Cutting out the middleman, Apple reportedly wants to buy cobalt directly from miners, according to a report from Bloomberg on February 21.
Cobalt prices have skyrocketed of late due to an expected growth in demand for electric vehicles powered by lithium-ion batteries. But by 2030, that figure is expected to skyrocket to over 300,000 tons. The company is one of the largest users of cobalt, which is in the batteries of its devices, but until now the battery makers have bought the metal.
More than 60 percent of cobalt is found in the Democratic Republic of Congo (DRC) in Africa, but more than half of the world's refined company chemicals that are used to build the batteries comes from China, according to a separate Bloomberg article from October.
A confidential source, speaking to Bloomberg, claimed that Apple is seeking to establish contracts to secure several thousand metric tonnes of cobalt per year for the next five years or more. According to Bloomberg, talks began a year ago and Apple still may not proceed with the deal. On average, smartphones use about eight grams of cobalt for each battery, but the battery for an electric auto requires over 1,000 times more.
Sources told Reuters last year that Germany's Volkswagen had asked producers to submit proposals on supplying cobalt for up to 10 years from 2019.
DRC's near-monopoly position in cobalt mining has been fraught with ethical and economic issues, most notably child labor in the mines.
"What will be interesting is the price-everybody is trying to get into cobalt so will set the price?" Much of that bumper 44% dividend payout is due to the spike in cobalt, which saw a 108% increase on the average price, from $12 a pound to around $25 a pound past year alone.
"We're not sure whether (Apple) want to buy the cobalt for the battery makers that supply them or whether they are planning to stand behind the cobalt supply chain as guarantors", a cobalt industry source said. In 2005, the company paid $1.25 billion to secure long-term supply agreements for iPod flash drives.