Red Flags for Forced Labor Found in China’s Car Battery Supply Chain

on Jun21
by | Comments Off on Red Flags for Forced Labor Found in China’s Car Battery Supply Chain |

The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur workers standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their new employer, the Xinjiang Nonferrous Metal Industry Group, announced.

But this was no ordinary worker orientation. It was the kind of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned more than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.

The scene also represents a potential problem for the global effort to fight climate change.

China produces three-quarters of the world’s lithium ion batteries, and almost all the metals needed to make them are processed there. Much of the material, though, is actually mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with relying on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a way to shore up scarce supplies.

That means companies like the Xinjiang Nonferrous Metal Industry Group are assuming a larger role in the supply chain behind the batteries that power electric vehicles and store renewable energy — even as China’s draconian crackdown on minorities in Xinjiang fuels outrage around the world.

But this previously unreported connection between critical minerals and the kind of work transfer programs in Xinjiang that the U.S. government and others have called a form of forced labor could portend trouble for industries that depend on these materials, including the global auto sector.

A new law, the Uyghur Forced Labor Prevention Act, goes into effect in the United States on Tuesday and will bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and every raw material they are made with, are free of forced labor — a tricky undertaking given the complexity and opacity of Chinese supply chains.

The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar companies last year were forced to halt billions of dollars of projects as they investigated their supply chains.

The global battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.

Trade experts have estimated that thousands of global companies may actually have some link to Xinjiang in their supply chains. If the United States fully enforces the new law, it could result in many products being blocked at the border, including those needed for electric vehicles and renewable energy projects.

Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it would be disruptive to the U.S. economy and the clean energy transition.

Representative Thomas R. Suozzi, a Democrat from New York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too damn bad.”

“We can’t continue to do business with people that are violating basic human rights,” he said.

To understand how reliant the battery industry is on China, consider the country’s role in producing the materials that are critical to the technology. While many of the metals used in batteries today are mined elsewhere, almost all of the processing required to turn those materials into batteries takes place in China. The country processes 50 to 100 percent of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, according to Benchmark Mineral Intelligence, a research firm.

Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.

Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.

Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.

Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.

A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.

Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.

The raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple companies as they are turned into auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the United States. Many more of the company’s materials are likely transformed in Chinese factories into other products before they are sent abroad.

For example, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the United States that uses lithium to produce a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.

A Livent spokesman said that the firm prohibits forced labor among its vendors, and that its due diligence had not indicated any red flags. Livent did not respond to a question about whether products made with materials from Xinjiang are exported to the United States.

In theory, the new U.S. law should block all goods made with any raw materials that are associated with Xinjiang until they are proven to be free of slavery or coercive labor practices. But it remains to be seen if the U.S. government is willing or able to turn away such an array of foreign goods.

“China is so central to so many supply chains,” said Evan Smith, the chief executive of the supply chain research company Altana AI. “Forced labor goods are making their way into a really broad swath of our global economy.”

Raymond Zhong and Michael Forsythe contributed reporting.



Previous postLA County Gas Prices Drop for Seventh Time in Eight Days – NBC Los Angeles Next postBrush Fire Burns Near Hollywood Hills – NBC Los Angeles


Los Angeles Financial times


Copyright © 2024 Los Angeles Financial times

Updates via RSS
or Email