are dependent on the world's petro-tyrants.

The email address is nkarim@postmedia.