Forced and Child Labor Abuses Found in 75% of Lithium Battery Supply Chains

Up to three-quarters of the planet’s lithium-ion battery supplies are at risk of being banned in the U.S. and other western nations because of forced and child labor abuses.

A data study by an U.K. artificial intelligence risk assessment specialist, Infyos, claims the abuses are widespread throughout the industry supplying batteries for electrification of transportation both in hybrid and battery-electric vehicle powertrains.

The company says its research reveals that 75% of lithium-ion battery suppliers employ supply chains identified using one or more companies facing allegations of severe human rights abuses. And most of the worst of these companies are based in China.

Its research uses industry data compiled from nearly 20,000 data points from government datasets, NGO reports, news articles and social media sources for the period covering December 2022 to June 2024.

Infyos says its AI technology is developed specifically for the battery industry to automate the gathering, cleansing and classification of unstructured data to identify and assign confidence ratings to allegations of human rights abuses with accuracy and speed that previously was not possible.

Sourcing of materials is coming under growing scrutiny, particularly in Europe and the U.S., where failure to address the issues means companies could be in breach of current and future regulations. Infyos says that with more legislation such as the European Union’s Battery Regulation and the U.S.’s Uyghur Forced Labor Prevention Act (UFLPA) being phased in, action must be taken now so companies can still sell their products.

The UFLPA prohibits the import of goods made with forced labor in the Xinjiang region of China. The penalties for non-compliance can be extreme: earlier this year inspectors blocked vehicles they found to violate the regulations. The U.S. Senate Finance Committee Chair has already accused automotive manufacturers of “sticking their heads in the sand” over forced labor in their supply chains. And a subsequent letter from Members of Congress recommended that the Department of Homeland Security and Customs and Border Protection act to further strengthen enforcement of the forced labor ban in automotive supply chains, including placing CATL, the world’s largest battery cell manufacturer, on a list of companies banned because of their connection to forced labor.

CATL spokesperson Fred Zhang Yizhi says the company opposes and prohibits any forms of forced labor in the operations of CATL and its suppliers.

“CATL actively works to create an open and transparent purchasing environment. Any suggestion that CATL has used forced labor, or has any connection to forced labor, is absolutely false,” he says. “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.”

Europe is following suit with its forced labor ban, while a proposal has been submitted to increase the fines for non-compliance with the U.K.’s Modern Slavery Act to 4% of global annual turnover.

Infyos claims its research found human rights abuses ranging from people being forced to work in lithium refining facilities under the threat of no or minimal pay to 5-year-old children mining cobalt materials in hazardous conditions. These severe human rights incidents are occurring globally, especially in resource-rich countries with fragile and corrupt governments like the Democratic Republic of Congo and Madagascar.

Chinese Mining

However, most of the allegations of abuses involve companies who are mining and refining raw materials in China that end up in batteries around the world, particularly in Xinjiang Uyghur Autonomous Region (XUAR) in northwest China where the battery, automotive and solar industry has already been hit with public allegations of widespread forced labor from journalists, government agencies and non-profit organizations.

The company says BEV and battery manufacturers work with complex supply chains, sometimes with more than 10,000 suppliers across their network, from mines to chemical refineries and automotive manufacturers. It finds human rights abuses frequently occur upstream in the supply chain, notably at the raw-material mining and refining stages, making it difficult for companies purchasing batteries to identify their supply chain risks.

The battery industry’s connections to these incidents stem from manufacturers sourcing components or materials from unethical companies in their supply chain network or entering business relationships, including joint ventures or equity investments hidden in complex and changing ownership structures, which conceals the reality of the unethical connections.

Tony To, co-founder and CTO of Infyos, says: “Our platform is designed to provide users with insights into the complexities of the battery supply chain so they can take proactive measures to identify and mitigate risks. By leveraging AI in our technology, we’ve created a system that delivers accurate data despite the complexity of the battery industry and, most importantly, provides users with simple, actionable mitigations to collaborate with their suppliers to address risks and improve the sustainability of the industry.”

Sarah Montgomery, co-founder and CEO, adds: “The relative opaqueness of battery supply chains and the complexity of supply chain legal requirements means current approaches like ESG audits are out of date and don’t comply with new regulations. Most battery manufacturers and their customers, including automotive companies and grid-scale battery energy storage developers, still don’t have complete supply chain oversight.”