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DRC responsible cobalt initiative needs breakthrough on mine access

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By David Whitehouse

An initiative backed by the government of the Democratic Republic of Congo (DRC) to foster responsible cobalt mining needs to find a breakthrough in the face of resistance from vested interests.

The government is supporting the responsible sourcing standard developed by state-owned Entreprise Générale du Cobalt (EGC) with global commodity trading firm Trafigura as industry partner. EGC, set up by the government in 2018, released its responsible sourcing standard last March. The standard commits buyers to a supply-chain policy in line with the OECD’s guidance on minerals from conflict and high-risk areas.

Though DRC President Felix Tshisekedi supports the initiative, progress is being held back by the “politicisation” of the issue in the cobalt-rich region of Katanga, says Indigo Ellis, associate director at strategic advisory firm Africa Matters in London. Influential politicians in the region own mining cooperatives and see it as against their interests to sign up to the scheme, she says, so EGC has been unable to gain access to mining sites.

EGC has been trying to get site access for the last five months without success. “They did not expect this kind of pushback at all,” says Ellis. “It will change. It’s a matter of time. The first site would be a breakthrough.”

Trafigura hopes there will be a breakthrough soon at the Kasulo site, near Kolwezi in the southern Lualaba province. With an exceptionally high grade of cobalt, the site is “of particular interest” and talks with the government to secure access are ongoing, says James Nicholson, head of corporate responsibility at Trafigura in Geneva.  “Conversations are progressing well” at the highest levels of government, he says. “The noises are entirely positive.”

Progress can’t come quickly enough. Scientists have linked birth defects in the DRC’s Katanga region to pollution caused by cobalt extraction and smelting. The world needs cobalt for a range of applications including smartphones and batteries for electric vehicles. Covid-19 has stoked demand for portable computers with rechargeable batteries. Between 15% and 20% of DRC cobalt output comes from artisanal sources, with the sector employing about 200,000 people. Each of these artisanal miners may have five or six dependents.

Many of them work in conditions which are “predominantly unsafe unless controls are put in place,” Nicholson says.  The biggest killers, he says, are deep tunnels and pits which are liable to collapse. The EGC rules ban pits which are deeper than 10 metres, and prohibit tunnelling. 

Reputational Risk

Cobalt is usually a by-product of mining for other metals such as copper or nickel. According to a report by Congolese legal aid centre the Centre d’Aide Juridico-Judiciaire (CAJJ) and Rights and Accountability in Development (RAID) in the UK, 70% of the world’s cobalt came from the DRC in 2020. Major international corporates involved in mining DRC copper and cobalt include Glencore, Eurasian Resources and China Molybdenum.

The DRC regularly comes near the bottom of global measures such as the World Bank’s ease of doing business index and Transparency International’s corruption perceptions index. Buyers want controls such as those set up by EGC, Nicholson says. The downstream market is aware of the dangers and the financial community has “become very risk averse,” he adds. 

High-ore grade surface veins in the southern DRC mean that cobalt sources are easily accessible without mechanized methods. Locals in Kasulo say that the scramble began in 2014 when a resident stumbled on cobalt under his house as he built a new septic tank. An initial attempt to simply ban artisanal mining there proved useless. The mine is now operated by Congo Dongfang Mining (CDM), a subsidiary of China’s Zhejiang Huayou Cobalt. CDM supplies international clients including Daimler, Apple, Dell, HP, Microsoft, Samsung and Sony.

A visit by the World Economic Forum (WEF) to Kasulo in September 2019 found many people working in tunnels that “do not meet international standards”. Many miners were having to work for hours in confined spaces with low oxygen levels. Workers at Kasulo were not wearing protective equipment. While the depth of the tunnels was limited to 10 metres, miners were allowed to dig horizontally underground, increasing the risk of collapse, the WEF found.

Lack of Options

According to the WEF, artisanal and small-scale mining (ASM) production constitutes 15%–30% of total DRC cobalt production. Human rights risks, including child labour, rise rapidly in ASM, the WEF says. Yet, it notes, ASM is often the sole form of livelihood available. The OECD has estimated that more than 80% of the DRC’s population is underemployed or unemployed. Simply turning away and seeking safer cobalt suppliers elsewhere is to abandon those communities to their fate. There is no real ethical alternative to doing the hard work of due diligence.

Buyers can limit themselves to specific suppliers. Tesla, for example, buys only cobalt sourced from Glencore in the DRC. Other sources are available, such as Morocco, Cuba and Russia. Some banks, Nicholson says, are now so cautious that they prefer to avoid the reputational risks of the DRC altogether. He questions whether that decision is aligned with ESG values when more than a million people depend on artisanal cobalt mining in the country.

Trying to avoid buying DRC cobalt makes little sense in purely financial terms. The DRC’s predominant role in global supply means that buyers will need to pay a premium to avoid it entirely. And the world is likely to need much more cobalt in future. Limiting the rise in global temperatures since pre-industrial times to 2°C would mean that cobalt producers need to build 167% more supply than currently forecast by 2030, says Simon Morris, head of metals at Wood Mackenzie. “This will present a huge challenge for the sector,” he says.

Subcontracting Model

According to the report by CAJI and RAID, many Congolese cobalt miners do not earn a living wage. They have little or no health provision and may face excessive working hours. The core of the problem, according to CAJI, is the subcontracting model used by the multinational mining companies. This is used as a strategy to reduce costs, limit liability for workers’ safety and prevent unionisation.

There is, says CAJI, “unmistakable evidence to suggest that mining companies in Congo are using subcontractors to supply staff for their core business operations on a long-term basis, often on extremely low pay”.

An enfeebled labour inspectorate compounds the problems. The service is “severely underfunded and understaffed”, CAJI says. In 2021, there were only two labour inspectors assigned to the Kolwezi area. Inspectors are sometimes refused entry to mine sites and workers are often too scared to complain to them. That has left a largely unregulated work environment, CAJI says.

The CAJI has a range of recommendations for companies who have DRC cobalt in their supply chain. They should press suppliers to halt the exploitation of workers and pay a living wage with benefits. “If your leverage is insufficient to remedy the situation,” the CAJI says, “end your contractual relationship with the supplier.” Companies should also map their supply chains all the way to the cobalt mine and make the information publicly available. They should detail the due diligence measures in place to ensure exploitation is not taking place. The Congolese government also has its part to play. It needs to urgently invest in labour inspection and establish sanctions mechanisms for non-compliant companies, CAJI says. 

One long-term risk for the DRC, says Ellis at Africa Matters, is that there is a concerted effort to reduce the amount of cobalt in batteries to avoid reputational risk. Still, there is no sign that cobalt-free batteries are on the horizon, and operating costs in the DRC remain lower than elsewhere. The country’s predominance in supply is not going to change any time soon. “There is no green world without DRC cobalt,” Ellis says.

David Whitehouse is a freelance journalist and business editor of The Africa Report in Paris.

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