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Red Flags for Forced Labor Present in China’s Automobile Battery Supply Chain

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The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur staff standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their recent employer, the Xinjiang Nonferrous Metal Industry Group, announced.

But this was no abnormal employee orientation. It was the type of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned greater than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.

The scene also represents a possible problem for the worldwide effort to fight climate change.

China produces three-quarters of the world’s lithium ion batteries, and just about all the metals needed to make them are processed there. Much of the fabric, though, is definitely mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with counting on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a method to shore up scarce supplies.

Which means firms just like the Xinjiang Nonferrous Metal Industry Group are assuming a bigger role in the provision chain behind the batteries that power electric vehicles and store renewable energy — whilst China’s draconian crackdown on minorities in Xinjiang fuels outrage all over the world.

The Chinese government denies the presence of forced labor in Xinjiang, calling it “the lie of the century.” However it acknowledges running what it describes as a piece transfer program that sends Uyghurs and other ethnic minorities from the region’s more rural south to jobs in its more industrialized north.

Xinjiang Nonferrous and its subsidiaries have partnered with the Chinese authorities to absorb a whole lot of such staff in recent times, in line with articles displayed proudly in Chinese on the corporate’s social media account. These staff were eventually sent to work within the conglomerate’s mines, a smelter and factories that produce among the most highly sought minerals on earth, including lithium, nickel, manganese, beryllium, copper and gold.

It’s difficult to trace precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the US, Germany, the UK, Japan, South Korea and India, in line with company statements and customs records. And a few have gone to large Chinese battery makers, who in turn, directly or not directly, supply major American entities, including automakers, energy firms and the U.S. military, in line with Chinese news reports.

It’s unclear whether these relationships are ongoing, and Xinjiang Nonferrous didn’t reply to requests for comment.

But this previously unreported connection between critical minerals and the type of work transfer programs in Xinjiang that the U.S. government and others have called a type of forced labor could portend trouble for industries that rely upon these materials, including the worldwide auto sector.

A recent law, the Uyghur Forced Labor Prevention Act, goes into effect in the US on Tuesday and can bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and each raw material they’re made with, are freed from forced labor — a tough undertaking given the complexity and opacity of Chinese supply chains.

As the general auto market stagnates, the recognition of battery-powered cars is soaring worldwide.

The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar firms last yr were forced to halt billions of dollars of projects as they investigated their supply chains.

The worldwide battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.

Trade experts have estimated that 1000’s of world firms may very well have some link to Xinjiang of their supply chains. If the US fully enforces the brand new law, it could end in many products being blocked on the border, including those needed for electric vehicles and renewable energy projects.

Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it will be disruptive to the U.S. economy and the clean energy transition.

Representative Thomas R. Suozzi, a Democrat from Recent York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too rattling bad.”

“We will’t proceed to do business with those who are violating basic human rights,” he said.

To grasp how reliant the battery industry is on China, consider the country’s role in producing the materials which can be critical to the technology. While most of the metals utilized in batteries today are mined elsewhere, almost the entire processing required to show those materials into batteries takes place in China. The country processes 50 to 100% of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, in line with Benchmark Mineral Intelligence, a research firm.

“If you happen to were to have a look at any electric vehicle battery, there can be some involvement from China,” said Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence.

The materials Xinjiang Nonferrous has produced — including a dizzying array of useful minerals, like zinc, beryllium, cobalt, vanadium, lead, copper, gold, platinum and palladium — have gone right into a wide range of consumer products, including pharmaceuticals, jewelry, constructing materials and electronics. The corporate also claims to be one among China’s largest producers of lithium metal, and its second-largest producer of nickel cathode, which could be used to make batteries, chrome steel and other goods.

Lately, the corporate has expanded into Xinjiang’s south, the homeland of most Uyghurs, acquiring useful recent deposits that executives describe as “critical” to China’s resource security.

