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Discussion of ESG-labelled cobalt for Tesla

Carnegie Asia fell 0,3 procent.

I travelled to Asia in November to visit both new and old companies. This time I visited China, Indonesia and Vietnam, and met with twenty-seven companies in ten days.

The impression from the Chinese companies I met is that they are seeing a clear slowdown in demand, whether it be cars, consumer goods or other industries. This is fully in line with what we foresee for the development of the economy as a whole. Growth now stands at 6 percent for GDP, which is historically low.

I met with mining company China Molybdenum, which among other things has copper and cobalt assets in the Republic of Congo. There are several question marks regarding ESG to discuss, and we have an interesting meeting. Both Apple and Tesla have signed long-term contracts for the delivery of cobalt from Freeport’s cobalt mining plant in Kokkola, Finland.

The Kokkola plant receives most of its raw materials from China Molybdenum in Congo. The company is well aware of the criticism that exists and has in recent years worked to improve the disclosure of information to investors and to discuss and elucidate ESG issues. It conducts industrial mining, and both the working environment and the environmental impact have been improved. It does not employ child labour in its mines. However, illegal non-industrial mining does take place in the country, outside the company’s operations, which is where the problems arise.

All cobalt from the company’s mines must be marked with its origin to verify where the mining took place. The company’s cobalt is classified by MSCI with an ESG rating, and the is a desire to introduce a new trade category for “safe cobalt”, with separate pricing.

Vietnam is probably the single biggest winner from China’s development. New capital in the form of foreign direct investment is flooding into the country as global manufacturers shift their production and supply chains from China as a consequence of Trump’s protectionist policies. Even the Chinese are investing and building new factories in the country, and many new jobs are being created and employment is rising.

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