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Cobalt miner

Supply chain

Urgent action is needed to protect Congolese cobalt miners

Published 16 September 2021 in Supply chain • 7 min read

The mineral is a vital component of electric car batteries, but small-scale miners, including children, are working in harsh conditions. Alliances need to be forged in the supply chain to make cobalt is responsibly sourced.

Cobalt is an essential mineral used for batteries in electric cars and everyday electronics. With an increasing number of companies and governments pledging ambitious targets to cut carbon emissions and promoting electric vehicles, the demand for cobalt is expected to surge up to 30 times higher than its current levels by 2040. Most of this demand will be met by production in the Democratic Republic of the Congo (DRC), where over two thirds of the world’s cobalt is produced, and more than half of the world’s cobalt resources are located. Whether a battery manufacturer or a buyer of electric vehicles, environmentally aware businesses cannot avoid Congolese cobalt, or the human rights challenges linked to it.

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Top 5 Cobalt producers
Top 5 Cobalt producers

Up to 30% of the DRC’s cobalt is extracted by artisanal and small-scale mining (ASM), an informal yet legal profession that constitutes a lifeline for millions of Congolese, who have no alternative source of livelihood. ASM means the extraction of precious metals with basic tools or bare hands, digging tunnels that can be up to 90 meters deep to reach the ore. In its current state, ASM involves high risks of fatal accidents and serious human rights violations, including child labor and unsafe working conditions. These risks also exist in large-scale mining (LSM) operations, because artisanal miners regularly dig on industrial mining concessions without authorization, especially where such industrial mining zones are not fully fenced off or not strictly monitored.

Blockchain traceability, a technology many automakers are currently investing in, does not provide a complete solution to the human rights risks in the cobalt supply chain. Unlike the experience with other mineral supply chains where blockchain has proven effective, tracking cobalt presents many challenges. The cobalt supply chain is significantly more complex and involves several mixing points before processing. By the time cobalt arrives at processing plants, it has traveled thousands of miles and the sources of cobalt are obscured. ASM cobalt can enter the cobalt supply chain at multiple points along the way: through open cobalt markets where artisanal miners sell their output; during transport as trucks sometimes stop and load additional ASM material on the way to refineries in the DRC; and at refineries in both the DRC and China (where 98% of cobalt from the DRC is destined).

Top 5 Exports
Top 5 Exports destinations for the cobalt from DRC

Similarly, the production of cobalt-free batteries is not a responsible solution to the problem. Not only are these alternatives expected to be used in less than 20% of the electric vehicles sold over the next decade, but replacing cobalt with another mineral is also not desirable from a social development perspective. Engineering cobalt out of batteries would render millions of Congolese destitute in an already extremely poor part of the world.

Finally, automating cobalt mining is also not viable in the DRC because artisanal mining is complementary to rather than an alternative to LSM. Cobalt concentration levels and the condition of the earth on a concession determine whether that specific area is suitable for extraction by hand or by machines. Accordingly, an area can be ideal for industrial mining, artisanal mining, or both.

Considering these limitations and conditions, companies that source cobalt must acknowledge that ASM is a business reality in their supply chains that they need to address now. And there are at least two ways to do so.

One way is to directly invest in longer-term formalization projects that address the human rights risks in the battery supply chain. Trafigura, a Swiss commodity trader, has taken the lead in formalizing the ASM cobalt sector in the DRC. It has recently partnered with Entreprise Générale du Cobalt (EGC), the state-owned mining company that oversees all artisanal cobalt mining activities in the DRC. Together they developed a set of responsible sourcing standards based on their pilot project at the Mutoshi mine that will apply to all artisanal cobalt mines in the country and be strictly monitored to establish safe working conditions for artisanal miners.

Another avenue is to join alliances that promote formalization. The Global Battery Alliance (GBA), an initiative that was launched through the World Economic Forum, serves as an ideal multi-stakeholder platform for players in the battery supply chain to work together to ensure Congolese cobalt is responsibly sourced. The GBA’s Cobalt Action Partnership was created to develop a common framework for the responsible production of ASM cobalt from the DRC. The partnership recently commenced consultations to solicit input into the development of a draft framework and all interested stakeholders were invited to join. These discussions will continue and companies that are committed to responsible sourcing of cobalt should sign up to contribute.

