Inside Elon Musk's Solution For Tesla's Potential Child Labor Worries

Forbes

Tesla’s CEO said he would address the company’s challenges with child labor in its supply chain. But his high-tech solution doesn’t cut it.   Forbes Reporter, Alan Ohnsman, joins Senior Editor, Maggie McGrath to discuss this interesting non-approach of Musk's response to child labor allegations.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2024/07/02/elon-musks-laughable-new-solution-to-teslas-child-labor-worries/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everyone. I'm Maggie McGrath, Senior Editor at Forbes, and my colleague, Senior Editor

00:08Alan Oensman, has a new story out with the headline, Elon Musk's Laughable Solution to

00:15Tesla's Child Labor Worries. That's a lot of information in one headline, and we're

00:20going to break it down. Alan, thank you so much for joining us.

00:23Great to be with you.

00:25I have to say, as someone who's followed your coverage, I'm aware of various issues around

00:30Tesla's stock price and the health of the business, but I have to say the child labor

00:35worries is a new one. What's going on here?

00:38Well, you know, this, you know, the issue relates to building electric vehicles and

00:46the batteries that power them is very different than the traditional auto industry, and particularly

00:52the types of raw materials and metals that go into a lithium ion battery. There's cobalt,

00:58nickel, manganese, all sorts of materials that really weren't an issue for a traditional

01:04car. And so companies that make these batteries have to get these raw materials from all over

01:09the world. It's a huge supply chain. The Democratic Republic of Congo turns out to be an amazing

01:16source of materials like cobalt and copper, and the mining industry there has just exploded.

01:24And so they've become a major supplier globally of cobalt, which is an essential ingredient

01:29for lithium ion batteries. It helps sort of stabilize the cell and it helps with the energy

01:36density as well. And it's a very, very valuable material. At one point it was selling for

01:42about $50,000 a ton. It's about half that price now, but still incredibly lucrative.

01:48So in Congo, this is a major source of revenue. And the issue of child labor comes in that

01:56there are very large scale industrial mines that operate in Congo, and Tesla uses one

02:02of the biggest. However, there are also what are called artisanal mines, these small, unofficial

02:09mines that people just put together on their own. And they're not created using modern safety

02:17practices or labor practices. And they recruit as many people as they can to just show up with

02:23a shovel and dig and try to get this stuff out of the ground. And what's happened over the years

02:28is that whole families come in, kids come in, there are children on site. In some cases,

02:34they're either working or perhaps their parents are working and the kids are just there because

02:40there's no outside childcare. So in the supply chain, you now do have a case where these small

02:46mines, up to maybe 40,000 people under the age of 18, may be working on site in these artisanal

02:53mines. A company like Tesla is not directly buying raw material, cobalt, from these small

03:01artisanal mines. They're using a big supplier like the Kamado Copper Company, run by Glencore,

03:08a major global mining company. The issue is not that there's child labor at that Glencore mine,

03:15for example. It's that these small artisanal mines, the operators of these are selling their cobalt

03:21to traders who are also purchasing cobalt directly from the large mines. All of that material then

03:29is gathered up and shipped off to China for refining. After it's refined in China, companies

03:35like Tesla then use it to go right into their batteries. So the issue with Tesla is that it's

03:40an indirect, potentially an indirect, user of child labor as a result of these small artisanal

03:47operations, mining operations in Congo. I see. Now, what did Tesla founder Elon Musk say when

03:55this issue came up? How does he want to address the issues of child labor in cobalt mining,

04:02cobalt which is needed for his EVs? Yeah, last year an activist shareholder group at the company's

04:10annual meeting suggested a proposal that the company take more efforts to monitor its supply

04:16chain specifically for cobalt and do a better job to ensure that the cobalt it's using is not being

04:23sourced from these artisanal mines and operations that perhaps aren't as safe and may use child

04:30to force labor. As tends to be the case with proposals for Tesla that don't come from the board,

04:38it failed dramatically. It was voted down. However, shortly afterward at the meeting, Elon stood up

04:44and said, you know what, we will take an extra effort. We'll work with outside auditors

04:50to investigate the situation and ensure that we're not using any artisanal cobalt that might

04:58have been mined with child labor. And in fact, we'll go even further and we'll set up a live

05:04webcam. And so, you know, anytime you want, you can look at this camera and see are there any

05:09children at the mine? And I guess he found this very funny because he was laughing as he said this.

