Volkswagen is looking for serious, long-term contracts with cobalt producers, according to a Reuters report on Friday. Cobalt is a common component in lithium-ion rechargeable batteries, and it's projected to command more and more demand as electric vehicles are adopted in greater numbers. Currently cobalt is trading at about $26 per pound.

Securing reserves of the kinds of materials used in batteries will be key to Volkswagen’s future growth. After the so-called “dieselgate” scandal of 2015, Volkswagen Group pledged to pivot away from diesel to electric vehicles (EVs). The German automaker has said it wants to produce up to 3 million electric vehicles by 2025 and offer 80 electric vehicle models across all 12 brands by 2030. If VW Group succeeds, it would be a considerable feat given that so far there are only about 2 million EVs of any brand on the road worldwide.

As more automakers move to develop EVs, the minerals used to make car batteries will become more and more important. In 2015, Tesla secured two contracts with mining companies Bacanora Minerals and Rare Earth Minerals as well as Pure Energy Minerals , to explore lithium deposits in northern Nevada and Mexico. Cobalt is often used as a component in electric powertrain batteries because cobalt-based lithium batteries tend to have high energy density (although other materials like nickel and manganese can be used in lithium-ion batteries as well, depending on the battery application).

Cobalt is primarily mined in the Democratic Republic of Congo (DRC), often under exploitative conditions. According to UNICEF and Amnesty International, around 40,000 children are involved in cobalt mining in DRC where they make US$1-2 per day. Apparently, the wording of Volkswagen’s request for proposals stipulates that child labor is not to be used to produce the cobalt the company buys. (As always, such stipulations are only good when enforced. A 2016 report from The Washington Post shed light on the fact that many companies turn a blind eye to human rights abuses perpetuated by materials suppliers.)

While 50 to 60 percent of cobalt comes from DRC, cobalt is also found in Canada, China, Russia, Australia, and Zambia.

According to sources speaking to Reuters, VW Group asked cobalt suppliers to submit proposals for a 10-year contract, which would start in 2019. Volkswagen later told Reuters that procuring all the materials needed to meet its 2030 goals would result in a total order volume worth €50 billion (or $59.76 billion USD). The company reportedly wants to have contracts settled by the end of 2017 and is looking for a fixed price for the cobalt it buys over the years.

“Analysts estimate each battery uses between 8-12 kg of cobalt," Reuters reported. The news outlet estimated a price of $30 per pound for cobalt and concluded that "VW will need 24-36 million kg a year for three million EVs, which at current prices would total $1.6-$2.4 billion.”