Apple considering buying cobalt directly amid booming demand

Apple reportedly looking to buy cobalt directly from miners

Apple is looking to buy the cobalt used in its batteries directly from the mining companies who dig it up, Bloomberg reports. The metal is a key ingredient in Apple's lithium-ion batteries for iPhones and iPads.

And, according to the sources, that's exactly it.

As a side effect, buying cobalt straight from the mines makes it easier to control the supply chain.

Apple is reportedly trying to buy several thousand metric tons of cobalt a year for at least five years.

The negotiations show that Apple is keen to ensure that cobalt supplies for its iPhone and iPad batteries will be sufficient, as the rapid growth in battery demand for electric vehicles threatens to create a shortage of the raw material.

This functionality will also apparently be folded into Apple's MacOS 10.14 update, codenamed "Liberty", and will see some of Apple's own iPhone apps, including Home, coming to the firm's desktop operating system.

That's caused the companies that rely on cobalt the most to go directly to the miners and sign contracts to ensure future supplies, while also locking in a price to hedge against future price increases.

Other companies have made similar moves.

While an Apple Watch battery is an order of magnitude smaller than a auto battery, Apple sells hundreds of millions of devices every year. Its first discussions for deals took place a year ago, but another source told Bloomberg that Apple might not even go ahead with the plans.

A second benefit of direct control over the cobalt supply-chain right from the mines onward would be that Apple could guarantee compliance with its supplier standards.

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 report does not say which miners Apple will be dealing with, and Apple refused to comment on Bloomberg's story.

According to report by Amnesty International in 2016, close 60 percent of the world's cobalt supply comes from the Democratic Republic of the Congo mined by approximately 20 percent under-aged children with hand. 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 previous year alone.

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