London and Kampala — The Democratic Republic of Congo's state-owned cobalt company Entreprise Generale do Cobalt will become the sole buyer of the country's artisanally mined cobalt from April, in a move to put an end to the "quasi-mafia-like exploitation of cobalt" in the country, a company official said March 31.
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EGC, which was already working with international trader Trafigura to formalize and improve working conditions in the artisanal mine sector, has now partnered with Trafigura to identify the best buyers for the cobalt produced in this way, Albert Yuma, chairman of EGC's parent Gecamines, said on a webinar to announce the formal start of the new purchase arrangements.
"By establishing a state monopoly on strategic minerals -- including the purchase, processing and marketing of [artisanal] cobalt, the Congo state ensures that all sectors of society benefit," Yuma said.
"All other [artisanal] cobalt will be illegal ... It's a revolution for artisanal mining," Yuma said, noting that a similar system should be extended to other minerals and countries.
Traceability of the artisanal cobalt will be guaranteed by blockchain technology to ISO standards, the official said.
The DRC holds around 80% of the world's cobalt reserves. Its production of 94,000 mt of cobalt in 2020 represented 67% of total global production. Typically, 15,000-30,000 mt/year of the country's output comes from artisanal production, EGC CEO Jean Dominique Takis said on the webinar.
EGC set up a five-year deal with Trafigura Group in which the latter will provide financing for the Congolese company while the former will supply all the country's artisan mined cobalt, Takis said.
The deal stems from an agreement struck in November 2020 in which Trafigura agreed to fund the creation of strictly controlled artisanal mining zones, the installation of ore purchasing stations and costs related to the transparent and traceable delivery of cobalt hydroxide to Trafigura on an export-cleared basis.
Under the supply terms, EGC will ensure that the ore marketed by Trafigura complies with due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas, as established by the Organisation for Economic Co-operation and Development, or OECD.
ECG's purchase of all the artisanally produced cobalt will "help control working conditions, combat fraud ... and stop the illegal export of cobalt," Takis said. "We will use this economic model to share wealth between miners, state and EGC and responsible sourcing standards will apply to all cooperatives."
EGC will work together with worker cooperatives on mining sites, he said.
Created in November 2019, EGC is owned 95% by DRC state-owned mining company Gecamines and 5% by the DRC state, and has the backing of the DRC government, Yuma said.
Global demand may double
Trafigura's head of corporate responsibility, James Nicholson, told webinar participants that the trading company expects demand for cobalt to double to around 290,000 mt/year by 2030 from 145,000 mt/year in 2020 due to governments' electrification priorities.
Cobalt is extensively used in production of batteries for electric vehicles and increasingly in the 5G telecommunications network. Trafigura expects the DRC to produce around 70% of the new supplies of cobalt needed in future and artisanal production will play an important role in this, Nicholson said.
"OEMs have taken an active role in this conversation [on responsible sourcing] and realize they have an important part to play," he added.
Questioned about Trafigura's growing presence in the global cobalt market, a spokesperson said the company aims to be one of the top three in each of the products it trades.