Cobalt in hydroxide that was mined in Congo. Congo sits on the largest economically accessible cobalt reserves in the world.
The mining industry is struggling to establish safe labor and environmental practices for Congo's artisanal cobalt sector, six years after Amnesty International flagged child labor issues and other human rights abuses.
Congo's artisanal mine industry, in which workers use chisels, mallets and other hand tools to extract ore, produces about 20% of the country's ore, according to a 2016 Amnesty International report. At the time, thousands of child workers were employed in the industry, and mine workers dug tunnels underground with minimal gear or protective equipment, the report said.
While large-scale cobalt miners have made headway in pulling their Congo operations into alignment with international mining accords that ensure labor and safety protections, the smaller projects in the country are still rife with problems, according to watchdogs. Congo sits on the largest economically accessible cobalt reserves in the world, putting battery-makers in a bind as they try to accelerate the energy transition and source cobalt from places that avoid abusive mining practices.
Large miners step in
Mining majors are making efforts to raise labor practices for small mining companies: Mining giant Glencore PLC co-founded the Fair Cobalt Alliance, or FCA, in August 2020, and commodities trading and logistics house Trafigura Pte. Ltd. has invested heavily in creating a zone of artisanal mines that would meet labor and safety standards. But progress has been slow despite a recent success, when Trafigura announced in January it would invest $600 million in a mine near Kolwezi, Congo.
"The industry as a whole is yet to take meaningful steps towards enabling responsible cobalt production in the artisanal mining sector of [Congo]," David Sturmes, who heads corporate engagement and strategic partnerships at the FCA, told S&P Global Commodity Insights over email. "There is no silver bullet to the issues at hand. Substantial investment into safer infrastructure is needed to address hazardous working conditions and prevent accidents."
Cobalt is a key ingredient in the rechargeable batteries expected to form the backbone of both the zero-carbon transportation sector and a zero-carbon electric grid.
The global cobalt supply deficit could increase to 15,000 tonnes in 2026, compared to an estimated deficit of 8,000 tonnes in 2022, Commodity Insights analysts forecast in a February report. Demand is heating up from the electric vehicle sector, with about 71.5% of the increase in cobalt demand between 2021 and 2026 estimated to come from passenger plug-in EVs.
Trafigura launched a pilot project in 2018 in the Kolwezi region aimed at training workers and improving labor standards at artisanal mines. The company signed a trading agreement with Congolese state-owned Entreprise Générale du Cobalt, or EGC, in November 2020.
Under the agreement, Trafigura would 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."
|A miner scans a Circulor QR code to trace raw materials.
Source: Douglas Johnson-Poensgen, Circulor Ltd.
Trafigura now understands that EGC is "in ongoing dialogue with both federal and provincial [Congo] authorities with a view to securing access to the first artisanal mining zone for EGC to operate," a Trafigura spokesperson told Commodity Insights in an email interview. "These discussions have, to date, focused on the development of the Kasulo site in Kolwezi, amongst others."
EGC's goal is to "establish a steady pipeline of projects within which it can incrementally transform working conditions and labor standards in tune with the EGC Responsible Sourcing Standard," Trafigura's spokesperson said.
The challenges of introducing the EGC standard — which is aligned with the country's law, mining regulations and the Organisation for Economic Co-operation and Development's Due Diligence Guidance — were assessed following an initial baseline assessment conducted at Kasulo.
EGC did not respond to requests for comment.
Glencore co-founded the FCA on the basis that artisanal mining cannot be ignored given it employs up to 2 million people in-country. At the time, the giant commodities trader said such operations will continue because they can be economically viable.
The FCA now has 18 members, with the world's second-largest cobalt producer, China Molybdenum Co. Ltd., and its Geneva-based trading arm, IXM SA, both joining in 2021.
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The traceability incentive
Circulor Ltd., an industrial supply chain traceability technology firm based in London, made a deal with Trafigura in October 2021 to provide traceability and carbon dioxide tracking for the company's nickel and cobalt trading division. Car companies are depending on trackers such as Circulor to allow them to promise customers and investors they are not buying cobalt from bad actors. The trackers also create accountability for the miners.
"Establishing any operation on the ground consistent with these standards would always take some time to implement (including securing stakeholder agreement), as all change projects do," Circulor CEO Douglas Johnson-Poensgen said in an email interview.
Circulor, which also provides traceability for the blockchain pilot program that Tesla Inc. is running with BHP Group Ltd., needs to ensure a reliable chain of custody for materials from managed artisanal sites in Congo to export, with intermediate steps including buying centers and smelters. That material will only be tracked from managed artisanal sites operating to the EGC standard, all of which involves many actors on the ground, including auditors to ensure standards are met at the sites, Johnson-Poensgen said.
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