Cobalt Use
Cobalt is used in hundreds of common houshold items

Solutions that effectively address human rights challenges in the cobalt supply chain require concrete commitments and long-term investments. But to get there, business leaders must first be made aware of the realities on the ground, their involvement in these realities, and their indispensable role in changing them. Here are five recommendations for companies that are genuine about the transition to a more sustainable future:

1. Do not avoid cobalt or the DRC

Companies should not engineer cobalt out of their products, nor should they make efforts to avoid sourcing from the DRC. Millions of Congolese rely on artisanal mining and the extraction of cobalt offers an unparalleled development opportunity for the DRC. To promote the economic and social development of Congolese mining communities, businesses that respect and promote human rights must also commit to sourcing ASM cobalt from the DRC. Yet, this commitment must be exclusive to sourcing from mine sites that can prove to be fully compliant with responsible sourcing standards.

2. Invest in developing standards for ASM formalization

Companies must understand that sourcing “exclusively from LSM sites” contradicts business realities in the DRC as artisanal miners often trespass into LSM sites to extract cobalt at night or in remote parts of the mining concession. Tracking programs that utilize blockchain technology to separate LSM from ASM cobalt are also likely to prove ineffective because almost all Congolese cobalt eventually converges in refineries in China. Companies pledging to source cobalt responsibly should support and invest in standardized formalization efforts that aim to establish a level playing field, such as the EGC Standard introduced by the Congolese ASM mining company and the multistakeholder platform led by the GBA.

China's cobalt use
China's cobalt use

3. Support capacity-building of mining cooperatives

Cooperatives, which represent all miners in an ASM site, are key partners in the effective implementation of safety standards in ASM. Under the EGC Standard, currently the only applicable ASM sourcing standard endorsed by the DRC government, miners’ cooperatives will be expected to adhere to certain operational management requirements to be able to sell their cobalt to the EGC. Companies that source cobalt from the DRC must use their resources and leverage to support and empower the cooperatives and help them build the capacity to ensure the responsible sourcing of cobalt in the relevant ASM site.

4. Back independent assessments and transparency in reporting

Companies must ensure close monitoring of the implementation of the ASM formalization standards on mine sites and support the strengthening of state oversight bodies, such as the newly established ARECOMS, the agency that reports to the Ministry of Mines, regulates the DRC strategic minerals markets, and oversees EGC. Under its responsible sourcing standards, EGC is obliged to facilitate and accommodate third party site-based assessments against the EGC Standard. In addition, the EGC Standard requires buyers of Congolese cobalt from ASM sites to provide support to EGC in coordinating and maintaining ongoing monitoring and capacity-building. Companies with genuine commitments to the responsible sourcing of cobalt must conduct independent due diligence of mining sites and encourage transparent reporting of their own findings and those of EGC and ARECOMS.

5. Address systemic challenges and support onboarding of mines

Mine safety, child labor and gender inequality are systemic issues and too complex for any business to tackle alone. To create a sustainable business landscape, companies must engage in collective efforts that address these systemic challenges in the DRC. This engagement must include lobbying foreign governments and international aid agencies on aiding social development efforts. As regards the mines, companies should form coalitions with other dedicated companies, government agencies and international organizations to support substandard artisanal mines in the DRC towards compliance. Onboarding more artisanal mines will enable more miners to work in safe environments, participate in the economy, create new opportunities, and elevate themselves out of poverty, a common root cause of the systemic issues in the DRC.

The corporate commitment to environmental sustainability goes hand-in-hand with the corporate responsibility to respect and promote human rights. Achieving electric mobility, as one way to promote a sustainable future, hinges upon a responsible cobalt sector in the DRC. This in turn depends upon a responsible ASM sector that operates in line with basic human rights principles and environmental standards that companies need to help implement today.  

Authors

Serra Cremer Lyi

Serra Cremer Iyi

Consultant at the Geneva Center for Business and Human Rights (GCBHR) and the Head of Communications at Löning – Human Rights and Responsible Business

Serra Cremer Iyi is a consultant at the Geneva Center for Business and Human Rights (GCBHR) and the Head of Communications at Löning – Human Rights and Responsible Business. Trained as a corporate lawyer with a background in mergers and acquisitions and project finance, Serra brings her experience representing businesses and advising senior management to the interdisciplinary field of business and human rights. As part of her role at GCBHR, where Serra co-leads the extractives workstream, she has frequently written and presented on artisanal cobalt mining in the DRC.

Dorothée Baumann Pauly

Director of the Geneva Center for Business and Human Rights (GCBHR) at the Geneva School of Economics and Management at Geneva University and the research director at the NYU Stern Center for Business and Human Rights

Professor Dorothée Baumann Pauly is the director of the Geneva Center for Business and Human Rights (GCBHR) at the Geneva School of Economics and Management at Geneva University and the research director at the NYU Stern Center for Business and Human Rights. She has published extensively on business and human rights (BHR) challenges to support companies in the development of business models that align profits and principles. She co-edited the first textbook on BHR, she currently co-leads the Business and Human Rights working group of UN PRME, and she is the co-editor of the practice section of the Journal of Business Ethics.

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