Ellen Carey: 0:00

You mentioned the consumer angle that, oh, we have concerns about responsible sourcing sustainability. So do investors. You know, we need a lot more critical minerals than we have available today. And to get to unlock the funding, both in terms of private and public investment, there need to be assurances that the upstream is doing it responsibly

Tom Raftery: 0:23

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain Podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi everyone. Happy New Year. It's 2024. Welcome to episode 378 of the Digital Supply Chain podcast. My name is Tom Raftery and it's fantastic to have you joining me here today as we dive into the most current and exciting developments in the supply chain world. To all this podcast's fantastic supporters, I cannot express my gratitude enough. Your involvement and backing are the lifelines that keep this podcast thriving. And for those of you who haven't yet joined our supporter community, here's your chance. To be part of something special. Supporting the Digital Supply Chain podcast is easy and affordable with options starting from just three euros or dollars a month. Less than the cost of your daily cuppa. This modest contribution can significantly impact my ability to continue delivering top quality content. To join, simply click on the support link in the show notes of this or any episode, or head over to tinyurl. com slash dscpod. Now, without further ado, I'd like to introduce my special guest today, Ellen. Ellen, welcome to the podcast. Would you like to introduce yourself?

Ellen Carey: 1:49

Hi, Tom. Yes. It's an absolute pleasure to be here with you. Thank you for having me. I'm Ellen Carey. I'm Chief External Affairs Officer for Circulor. Circulor is a global technology company bringing visibility and transparency to complex industrial supply chains, and it's a pleasure to be with you.

Tom Raftery: 2:08

Fantastic. That's quite high level. Ellen, could you. Dig a little

Ellen Carey: 2:15

you like some more detail?

Tom Raftery: 2:18

Funnily enough. So everyone is bringing transparency to supply chains these days in one way or another. So yeah. Tell me a little bit more about what Circulor does, and the name Circulor as well. I'm guessing that has something to do with what we're talking about, right.

Ellen Carey: 2:38

Yeah, abs. Absolutely. Well, I think you're right on the one way or the other, all supply chain transparency and visibility is not one and the same. I think to date, we've done a lot of work estimating, mapping our supply chain, doing that maybe annually, et cetera. And I think honestly that kind of time period has served its purpose. And now we're going into the next phase. And And the next phase is really end to end granular proof of key minerals and materials. The provenance and the activity that they inherit along that way. And then the attribution to products. And that attribution to products can say, yay or nay to market access for those products, can unlock incentives, and then also can unlock marketing potential to consumers and assurance that consumers are in fact getting what they think or what they hope to be getting, sustainable responsible products. So yes. You know, supply chain transparency, there's a lot of different animals out there. We are doing material traceability from the source and the providence to the product, connecting the entire supply chain, creating accountability of what's happening upstream, and giving the visibility to the downstream, specific to the product.

Tom Raftery: 4:15

Okay. And what kind of products are we talking about? Because I've done, podcasts on visibility and transparency for everything from food right the way through to, I don't know. Tell me what, what, what is it we're talking about here?

Ellen Carey: 4:34

Yeah. You know the thing that I have really hmm. Respected and admired about Circulor is starting where it's hard starting where things chemically and physically change, shape and form, uh, and get and, and then transform into an end product. So we really got started in critical minerals and in batteries, and so cobalt, lithium, nickel, graphite, mica, things that have high human and environmental impact who have very opaque supply chains, right? So tackling and getting that digital thread of accountability and change of state down is not an easy task. And then also these minerals and materials are key. And we talked about this, you, you brought it up, circular key to creating a circular energy transition and energy economy. They can be recycled, infinitely. And then also when all of that material or all that visibility is attributed to a battery itself, that battery can be monitored and and ensured that it stays within borders and gets properly handled into repurposing and recycling.

Tom Raftery: 5:52

Okay, so all that sounds very important because for a lot of products, particularly EVs for example. There's pushback against them. And some of the pushback talks about forced labor, in particularly the likes of the sourcing of cobalt and other metals. But particularly cobalt is one is mentioned because of the DRC, the Democratic Republic of Congo. And then the other thing that people are often talking about is, you know, the landfills are going to be full of EV batteries. So , this is obviously something that

Ellen Carey: 6:29

What about the high carbon intensity of nickel production,

Tom Raftery: 6:32

Indeed. Yep.

