Volvo Adopts Blockchain Technology To Ensure Its Promise Of Safety
The Volvo brand has assured safety for an incredible 93 years. As it stimulates its first all-electric vehicle, it’s developing that promise of safety—not only for drivers and the atmosphere but also for miners producing materials in the vehicles’ batteries.
The Swedish car company started the 2020 XC40 Recharge in October, and Volvo has operated jointly with its suppliers to control the materials that go into the SUV’s lithium-ion batteries.
“We’re doubling down on ethical sourcing,” states Martina Buchhauser, senior vice president of procurement at Volvo Cars. “By working with our suppliers to make sure that the raw materials in our batteries, including minerals like cobalt, come from ethical supply chains, we’re able to extend our promise of safety to drivers, miners, and the environment.”
Such a commitment isn’t simple to keep. Cobalt is a vital mineral in lithium-ion batteries, and more than half of the world’s cobalt is excerpted in the Democratic Republic of Congo. An expected 15%-20% of DRC cobalt is hand-dug by autonomous miners and then traded to traders and large-scale mining companies, making it remarkably difficult to tell the variation between pirated and ethically sourced cobalt.
To fight illegal practices, Volvo Cars signed 10-year agreements with Chinese battery suppliers Contemporary Amperex Technology (CATL) and South Korean LG Chem, with both consenting to engage in a blockchain program that traces cobalt-sourcing activities across their global supply chains.
In extension to utilizing newly mined cobalt, Volvo Cars’ electric vehicle battery suppliers are also sourcing cobalt recovered from older lithium-ion batteries.
To assure that various cobalt recycling and refining companies that supply CATL and LG Chem do not apply unsafe or unethical processes, Volvo Cars employed sourcing blockchain specialist Circular to expand the carmaker’s traceability network and administer these nodes on Oracle Blockchain Platform.
By validating each mining site, person, and truck, “blockchain helps us see exactly where the cobalt was extracted, who mined it, and how it was transported, giving us the confidence that the materials are mined under good working conditions, and without committing any human rights violations,” Buchhauser says.
Blockchain technology is attracting interest for supply chain practices over industries because it allows businesses to build a ledger that various parties can see and contribute information to, but that also can be extremely secure, granting a clear audit trail of all information that’s connected to the blockchain.
Buchhauser states that data in the blockchain has provided her a lot of faith that every player in Volvo’s battery supply chain is meeting its expectations.
“We can see the cobalt’s entire chain of custody—from mining companies, parts makers, and logistics firms,” Buchhauser says. “Not only are these participants tracked and evaluated for compliance with the OECD’s ethical supply chain guidelines, but their activities, such as how long it takes to get a sample onto a truck and into a warehouse, are also tracked so that any suspicious delays can be monitored and dealt with,” she says.
Blockchain doesn’t substitute Volvo’s inherited process for trailing raw materials, but it has become a crucial part of its ethical-sourcing toolbox. “Blockchain helps us do more than recognize the challenge of illegally-sourced cobalt,” Buchhauser says. “It also helps us take steps to stop it.”