A man walks down the street talking on his cellphone. A woman starts her electric car and heads home after work. These are everyday occurrences that often don’t get a head turn from passersby; they’re just that common.
What gets taken for granted even more so is the lithium ion batteries that keep these technological wonders running, and fewer people still ponder where the components in these power sources come from in the first place.
A Digging Dilemma
One of the most important—and expensive—raw materials found in the rechargeable batteries that are used in mobile phones, electric cars and the like is cobalt. It’s a shiny, ferromagnetic metal that comes from the earth’s crust and is mostly mined in the heart of Africa: the Democratic Republic of the Congo to be exact.
As you might imagine, it’s dangerous work.
A 2016 Washington Post report detailed the risks cobalt miners face. The dangers are even more pronounced for so-called “artisanal miners” who go it alone—generally without access to proper safety equipment or any type of safety protocols to follow. These people for all intents and purposes are independent agents and not affiliated with any contracting company, and they are responsible for collecting 10 to 25 percent of the world’s cobalt supply, according to the article.
Add the war and conflict that the region has endured over the past couple of decades into the mix and you start to get a sense of the challenges of contracting for cobalt.
Of course, some organizations are looking for other options. One Canadian company, for instance, is hoping to “mine” cobalt from faulty batteries to eliminate the need for the more-traditional mining of the grayish metal.
“Mining batteries is much more profitable than mining the ground,” said Larry Reaugh, the president of American Manganese, in a recent Bloomberg article. “Rather than mining ore that’s 2 percent cobalt, you’re mining a battery that has 100 percent cobalt in it.”
But even with any cobalt-mining alternatives in development, it’s not likely to stop the need for traditional mining in the Congo anytime soon.
Betting on Vetting
For companies that need materials such as cobalt for their products, it’s important that they properly vet contractors before employing their services. After that, they must set expectations for those companies around Environmental Health & Safety best practices to ensure compliance with regulatory and organizational safety directives and standards.
Apple Inc., for one, is doing just that.
“In 2016,” Apple reported in its 2017 “Supplier Responsibility” report, “we expanded our responsible sourcing efforts beyond conflict minerals to include cobalt. We’re proud to report that 100 percent of our conflict minerals and cobalt smelter/refiner partners are now participating in independent third-party audits to ensure their own business practices are conducted responsibly. Our commitment to responsible sourcing will not waiver, and we will continue to drive our standards deep in our supply chain.”
More recently, Apple has discussed buying “several thousand metric tons” of cobalt directly from miners rather than through the typical channels the company uses to help ensure it gets the cobalt it needs for its batteries, according to a separate Bloomberg article.
There are other companies that take cobalt extraction and distribution just as seriously.
One of those organizations is Trafigura Group, a Singapore-based commodity trading company with offices around the globe, including four regional locations in North America. In December 2017, Trafigura’s Richard Head, who leads the company’s Health, Safety & Environment initiatives, participated in EHS Today’s “Advancing Trade” webinar, which Sphera sponsored. In his talk, Head explained Trafigura’s process for evaluating contractors around Health & Safety issues.
As Head conveyed in his talk, the process of getting cobalt out of Africa for trading purposes is a complex and often slow process.
“We normally export cobalt from the Congo through to South Africa to Durban,” Head said. “That’s a journey that can take up to four weeks. There’s three border crossings and, in extreme cases, it takes a month for a truck to do that. You can understand some of the challenges we have around finding a company that can reliably do that rather than find out a few days or weeks into the journey that they’ve had a problem, and we have to start fixing that and the product doesn’t arrive on time.”
And not having to fix things after problems arise is key.
Hire Safely When Focus Is on Safety
Poignantly, Head said, Trafigura is “only as reliable as our contractors.”
But how does Trafigura assess those contractors?
According to Head, safety is a strong indicator of reliability. “If a company has a good safety performance, it probably has good other processes,” he said. “If it has a bad safety performance, it probably has other poor processes.”
In particular, Trafigura looks at how companies manage safety in high-risk activities, such as oil storage, warehousing and waste management (e.g., marine slop) to assess its contractors.