Ellen Carey: 6:33

how do we dis distinguish sustainable, responsible nickel from less sustainable, responsible nickel

Tom Raftery: 6:40

Mm-Hmm.

Ellen Carey: 6:41

They're not one in the same. So, you're exactly right and I think the only way, you know, you see a lot of change, especially in the upstream and the midstream that's only based on cost. So when you follow the mineral and the material itself though, and you start attributing CO2 and you start attributing, you know, are there audits of labor standards, et cetera. You start integrating and inserting a different dynamic other than cost. It's about the responsibility of that material and the responsibility of that supply chain. And so that's really what we do, and I think that's where we're talking about changing these supply chains. You mentioned the consumer angle that, oh, we have concerns about responsible sourcing sustainability. So do investors. You know, we need a lot more critical minerals than we have available today. And to get to unlock the funding, both in terms of private and public investment, there need to be assurances that the upstream is doing it responsibly.

Tom Raftery: 7:44

Fair enough. How do we know that they are?

Ellen Carey: 7:50

Well, Circulor, actually, last week We did an announcement with Volvo Cars and with SQM. So you're starting to see this book ending of the value chain. This book ending is SQM's lithium production at the Atacama in Chile, and this production site for SQM has received the highest standard according to Irma. Which is the most credible mining initiative, third party party audit. So they've achieved Irma 75, meaning they're looking at about 24 different metrics of sustainability, taking care of the land, the people, the water use, the recycling, the energy use, the carbon emissions. And what we're doing there is we're able to attach that proof from a very credible third ar, the third party audit. To the material itself and carry it all the way downstream to the end customer. This case, Volvo Cars, who says, I know that I am getting the most sustainable lithium out there. And this is how you're gonna start differentiating these products and giving the downstream the visibility to choose. You know what they want, what risks they're inheriting, or see the risks that they're inheriting and make do that trade off between cost, low cost risk, and putting data behind their claims of being a responsible, uh, responsible brand.

Tom Raftery: 9:27

Okay. How do I know as a consumer though, that this is the case. For example, I have an EV today, Kia Neuro ev. I've no idea who manufactured the battery in it or where the minerals in the battery came from. It, it certainly, you know, obviously I assume Kia sourced the battery from some third party manufacturer, battery manufacturers, CATL, or Panasonic, or one of the other big ones. Yeah.

Ellen Carey: 9:59

Sure, sure. It's, we're on the cusp of changing that. So there's this formation happening between customers or businesses who want to know the risks they're inheriting

Tom Raftery: 10:12

Hmm.

Ellen Carey: 10:13

customers who are putting demands on those companies, that they want to know the risks that they're buying into with their purchase power. And then also governments and regulators, so who are wanting to ensure that the clean energy economy is done sustainably, ethically, and regionally. Or with friends. So you've actually, you're gonna start seeing that change. A lot has happened this last year in 2023. 1, the EU battery regulation has been signed into law. That requires a digital battery passport for every battery that is placed onto the market in Europe. So we're talking EVs, industrial batteries, and light means of transport batteries. Every one of those will come with a digital product, passport, QR code that Tom, you'll be able to scan and then you'll have the answers to those questions that you just post. In the US similar, but different. The US has always incentivized the clean energy economy with tax credits, and through the tax codes. So giving financial benefits as emerging clean energy economies ramp up and you'll see that with the Clean Vehicle tax credit. It's also known as Section 30 D in the Inflation Reduction Act. And to access that fund, you now, different than really they've ever done before. You need to know where things are extracted, processed, and where components are manufactured, and then that information has to be relayed to the consumer. Let's say you're in, you know, Maryland or Washington, DC Tom, when you go to buy a car, cars will have different incentives behind them given what happened in their upstream value chain.

Tom Raftery: 12:08

Okay. And how are Circulor tracking that? Because a rock is, a rock is a rock, you know, one, one rock of nickel or lithium or whatever looks the same as one another. You know? How do you differentiate what rocks came from, what mine went into, what EV?

