Three-Quarters of Li-ion Battery Supply Chain at Risk of Forced Labor, Violating US and EU Laws
## Report: 75% of Battery Supply Chain Risks Violate U.S. and EU Forced Labor Laws
Author: Cameron Murray
September 18, 2024
 Image Credit: CC.
According to a report by AI supply chain risk platform Infyos, battery and battery energy storage system (BESS) products could be banned from entering the U.S. and EU markets if violations of the law are discovered. The report indicates that Infyos’ analysis of thousands of data sources suggests many large automotive, energy storage, and other industry companies may use lithium-ion batteries with human rights infringement risks in their supply chains. Lithium-ion batteries are currently the primary technology used in battery energy storage systems (BESS).
Infyos CEO and co-founder Sarah Montgomery and sustainability lead Jeff Williamson discussed these findings and their importance to the industry with Energy-Storage.news. The company offers a platform showcasing its research results, allowing suppliers and customers to document mitigation actions.
The report does not specify which lithium-ion original equipment manufacturers (OEMs) are at risk but notes that recent calls from U.S. Republican lawmakers have urged an immediate ban on battery shipments from Chinese companies CATL and Gotion. CATL declined further comment on allegations of forced labor in its supply chain, while other contacted firms did not respond to requests for comments during this week with public holidays in China and South Korea.
Infyos states that most severe human rights violations involve companies mining and refining raw materials in China, particularly Xinjiang Uygur Autonomous Region, which are then used in batteries. Republican lawmakers accuse CATL and Gotion of having “deep” supply chain ties to “worrisome Chinese entities involved in the enslavement of Uyghur Muslims.”
CATL and another company BYD are typically considered the two largest players globally, holding over 50% market share, followed by—depending on different cycles—LG Energy Solution, Panasonic, Rept, Hithium, SK On, Samsung SDI, Gotion, and CALB. These companies are based in China or South Korea.
Recently, a fire at Aricell, a lithium-ion battery component factory in South Korea, resulted in the deaths of 23 workers, mostly overseas contract workers. Such potentially exploitative labor contracts are another risk identified by Infyos’ platform, according to Montgomery.
Supply chain abuses and lack of transparency identified by Infyos may violate upcoming EU Battery Regulation supply chain requirements set to take effect next August as well as the U.S.’s Uyghur Forced Labor Prevention Act. In the U.S., this could mean that imported products are seized and detained; last year, $1.4 billion worth of goods were seized for such reasons. In the EU, non-compliant products may also be barred from entering the market.
Energy-Storage.news will publish an interview with Montgomery and Williamson next week, detailing what these findings mean for companies aiming to enter the EU and U.S. markets and how the industry is responding.
Following this article’s publication, a CATL spokesperson provided the following statement: “CATL opposes and prohibits any form of forced labor in its operations and those of its suppliers. CATL is committed to creating an open and transparent procurement environment. Any suggestion that CATL uses or has any connection with forced labor is completely false. CATL has policies in place to ensure responsible sourcing and compliance with industry and global standards, such as responsible and sustainable supply chain management and due diligence policies.”
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Source: Energy-Storage.News
