According to a report from Bloomberg, Apple is in talks with mining companies to secure long-term supplies of cobalt, a key element in the lithium-ion batteries that power virtually every gadget the company makes.
Apple doesn’t make its own batteries (yet), so buying up the raw materials is an unusual step for the company. But it’s a necessary evil, and it’s all thanks to Tesla and the explosion in popularity of electric cars.
Although the electric car market is still relatively small right now, auto manufacturers are preparing for a steep increase in demand for electric vehicles in the next few years. That will stress the world’s supply of cobalt, and that reality is reflected in the current price. Bloomberg notes that Cobalt prices have soared from a little over $20,000 per metric ton back in September 2016 to $80,000 per metric ton right now.
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. Two-thirds of the world’s cobalt production comes from the Democratic Republic of Congo, a region not exactly known for its stability.
So on the surface, the Bloomberg report looks like Apple doing the responsible thing and ensuring it has a consistent supply of an important manufacturing product at a reasonable price. But given Apple’s recent interest in designing all its own modems and processors for use inside its gadgets, it also raises the possibility that the company could start involving itself more in the battery manufacturing process.
Currently, Apple contracts out the battery manufacturing for the iPhone, just like it does with the bulk of components. But as battery science continues to improve and battery quality control becomes ever more important, it’s easy to believe Apple could want to exert more and more control over the manufacturing process — and locking down the necessary resources to do so would be a good first step.