Ellen Carey: 12:35

Key really is, connection to every single participant. That's kind of the hard part. First, illuminating the upstream supply chain. Right now, I think, you know, a, a downstream manufacturer knows about 6% beyond their tier two supplier. So tier two to tier seven of these supply chains are very opaque. So first it's bring visibility. Second, immediately start creating accountability by uploading industrial systems onto our platform so that we can create a digital, digital twin of the material itself. So we know the difference of nickel that came from Australia versus nickel that came from Indonesia, right? And it doesn't just, it isn't just rock versus rock, right? But we start putting that information to the material itself, providence, where it came from, and then where did it go from there, and who touched it, who touched what, when and where? And also attributing carbon emissions, et cetera. So all of that to that service, that's that Circulor does and that material traceability plus our emissions tracking on top of that can be folded into what we call a digital product passport. So then it is attributed to Tom's car, and then you have that information when it comes to lithium and nickel and cobalt and graphite and mica. You have that information and you can make your decision making based on real facts of what you're purchasing.

Tom Raftery: 14:45

Okay. There's a lot of talk about how sensitive consumers are to sustainability versus price. So if I'm looking at a car with a digital passport for its battery and one that doesn't, and there's a difference in price. How, well does enabling this digital product passport for batteries, does it create an increased price for those vehicles, or, if so, is it 10 x the, the price? Obviously not, but you know, where, where does that kind of balance lie?

Ellen Carey: 15:23

Yeah, this, the services that we provide and doing it per car are, are very, really, very nominal. We're talking in the five to $12 per car, right to create this visibility. We're seeing other things like in the US market, the cost to say the United Auto Workers strike and stuff, adding about 500 per car, right? So we're talking very small. Also, it, it unlocks things. It can unlock you know, incentives in Europe. It can unlock market access and it certainly unlocks incentives in the US market, either between $3,750 or $7,500. So when you're talking about, you know, five bucks to unlock and prove 7,500 and give that money back to the consumer. That's, that's really a . That's a really easy calculus to me make,

Tom Raftery: 16:26

Sure, sure, sure. and what about, you know, where this is going because it's great to have a digital product passport for batteries, but is it stopping there or are more products gonna be brought into this legislation?

Ellen Carey: 16:40

Yeah, I think it's really nice that you asked. Yeah, we're gonna see more. We're certainly going to see more. On the US side you've got another incentive in the IRA called 45 x, which it applies to more critical minerals going into more than batteries. So proving where things happened. Over here in Europe you've got just this week it's the Ecodesign for Sustainable Production Regulation. And that's gonna apply to, you know, steel, aluminum, electronics, et cetera, that will have what Thierry Breton of the European Commission called, you know, digital Pro. When we talk beyond batteries, they're called digital product passports, right? And so you're gonna see that expansion and that cascade from batteries to other products that have very similar characteristics, lots of, uh, human rights and, uh, emissions concerns in the upstreams. And then an incentive also to continue to track those materials, ensure that they meet qualifications to gain market access, and then are created into a circular economy.

Tom Raftery: 17:50

Okay, cool. And you know, obviously this for Circulor and for your customers and even for consumers. This requires a lot of leveraging of data. How crucial is access to data and how, you know, how are

Ellen Carey: 18:09

Hmm.

Tom Raftery: 18:10

companies viewing the requirement to utilize their data more? Is, it's, it's . It's a new kind of paradigm. I mean, people have been talking about data for a long time, but actually capturing and using that data in products and in supply chains is quite new. How your customers and companies as you talk to in general, how are they viewing that?

