The London Metal Exchange (LME) introduced responsible sourcing requirements for cobalt and other base metals in 2021 as part of its LME Responsible Sourcing initiative. The requirements apply to all brands of cobalt deliverable against LME contracts and are designed to align with the OECD Due Diligence Guidance.
LME Passporting Requirements
From 2022, all cobalt brands deliverable against LME contracts must be "passported" — meaning the producer must demonstrate compliance with the LME's responsible sourcing requirements. Passporting requires producers to publish a responsible sourcing policy, conduct OECD-aligned due diligence, and submit to independent third-party assessment.
Implications for Cobalt Pricing
LME-passported cobalt commands a premium in physical markets as it provides buyers with documented responsible sourcing credentials. Non-passported cobalt faces increasing market access restrictions as downstream buyers implement supply chain due diligence policies aligned with the EU Battery Regulation and CSDDD.
Cobalt Hydroxide and Sulfate
The LME trades cobalt in various forms including cobalt metal, cobalt hydroxide, and cobalt sulfate. The responsible sourcing requirements apply to all LME-listed cobalt products. Battery-grade cobalt sulfate, the primary form used in cathode active materials, is increasingly subject to chain-of-custody documentation requirements from battery manufacturers.