The first step is having the potential contractor fill out an online form to evaluate if that contractor is meeting Trafigura’s minimum standards. Contractors that fail are then evaluated to see if there could still be an opportunity to do business together. Some companies are immediately weeded out, but others that are deemed close to meeting Trafigura’s standards but not all of them can qualify for a temporary approval process. This allows Trafigura the opportunity to coach the company on how it can meet all Trafigura Health & Safety expectations.
As part of the temporary approval process, a time limit is set on how long the company has to meet Trafigura’s safety requirements.
The second step of the approval process is when Trafigura performs an on-site visit to the contractor to see if that company is following through on what they said they would do during the online evaluation. Trafigura normally does this themselves, but occasionally uses contractors to do the inspections as well. Sometimes, for instance, Trafigura works with insurance companies to evaluate contractors for them since insurers are risk experts.
Once a contractor is approved, Trafigura uses software to tag any incidents or near-misses that the contractors might have experienced to see if something jumps out. For example, Trafigura looks at kilometers driven and leverages that data against road traffic accident frequency, Head explained, to see if a contractor’s workers are getting into a disproportionate number of accidents.
Operational Risk software can help manage the contracting process along the way, and since more and more areas of the Congo are poised to get satellite-enabled high-speed Internet capability, at least according to a recent press release from an Israeli company, a cloud-based Operational Risk solution could allow Congolese contractors to enhance their EHS practices.
Lagging or Leading?
One interesting point that Head made is when he discussed the difference between Trafigura’s contractor-evaluation process and the well-regarded Campbell Institute Model of Contractor Life Cycle. Trafigura deals with off-site contractors, he said, while Campbell focuses on fence-line contractors. Additionally, Head said the Campbell model focuses on lagging indicators for safety performance rather than leading or predictive indicators, which is Trafigura’s preference.
In Head’s opinion, focusing on lagging indicators doesn’t bode well for its relationship with contractors. The reason is once a contractor starts losing business because of logging incidents or near-misses, they can do one of two things: learn from them and improve or just stop reporting incidents and near-misses altogether, i.e., taking a “What they don’t know won’t hurt them” approach. Although in this case, what you don’t know can hurt you as a company if an undocumented incident is uncovered and your organization is subsequently found to be in noncompliance with pertinent workplace safety regulations.
Another difference is that Trafigura prefers an in-house employee be responsible for managing the contractor, and that worker is accountable for the contractor’s performance and the performance of any of its subcontractors as well. Taking the position that contractors are still part of the company’s workforce, “It makes no difference if the contractor has an incident or an employee” does, Head said.
Occasionally, time is of the essence, so Trafigura takes what it calls a “dispensation” route with a contractor rather than just “punting” on any one contractor. In this scenario, the contractor must show how they manage risks to an in-house manager, and that Trafigura manager must essentially vouch for the contractor.
“This is the pressure relief valve if … we can’t keep up with the business,” Head said. “There is a way for us to formally have a dispensation.”
The end goal, after all, is improving contractor reliability, Head explained, which benefits Trafigura’s customers. While Head didn’t have statistics to share, he did say, anecdotally, that the initiatives are working to reduce EHS issues. Still, Trafigura is learning how to best work with its contractors, he added.
“For instance, we have a lot of lost loads where cargo is spilled from trucks,” Head said, “so we’re developing some guidance on securing and lashing loads that we can then pass out and help our contractors to improve the security of a load.”
Trafigura is also limiting the number of contractors it works with to build a better relationship with the better contractors by sharing best practices and lessons from previous incidents. The company is also thinking about how futuristic technologies could reduce risks for Trafigura and its contractors: namely self-driving trucks and self-steering containers ships.
Until then, Trafigura will continue developing its relationships with its contractors and training them to meet the company’s safety protocols. By doing so, Trafigura is coincidentally adhering to the wisdom of the Congolese proverb: “Don’t buy a boat that is under water.”
To learn more about contractor safety, download Sphera’s e-book, “Contractor Safety Management: A Comprehensive Guide.”