05:15So I got curious, is there such a webcam at the cobalt mine that Tesla uses? And I did see an

05:25image in their annual environmental impact report that showed a static picture of the Kamado copper

05:32mine in Congo that they use. After further investigation, it turns out that that's all

05:38there is. There is no webcam per se. When you hear webcam, you think it's a live video feed,

05:44for example. That's not what this is. About once a month, a satellite image is uploaded of the

05:51Kamado copper mine where the cobalt comes from. And what you see is a vast open pit mine. It's

06:00an industrial mine. So you'll see giant trucks and processing facilities and tailing ponds and

06:05all the things you see at a big open pit mine. You don't see any children, but you also don't

06:10see any people because it's not that kind of resolution and it's not live and it's not even

06:17quite once a month. It's about once every six weeks, I guess, a new image uploads. I don't know

06:22that there's any particular value in what they're doing. It's just a static picture of an open pit

06:29mine. And if you talk to some of the labor advocates and groups that are concerned about this issue,

06:36they will say that this is useless. That's not the problem, that their concerns are not about

06:41Tesla's direct supplier per se. It's more about these adjacent artisanal mining operations that

06:48are right next door to the big mine that Tesla has contracted with. And that's really where the

06:54efforts need to be made for improved monitoring. You outlined a few different issues there, and I

07:01want to break them down. So let's talk about where the issue of child labor is. You said

07:05these are the adjacent artisanal producers, effectively, whose supply is getting mixed in

07:11with the industrial producers. How possible is it for Elon Musk or any EV CEO to legitimately

07:21tamp down the amount of child labor that happens in these coal mines? Put another way, can any U.S.

07:28CEO have an effect on this global issue? Actually, yes. Tesla is singled out because they're the

07:39biggest user of this material. They're the largest EV company. And so they're one of the biggest

07:45customers. What is being sought by those who are concerned about this issue is that a company like

07:52Tesla work across the industry. So you would need a broad partnership and you need all of the big

07:58buyers, all the companies, the mining companies and the battery companies, everyone sort of working

08:02together. And the issue is basically they're saying these artisanal mines, these artisanal

08:08operations need to be recognized and need to be acknowledged and make efforts to maybe make some

08:15investments so that they can get some safety equipment, that they can have better on-site

08:21safety and labor practices at these unregulated facilities. And that Tesla could serve a big role

08:28in sort of working across the industry with other companies to do this. And that's what's really

08:34being sought. So Tesla gets singled out because it's probably the biggest consumer, but it could

08:42have a very meaningful role if it worked with industry partners for both better monitoring and

08:49perhaps some form of investment or a fund that would go towards upgrading conditions at these

08:56operations so that this problem is resolved. That's not really happening right now.

09:01Which gets to the second issue that you identified in your explanation there. So essentially Tesla

09:06is a big enough player in this space to have an impact. And yet Elon Musk laughs when he proposes

09:13this. It's not a webcam, according to your reporting. It is a still image. What do we

09:20make of this? And what do we make of the laughter? Was the webcam a joke? Was it always

09:26meant to be a camera? Do we know? I know it's impossible to know what's in someone's heart,

09:30truly. I don't know. I mean, if you think about the concept of a webcam at a huge mining operation,

09:37because the Kamado mine is vast. It's probably the size of a small county in the United States.

09:45I don't know how you could set up a video camera to monitor that. You would need

09:51hundreds of cameras on site. And then if you think about the reality of doing that,

09:57it's almost impossible. So I'm not sure why he even suggested it, because

10:02it's fairly impractical given the scale of this facility. I don't really know what benefit

10:12the satellite photo has. I think if anyone using Google Earth could actually see the same thing,

10:18you could just scroll down using that. So I'm not sure why they feel the need to do that. I think,

10:24obviously, this concern has been around for some years. The Stern School at NYU,

10:31the Center for Business and Human Rights, has really done a lot of work on this.

10:35And they have pointed to Tesla and other EV makers and battery companies and Apple, which,

10:40of course, consumer electronics and those batteries all use cobalt. They've singled out

10:46these companies as really needing to do more to address this issue. I guess in Tesla's case,

10:53Elon wanted to show that they were doing something, but the end result is there's

10:59really no value in the information being provided. What would make more sense is if

11:04he had announced that they were starting, say, a fund or a plan to work with major industry partners

11:12to set up broader monitoring of the entire supply chain of cobalt, not at just the one

11:18mine that Tesla works with. Something like that, I think, would have been a little more impactful.

