(Reuters) - Apple Inc is in talks to buy long-term supplies of cobalt, a silver-gray metal used in iPhone batteries, directly from miners, Bloomberg reported on Wednesday, citing sources.
Cobalt, a byproduct of copper and a key ingredient in lithium-ion batteries, has seen strong demand due to its use in smartphones and would get a further boost as electric vehicles come to the fore.
Car and electronics makers are racing to lock in supply agreements for cobalt amid fears of shortage.
The iPhone maker is seeking contracts to buy several thousand metric tons of cobalt for five years or longer, Bloomberg reported, citing an anonymous source. (bloom.bg/2CAIdXr)
Germany's Volkswagen (VOWG_p.DE), the world's largest automaker, has asked producers to submit proposals on supplying the material for up to 10 years from 2019. BMW is also seeking long-term cobalt supplies. (reut.rs/2HB0Nm4)
While the prices of cobalt has risen to $80,000 per ton from just above $20,000 per ton two years earlier, it comes with a human cost.
Presence of huge cobalt reserves in war-ravaged countries such as the Democratic Republic of Congo has led to human rights abuses.
About a fifth of Congo’s cobalt production is mined by hand by informal miners including children, often in dangerous conditions, Amnesty International said in November.
Total cobalt demand to exceed 120,000 tons per annum by 2020, up about 30 percent from the 93,950 tons consumed in 2016, Darton Commodities said in a 2016 report. (bit.ly/2ofLDun)
Electronics and electric vehicle companies, which use cobalt, are under growing pressure from consumers and investors to show the cobalt they use has come through supply chains free of rights abuses.
Apple last year became the first company to publish the names of its cobalt suppliers.
An Amnesty report had called out companies such as Microsoft Corp and General Motors for not doing enough to ensure that cobalt supply chains were free of rights abuses. (bit.ly/2BGqEsc)
Apple may end up deciding not to go ahead with a deal, the Bloomberg report said, citing another source.
Apple did not immediately respond to a request for comment.
Reporting by Mekhla Raina and Supantha Mukherjee in Bengaluru; Editing by Sunil Nair and Shounak Dasgupta