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Article

9 Aug 2022

Author:
DAKE KANG, VICTORIA MILKO and LORI HINNANT - AP

Myanmar: 78 companies implicated in rare earth supply chains but human rights due diligence lacking, investigation finds; incl. co. comments

"'The Sacrifice Zone': Myanmar bears cost of green energy" 9 August 2022

Rare earths now reach into the lives of almost everyone on the planet, turning up in everything from hard drives and cellphones to elevators and trains. [...] But an AP investigation has found that their universal use hides a dirty open secret in the industry: Their cost is environmental destruction, the theft of land from villagers and the funneling of money to brutal militias, including at least one linked to Myanmar’s secretive military government. As demand soars for rare earths along with green energy, the abuses are likely to grow.

The AP investigation drew on dozens of interviews, customs data, corporate records and Chinese academic papers, along with satellite imagery and geological analysis gathered by the environmental non-profit Global Witness, to tie rare earths from Myanmar to the supply chains of 78 companies.

About a third of the companies responded. Of those, about two-thirds didn’t or wouldn’t comment on their sourcing, including Volkswagen, which said it was conducting due diligence for rare earths. Nearly all said they took environmental protection and human rights seriously.

Some companies said they audited their rare earth supply chains; others didn’t or required only supplier self-assessments. GM said it understood “the risks of heavy rare earths metals” and would source from an American supplier soon.

Tesla did not respond to repeated requests for comment, and Mercedes said they contacted suppliers to learn more in response to this story. Apple said “a majority” of their rare earths were recycled and they found “no evidence” of any from Myanmar, but experts say in general there is usually no way to make sure.

Just as dirty rare earths trickle down the supply chains of companies, they also slip through the cracks of regulation. [...]

The most destructive mining is for heavy rare earths, which are critical to make powerful magnets heat-resistant. Ores are trucked across the border from illicit mines in Myanmar to southern China, where state-owned companies buy them up in sacks by the thousands. Among them: Minmetals, China Southern Rare Earth, and Rising Nonferrous Metals. [...]

All three companies did not respond to calls, emails and faxes requesting comment. [...]

Among global carmakers, GM, Volkswagen, and Mercedes said they expect suppliers to adhere to codes of conduct and due diligence, and Mercedes added that they were designing new motors to eliminate heavy rare earths. Ford said they conduct audits and request suppliers to identify sourcing.

Hyundai denied using rare earths from Myanmar, and Stellantis said that “to the best of Stellantis’ knowledge,” their rare earth supply chains only involve operations in China. Some auto parts makers, including Bosch, Brose and Nidec, also said they were assured by the magnet companies that their components were free of rare earths from Myanmar. Others, such as Continental AG and BorgWarner, said they expected suppliers to adhere to their codes of conduct. [...]

Among electronics giants, Samsung said they did not tolerate rights violations or environmental damage but did not answer other specific questions about their suppliers. Toshiba, Panasonic and Hitachi did not comment on suppliers but said they would suspend working with businesses violating human rights.

Thyssenkrupp said it had “initiated measures” to find out more about the origin of the minerals for its magnet supplier. Other machinery manufacturers like Mitsubishi did not respond.

Among wind turbine manufacturers, Siemens Gamesa, which has projects in the United States and Europe, said it audits immediate suppliers and is preparing to trace those further upstream. It said “supplier feedbacks” showed only rare earths from China. Other wind companies, like Xinjiang Goldwind, did not respond. [...]

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