Responsible mineral sourcing key to Korean battery materials makers

South Korea’s battery materials makers are stepping up their efforts to conform to environmental, social and governance (ESG) standards throughout their supply chain by purchasing minerals responsibly.

POSCO Chemical Co. is one of Korea’s leading companies that regularly issue responsible minerals reports.

A unit of steel giant POSCO Holdings Inc., the battery materials producer joined the Responsible Minerals Initiative (RMI) in 2020 to address issues related to the responsible sourcing of battery minerals in its supply chain.

RMI is a global non-profit organization that tracks the country of origin of minerals and certifies producers.

According to POSCO Chemical’s 2021 report, the company receives raw materials, including cobalt and tungsten, from companies and miners certified for their human rights protections and free of funding linked to conflict groups or environmental destruction.

EcoPro Group recently joined the ESG initiative by stepping up its responsible minerals purchasing efforts.

Led by its battery materials unit, EcoPro BM Co., the group is buying several battery raw materials, including cobalt, nickel and lithium.

STRICTER ESG RULES

Among 49 mines, smelters, and metal refineries in its supply chain, EcoPro Group recently severed ties with three contractors that were classified as high-risk companies.

L&F Co., another Korean battery materials manufacturer, hasn’t yet produced a responsible minerals sourcing report.

But the company joined the Responsible Cobalt Initiative (RCI) in 2016 and has since made it mandatory for cobalt suppliers to conduct due diligence by a third party to ensure that they also fulfill their social responsibilities on the ESG front.

The move by Korean companies comes as governments tighten their ESG regulations throughout the supply chain.

In line with stricter rules by the European Union (EU), Germany plans to obligate companies with more than 3,000 employees to conduct due diligence on their supply chain and human rights conditions.

The EU has also worked out due diligence guidelines for companies outside the region that wish to do business with EU member countries.

"Supply chain management is an area where ad hoc action does not work,” said Yoo Hyun-joo, a senior researcher at the POSCO Research Institute. “ESG is crucial to enhancing the business competitiveness of companies in any sector.”

Write to Seo-woo Jang at suwu@hankyung.com
In-Soo Nam edited this article.