Ellen Carey: 18:35

It's certainly very sensitive. I mean, I'll be honest with you, Tom, 'cause we're talking about ip, we're talking about procurement. These are very sensitive areas for businesses. So for Circulor, our platform and our offering, our data collection, storage and management has to be done just right with that transparency. But also that procurement and the sensitivities on IP and procurement being properly accommodated. I think though, what's important is first neutral third party, bringing in someone who's a neutral third party to broker that data exchange. So that's a lot of the role that we play. Second is it's about a negotiation of the content and the data that will be shared, and then a negotiation of the technical standards in terms of how that data will be shared. Nicely, the EU battery regulation and its requirement for a battery passport comes with two provisions. What's the content? And what are the technical standards? Now, the German government is really leading this project. It's called the Battery Pass Project. It's a 9 million Euro fund from the German government to bring together Circulor Audi, BMW, BASF, Yuma Corp, Frauenhofer, and others to say, here are the seven categories of information that align with the regulation of an EU battery passport compliance, and then here's how the data needs to be exchanged. And we, again, it goes back to those three pillars, consumers, businesses, and governments to say, this is what transparency looks like. And on top of tho that three-legged stool, we start making, you know, real progress based on collaboration and trust.

Tom Raftery: 20:40

Okay.

Ellen Carey: 20:41

on this Battery Pass project, we've defined the 90 attributes of a battery passport, and now working on technical exchanges and technical standards, and then those companies, Circulor included, will start interplaying it with data.

Tom Raftery: 20:58

Okay. And obviously it's quite an immature area. Seeing as the legislation here in Europe only passed this year, where are we in terms of creating those standards to make that data, you know, cross well, to be able to be shared more easily?

Ellen Carey: 21:16

Yeah. So. So we are basically in 2024 now, right? So , we're gonna go on holidays. It is 2024, February, 2025. All batteries are going to need to share their embedded carbon emissions.

Tom Raftery: 21:32

Right.

Ellen Carey: 21:33

February, 2027 all will need to have a battery passport. So you're starting to, it's been passed. You start entering a secondary legislation phase, where all of those points will get defined exactly the methodology and how the data is shared. So we're gonna start seeing it with embedded carbon emissions, right? That battery that you buy from Kia. What information do they need from the upstream exactly on the emissions incurred along that process? And then we're gonna start talking about how it gets to that battery and how it gets shared with you, Tom

Tom Raftery: 22:08

Okay. There's always When it, when it comes to regulations, there's always kind of a, a, panopoly of opinions amongst companies a about regulations. Some

Ellen Carey: 22:25

No, you don't say

Tom Raftery: 22:26

I know. Yeah. So some, some pushback and are anti-regulation. Some embrace and some are kind of stellar and they go beyond what the regulations require. Uh,

Ellen Carey: 22:37

Exactly.

Tom Raftery: 22:37

you know, you, you, you're agreeing with me here. So it's, it's not, it's not just me being, uh, cynical. So, Where are we with that? Because as I say, it is kind of a panopoly of opinions. How are companies reacting to these regulations? I mean, I, I, I guess I've answered my own question, , but tell me from your experience what you're seeing out there.

Ellen Carey: 23:03

You kind of did, you kind of answered your own que own question. We're we're seeing. We're seeing a lot of the same, we're seeing those that haven't started that are a bit, ah, you know, bright-eyed and how do we handle this? We've got others who have been at this for five years. You know, Volvo was the first OEM to put blockchain into its traceability. And they've done it nicely. They have done a lot of visibility and revelation of their supply chain. And the work that they've done to create that accountability and all of those digital threads is actually something that they pay forward to the industry. Now, that traceability is kind of there across your Panasonics and your LGs and your CTLs and all of that, right? And so there are, there's already a formation of a web that actually starts creating a network effect. And pays it forward for the others that may be saying, oh, we, we gotta get end to end traceability going, where do we even start? Well, thankfully, you know, Circulor has a number, I think we we're covering about 52% of the cell manufacturing network currently. So they're already doing the traceability and the ones that are kind of come new to this picture can tap into that, which is really, really a nice gift.

Tom Raftery: 24:27

Okay. And how important is that kind of collaboration, that kind of cross industry public-private collaboration in achieving more sustainable and transparent supply chains?

Ellen Carey: 24:38

Hmm. I would say it's, I, I would say it's very important. I think the signal has been sent, you know, this is the standard of doing business now.

Tom Raftery: 24:52

Hmm.

