* First live projects possible by early next year
* Compliance costs could be reduced
By Barbara Lewis
LONDON, March 5 (Reuters) - Automaker BMW BMWG.DE is working with a London-based start-up to use transaction-recording technology blockchain to prove batteries for its electric vehicles will contain only clean cobalt, thes tart-up's CEO said.
The competition is intensifying to use blockchain, the technology that underpins cryptocurrencies such as Bitcoin, to try to eliminate battery minerals produced by child labour.
Cobalt is in focus because around two thirds of the world'ssupplies are from Democratic Republic of Congo, where roughlyone fifth of cobalt is mined in unregulated artisanal mines.
One organisation has begun a project to work with theartisanal miners to use blockchain to prove they are not usingchild labour. start-up Circulor is meanwhile working on a pilot forBMW to map cobalt that is already assumed to be clean because itcomes from jurisdictions such as Australia and Canada or fromindustrial production in Congo, Circulor said.
A BMW spokesman said the firm could not comment at thisstage.
"We believe it makes economic sense to start with sourcesthat aren't a problem," Circulor CEO Douglas Johnson-Poensgentold Reuters in an interview.
"Once the system is proven and operating at scale, one cantackle the harder use cases like artisanal mines."
The pilot shows it is possible to give clean cobalt abarcode and enter the main stages of its journey on to animmutable ledger using blockchain technology, Johnson-Poensgensaid.
Because that is an efficient way to prove cobalt is clean,he said it had the potential to cut regulatory compliance costs,although the economics still needed to be proved.
Johnson-Poensgen was an army engineer, involved inactivities such as bomb disposal in Sierra Leone and Bosnia, andhas also worked for big corporations, including BT and BarclaysBank.
He founded Circulor last year with a view to tackling theneed for automakers to reduce costs to make electric vehiclemanufacturing is profitable.
Glencore GLEN.L dominates industrial production in Congo.It has said it would never use child labour, while declining tocomment on blockchain.
(Editing by Mark Potter)