Apple Reportedly in Talks to Buy Cobalt Directly From Miners

Apple believed to be trying to deal with cobalt miners

The tech titan is in negotiations to buy long-term supplies of cobalt directly from miners, Bloomberg reported Wednesday.

Australian Mines has just agreed a A$5bn ($3.9bn) deal for cobalt and nickel with South Korean refiner SK Innovation, which has agreed to buy all the company's output for up to 13 years, according to a filing.

About a quarter of global cobalt is used in smartphones.

A new report from Bloomberg details that Apple is looking to secure a deal that is set to last for at least five years.

If there is a shortage, Apple will have nothing to fear because it would have already secured a hefty supply of the element in the first place.

Cobalt prices have skyrocketed of late due to an expected growth in demand for electric vehicles powered by lithium-ion batteries.

Until now, Apple left the business of buying cobalt to the companies that make its batteries.

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While an Apple Watch battery is an order of magnitude smaller than a auto battery, Apple sells hundreds of millions of devices every year.

The price per ton of cobalt rose to $82,000 on the London Metal Exchange in mid-February, its highest level since it began tracking the commodity in 2010, and has nearly tripled in value since the beginning of 2016.

The move to get more supplies of cobalt means the technology giant will find itself in competition with electric carmakers and battery producers to lock up cobalt supplies.

An Apple spokesman declined to comment.

Further complicating matters, Apple and Samsung have both been put under scrutiny for procuring cobalt from mines where child labor was found to have been used. Though, with interest in cobalt surging to great numbers, the money suppliers are asking for cobalt has dramatically risen too.

Hong Kong-traded China Molybdenum, based in the central province of Henan, bought a 56 per cent stake in Congo-based copper and cobalt miner Tenke Fungurume Mining for US$2.65 billion in 2016. Two-thirds of the world's cobalt production comes from the Democratic Republic of Congo, a region not exactly known for its stability.

Apple has increased its engagement with cobalt miners in recent years due to scrutiny from worldwide human rights organizations.

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