Ellen Carey: 24:52

Period. Full stop. I mean, we've talked about Europe and the US. You've also got battery passport provisions in Korea, Japan, you've got traceability funding going on in Canada, Australia. So , there's the signal from my side. The signal is very, very clear. And so I think it's, it's, it's certainly it. It's good to collaborate, have those conversations and 'cause you, you certainly, I think a lot of companies do want to be that leader, but they first need to get ingrained and step into the process and kind of have that seat at the table to do so

Tom Raftery: 25:33

Okay, cool. I might have missed it, but I'm not sure. I'm not sure if you mentioned as one of the minerals that you're tracking, did you mention sodium? And if I say that, it's just because I've seen some announcements about new sodium metal batteries, for example. So is that, is that something you're tracking as well? Did I, did I miss the mention of sodium or, or is that something you're tracking?

Ellen Carey: 25:57

No, it's not something we're doing now. We are doing other non battery or more general materials that comply to, can apply to a number of things. Copper for one, polysilicon, or we've even done leather, et cetera. Sodium is not something that we're doing currently, but certainly, certainly we can and will move towards those other types of battery technologies as they need to be.

Tom Raftery: 26:24

Okay, cool, cool. We're coming towards the end of 2023 actually, when this episode is published, it will be 2024. So welcome to the future,

Ellen Carey: 26:35

hmm.

Tom Raftery: 26:36

where, what, what do you see? This is, it's kind of traditional this time of year to ask for your predictions for, you know, where do you see supply chains and transparency going in the next, we'll say 2, 3, 4 years?

Ellen Carey: 26:50

Mm-Hmm.. Yeah. I, I, I think we'll nicely normalize not this one or the other of, you know, making a clean energy transition or having secure and responsible supply chains. I think we're starting to marry those up and find the nuance and discover it's difficult to have both, but it's critically important to climate and economic and national security that we juggle both and we do both at the same time. So I think we're going to normalize. This balancing act that has to happen about deployment, but also supply chain visibility and accountability. So I see that becoming more and more the norm. I also see more in terms of trade being instituted in terms of knowing what is in a a product. You're gonna have things like CBAM, you know, the Carbon Border Adjustment Mechanism take account. You're going to have more of those take account that says, we know what's in this product, and so we are able to give it this market access or these market incentives, and we're gonna see more of that, and that's also going to become more normalized. I think we've had a big year in 2023 in terms of things being fresh, new, and newly announced, and now we're gonna start seeing, you know, really how that sorts out with, in terms of industry on the priority areas.

Tom Raftery: 28:22

Cool. Cool. We're coming towards the end of the podcast now. Ellen, is there any

Ellen Carey: 28:27

It is a shame

Tom Raftery: 28:31

we, we can have a part two

Ellen Carey: 28:33

Yeah. Yeah. We can, we can, we have to, well, we can check back in in terms of that normalization and where things keep going.

Tom Raftery: 28:39

There you go. There you go. But in the meantime, is there any question I didn't ask that you wish I did or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Ellen Carey: 28:54

you know, I, I'm not so sure no, Tom, I think I, I think, I think not, I think consumers need to keep doing what they're doing and asking the question about what's in their products. It's a key part of all of this. A key driver. So where there's questions, where you want information, keep asking for it because companies are working on it, regulators are working on it, and has to be that synergy across all three that brings this to fruition.

Tom Raftery: 29:21

Great. Great. Superb. Ellen that's been really, really interesting. If people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Ellen Carey: 29:35

Yeah, visit us on our main page, www.Circulor.com. We're also available on LinkedIn. You'll see a lot of our new information. A lot of these themes, as well as how technology responds to them is, is really what we focus on on our LinkedIn channel as well.

Tom Raftery: 29:55

Great. Fantastic. Ellen, that's been really interesting. Thanks a million for coming on the podcast today.

Ellen Carey: 30:01

Tom, thank you very much. It's, it's been a sincere pleasure. And thanks to your audience.

Tom Raftery: 30:05

Okay, thank you all for tuning in to this episode of the Digital Supply Chain Podcast with me, Tom Raftery. Each week, over 3, 000 supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose our guests or a personalized 30 second mid roll ad. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn or drop me an email to tomraftery at outlook. com. Together, let's shape the future of the digital supply chain. Thanks. Catch you all next time.