11:23But yeah, and why he laughed, I can't begin to explain that. I don't know. He's often an

11:32awkward public speaker. And, you know, again, as you said, I don't know what's in his head.

11:38So I can't explain that. That is a fair answer. Now, it's interesting,

11:43Alan, as you describe the cobalt supply chain and how it affects not just Tesla or how it's

11:49used by not just Tesla, but EV makers and companies like Apple. This is a broad question,

11:55but as you talk about the child labor, I just wonder how clean and how ethical

12:00are these technologies? I mean, we often look at EVs as the clean solution, the clean alternative

12:07to traditional cars. But if this is going on, is any EV maker totally clean?

12:14That's a really great question. And actually, it's one of the things I've been spending more

12:18time looking into because all of the raw materials that go in lithium, cobalt, nickel,

12:24manganese, all of these have a graphite. They have issues. The Washington Post last year did

12:31a terrific series looking at some of the problems with these raw materials. Manganese, which is

12:37another key ingredient for batteries, extended exposure to manganese creates basically the

12:44equivalent of Parkinson's disease. I mean, it's very bad for the miners who are around this stuff.

12:49There's a whole host of new issues that we do need to understand as we do this pivot towards

12:56a cleaner energy economy. Copper is also mined in an open pit manner. Copper mining has a lot

13:06of environmental impacts related to the effect on the environment. It turns out nothing is free

13:12and perfectly clean. We can find better ways to acquire some of these materials,

13:18but there are tradeoffs. You're cutting carbon emissions, but you may also be creating an

13:24unexpected problem, whether it's childhood forced labor or human health problems related to exposure

13:30because some of these materials are toxic. And so we do need to have a better understanding

13:36as we scale up electric vehicles and all manner of clean energy technology.

13:42What are the ramifications of this switch? Oil and gas and coal, we sort of understand

13:48those are bad. You're getting groundwater pollution, you're getting air pollution,

13:52you're getting heart and lung disease, and of course, you're getting climate change from all

13:55that CO2. So those are bad things. Batteries don't appear magically. We need to understand

14:04the supply chain, where all the materials are coming from, the chemicals, the mined materials,

14:09and understand how can we do this in a sustainable, healthy way. And right now,

14:14I think in the rush to try to shift to a clean energy economy, not as much thinking and preparation

14:23perhaps has been made on some of the environmental and health issues and labor issues that are coming

14:27up. And cobalt is certainly one of these things. Manganese is an issue. Lithium has a lot of

14:32problems related to water use. And copper has environmental impacts there too, from copper

14:39mining. So nothing is simple and clean and easy. These things can be done in better ways.

14:48But it would be fair to say that there are still a lot of problems to be solved, I think,

14:55in the supply chain. Now, I started this conversation by saying that seeing the words

15:01Elon Musk, Tesla, and child labor in one headline was a little shocking to me. What has been the

15:06reader reaction to your reporting? And what type of follow-up reporting have you been doing since

15:11you published this article? Well, there's been a fair bit of response by both people who think

15:18that the problem is overblown and others who perhaps aren't big fans of Elon Musk saying,

15:25of course, this is not surprising at all that this would be happening with this particular

15:29individual in this company. That's not really for me to say. But it has made it clear to more

15:38people that there are issues that do need to be looked into, that it's not as simple as just you

15:43buy the electric car, you charge it up, and everything's great. You have to think about

15:47how that vehicle was made, where the materials came from for it, and is that being done in the

15:53best possible way. You know, continuing to look into this, one of the issues from Glencore,

16:01they have questioned, is the amount of artisanal cobalt, for example, that's going into the global

16:07supply as high as some of the advocates believe it to be? They pointed me to an industry study

16:12that suggests that it was much, much lower, an overall percentage much smaller than, say,

16:20NYU and some of the other groups estimate it to be. That's very difficult for me to say,

16:26to understand that, because it is a vast global industry. Congo is just awash in this stuff right

16:32now. Does Congo have the ability to fully monitor this situation on its own? Probably not.

16:41So I think it's going to be an ongoing issue about finding ways to ensure that the material

16:49that's entering our Teslas and other electric vehicles and our iPhones is not coming from,

16:56you know, certainly the worst possible labor conditions.

17:00Alan Onsman, this is such important reporting. Thank you so much for doing it. Thank you for

17:05explaining it to us, and we hope you come back to share more of what you find in the

17:09coming weeks and months. Great. Thank you for having me.

17:19Thank you.

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