Ma Xingrui, a former aerospace engineer who was appointed Communist Party secretary of Xinjiang in 2021, has talked up Xinjiang’s prospects as a source of high-tech materials. This month, he told executives from Xinjiang Nonferrous and other state-owned firms that they need to “step up” in recent energy, materials and other strategic sectors.

Xinjiang Nonferrous’s role in work transfer programs ramped up several years ago, as a part of efforts by the Chinese leader Xi Jinping to drastically transform Uyghur society to change into richer, more secular and constant to the Communist Party. In 2017, the Xinjiang government announced plans to transfer 100,000 people from southern Xinjiang into recent jobs over three years. Dozens of state-owned firms, including Xinjiang Nonferrous, were assigned to soak up 10,000 of those laborers in return for subsidies and bonuses.

Transferred staff appear to make up only a minor a part of the labor force at Xinjiang Nonferrous, perhaps a number of hundred of its greater than 7,000 employees. The corporate and its subsidiaries reported recruiting 644 staff from two rural counties of southern Xinjiang from 2017 to 2020, and training more since then.

Some laborers were sent to the corporate’s copper-nickel mine and smelter, that are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.

Before being assigned to work, predominantly Muslim minorities got lectures on “eradicating religious extremism” and becoming obedient, law-abiding staff who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.

Inductees for one company unit underwent six months of coaching including military-style drills and ideological training. They were encouraged to talk out against religious extremism, oppose “two-faced individuals” — a term for many who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the corporate, in line with the corporate’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their rating. Those that scored well earned higher pay, while students and teachers who violated rules were punished or fined.

At the same time as it promotes the successes of the programs, the corporate’s propaganda hints at the federal government pressure on it to fulfill labor transfer goals, even through the coronavirus pandemic.

A 2017 article within the Xinjiang Day by day quoted one 33-year-old villager as saying that he was initially “reluctant to exit to work” and “quite satisfied” along with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his considering.” And in a visit in 2018 to Keriya County, Zhang Guohua, the corporate president, told officials to “work on the considering” of families of transferred laborers to make sure that nobody abandoned their jobs.

Chinese authorities say that each one employment is voluntary, and that work transfers help free rural families from poverty by giving them regular wages, skills and Chinese-language training.

It’s difficult to determine the extent of coercion any individual employee has faced given the limited access to Xinjiang for journalists and research firms. Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain, said that resisting such programs is seen as an indication of extremist activity and carries a risk of being sent to an internment camp.

“A Uyghur person cannot say no to this,” she said. “They’re harassed or, in the federal government’s words, educated,’ until they’re forced to go.”

Files from police servers in Xinjiang published by the BBC last month described a shoot-to-kill policy for those attempting to escape from internment camps, in addition to mandatory blindfolds and shackles for “students” being transferred between facilities.

Other Chinese metal and mining firms also look like linked with labor transfers at a smaller scale, including Zijin Mining Group Co. Ltd., which has acquired cobalt and lithium assets across the globe, and Xinjiang TBEA Group Co. Ltd., which makes aluminum for lithium battery cathodes, in line with media reports and academic research. Other entities that were previously sanctioned by the US over human rights abuses are also involved in the provision chain for graphite, a key battery material that is simply refined in China, in line with Horizon Advisory, a research firm.

The raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple firms as they’re become auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the US. Many more of the corporate’s materials are likely transformed in Chinese factories into other products before they’re sent abroad.

For instance, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the US that uses lithium to supply a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.

A Livent spokesman said that the firm prohibits forced labor amongst its vendors, and that its due diligence had not indicated any red flags. Livent didn’t reply to a matter about whether products made with materials from Xinjiang are exported to the US.

In theory, the brand new U.S. law should block all goods made with any raw materials which can be related to Xinjiang until they’re proven to be freed from slavery or coercive labor practices. However it stays to be seen if the U.S. government is willing or in a position to turn away such an array of foreign goods.

“China is so central to so many supply chains,” said Evan Smith, the chief executive of the provision chain research company Altana AI. “Forced labor goods are making their way into a extremely broad swath of our global economy.”

Raymond Zhong and Michael Forsythe contributed reporting.

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