Regulation and Reality: How New Cobalt Rules Are Changing the Industry
A decade ago, most companies in the battery supply chain could describe their cobalt sourcing in broad strokes without facing serious consequences. That era is ending. A wave of new regulations in Europe, the United States, and elsewhere is requiring companies to trace their cobalt, audit their suppliers, and report publicly on risks such as child labor, corruption, and environmental damage. The rules are still being phased in, and their ultimate impact is uncertain, but they are already changing how companies think about their supply chains.
The European Union's Battery Regulation is among the most comprehensive. It introduces requirements for carbon footprint disclosure, due diligence on raw materials, and minimum recycled content in new batteries. Companies selling batteries in the EU will need to provide detailed information about the origin of their cobalt and the conditions under which it was mined. The regulation also sets targets for recycling efficiency and collection of portable batteries, pushing the industry toward a more circular model.
What the Rules Require and Where They Fall Short
In the United States, the focus has been different. Provisions in recent legislation tie tax incentives for electric vehicles to sourcing requirements, including restrictions on battery materials from certain foreign entities. The goal is partly to reduce dependence on Chinese refining and partly to encourage domestic or allied production. For cobalt, this means companies are scrambling to secure supply from countries such as Canada, Australia, and the Philippines, as well as from recycled sources.
Other regulations target specific risks. The U.S. Dodd-Frank Act included a provision on conflict minerals that, while focused on tin, tantalum, tungsten, and gold, set a precedent for supply chain transparency. More recent laws and proposals address forced labor and child labor in supply chains more broadly. In the DRC, the government has its own rules, including a requirement that companies disclose their subcontractors and adhere to environmental standards, though enforcement is inconsistent.
The gap between regulation and reality is significant. Auditing a mine in a remote part of the DRC is difficult and expensive. Certifying that a batch of cobalt is free from child labor requires more than a paper trail; it requires on-the-ground verification, which may be beyond the capacity of some companies. There is also the risk of creating a two-tier system, where large, well-funded companies can comply and smaller operators cannot, pushing the latter into informal channels where oversight is even weaker.
The Long Road to Enforcement
For regulations to work, they need enforcement. That means governments must invest in monitoring, and companies must be held accountable when they fall short. It also means supporting the development of systems that make compliance feasible, such as shared auditing platforms, digital traceability tools, and capacity-building for artisanal mining cooperatives. Without these, rules may simply shift problems from one link in the chain to another.
There is also a risk that overly rigid rules could harm the very people they are meant to protect. If companies respond to regulatory pressure by cutting ties with artisanal miners entirely, those miners may lose their livelihoods without gaining safer alternatives. A more thoughtful approach would involve engaging with communities, investing in formalization, and creating pathways for responsible artisanal cobalt to enter the legitimate supply chain.
The regulatory landscape will continue to evolve. What is clear is that the age of unexamined supply chains is over. Companies that treat regulation as an opportunity to build more transparent, resilient, and ethical operations will be better positioned than those that treat it as a burden. The rules are not perfect, but they are a starting point for a conversation that the industry can no longer avoid.