Volvo Adopts Oracle’s Blockchain for Its Supply Chain — Here’s Why
Volvo Cars announced last week that it is using Oracle’s blockchain platform to trace cobalt, one of the main components in electric car batteries. Following the unveiling of the company’s first fully electric car, the XC40 Recharge, Volvo has come up with a new business strategy that includes introducing an electric vehicle every year through 2025.
“Cobalt is at the heart of electric vehicle batteries, yet supplies are limited. Companies like Volvo are ramping up their production significantly, as half of Volvo cars will be electric by 2025. Each car requires 10-20 kilograms of cobalt in their batteries,” Mark Rakhmilevich, senior director of blockchain product management at Oracle, told Cointelegraph.
Volvo looks for transparent and reliable data
While cobalt is a key mineral for making lithium-ion batteries, the majority of cobalt production comes from the Democratic Republic of Congo, a region criticized for its unethical cobalt mining conditions.
According to findings from Amnesty International, children as young as seven are working in life-threatening conditions in the DRC to mine cobalt that ends up in smartphones, tablets and cars each year. Young children and adults are often paid only $1 a day to work under these perilous conditions.
Volvo will be applying blockchain technology to provide global traceability in all raw products used throughout its supply chain. Rakhmilevich explained:
“Volvo is ensuring that their supplies of cobalt are clear and safe from unethical issues by tracing raw materials on the Oracle blockchain. We’ve been working with Volvo since this summer to implement a material tracking application that captures data relevant to different points in the manufacturing process.”
Volvo has also partnered with traceability-as-a-service provider Circulor to trace raw materials through the supply chain to its battery manufacturer and then to Volvo cars. This end-to-end solution would ensure transparent and reliable data sharing, significantly boosting transparency of the entire raw material supply chain.
Following a successful pilot with Oracle and Circulor this summer, Volvo Cars has now reached an agreement with its two global battery suppliers, CATL of China and LG Chem of South Korea, to implement cobalt traceability starting this year.
Both Oracle and Circulor will operate the blockchain technology across CATL’s supply chain, while the Responsible Sourcing Blockchain Network, together with responsible sourcing specialists RCS Global and IBM, will roll out the technology in LG Chem’s supply chain.
Data captured on the Oracle blockchain platform will include the cobalt’s origin, attributes such as weight and size, the chain of custody and information establishing that participant behavior is consistent with globally recognized supply chain guidelines.
“We’ve been working with Volvo and Circulor, to implement a material tracking application on top of the Oracle blockchain,” Rakhmilevich said. “This will capture data relevant to different points across the manufacturing process, such as time, location, weight, size and more, to ensure that all materials being used are accurate.”
Blockchain is an ideal solution for tracking materials across a supply chain, as the technology creates records of transactions that can’t be changed while also enforcing a common set of rules about which data can be recorded. This lets participants across a network independently verify and audit transactions.
“After ensuring that all materials are accurate, we record each data point from those transactions on the blockchain, making that data immutable and transparent across the network,” Rakhmilevich noted.
Challenges to overcome
According to Rakhmilevich, the Oracle blockchain is currently running 20 million transactions per month for Volvo. While he is confident that this will scale over time (and eventually evolve into other aspects of the supply chain, like tracing lithium and nickel), the real challenge is properly managing materials.
“There are a number of complex stages that cobalt and other materials go through to ensure that data points are captured at origin. This data must then be scanned and secured, so it’s important to make sure that data from physical sources is captured appropriately,” Rakhmilevich explained.
According to Caspar Rawles, senior analyst at Benchmark Mineral Intelligence, it’s great that Volvo is using blockchain to track its cobalt, but much of the DRC’s cobalt comes from small, independent mines. Child labor and a number of fatal accidents have been reported in such small-scale, so-called "artisinal" mines.
Although Volvo is tracking its materials, the company also needs to carefully follow cobalt through the entire supply chain, from where it is mined all the way to where it is shipped in China. This ensures that materials are not then blended with other minerals coming from the DRC.
“Volvo needs to trace cobalt not only from the mine but also to where it is being shipped, up until batteries are placed in cars, to ensure that materials are not being blended with unethically sourced items,” Rawles told Cointelegraph.
While there are obstacles, Rawles also noted that Volvo has taken the first steps to demonstrate that using technology can ensure sustainability and ethically sourced products:
“As more carmakers produce electric vehicles, they need to realize that dealing with the supply chain will be a crucial aspect. It’s good to see that Volvo is taking this approach now with blockchain technology.”