The Democratic Republic of Congo (DRC) has officially begun operations at Entreprise Générale du Cobalt (EGC), a state-owned company with monopoly rights to the purchase and sale of the country’s hand-mined cobalt.
EGC, created a year ago to help control artisanal supplies and boost government revenue through price controls, will sell cobalt hydroxide under a five-year contract with trading house Trafigura.
The non-exclusive supply deal will also see Trafigura finance the creation of strictly controlled artisanal mining zones, buying centres and logistics to trace supply.
DRC holds around 70% of the world’s reserves of cobalt, crucial for the lithium-ion batteries used in the fast-growing electric vehicle (EV) sector.
Congo’s artisanal miners are the world’s second-largest source of cobalt after the country’s industrial mines. Consultancy CRU expects the DRC to produce more than 100,000 tonnes of cobalt this year, or 71% of the global total, of which 8,000 will come from artisanal sources.
Child labour and a lack of safety measures in artisanal mining are behind many initiatives to formalize the sector.
According to Amnesty International, children as young as seven have been found scavenging for rocks containing cobalt in the DRC. The group also claims to have evidence that the cobalt those miners dig has been entering the supply chains of some of the world’s biggest brands.
“All of us engaged in this endeavour are aligned in a firm commitment to collaborate transparently with our stakeholders and to ensure that together we create effective solutions for responsibly sourced cobalt,” Jeremy Weir, Trafigura executive chairman and CEO said in the statement.
“Ultimately, we believe that a formalized artisanal mining sector can transform lives and serve as a catalyst for economic growth in the DRC,” he said.
EV makers including Tesla and Volkswagen have recently vowed to help improve working conditions in the DRC. The metal, a by-product of copper or nickel, is an essential metal in the production of the batteries that power EVs and high tech devices.
China’s biggest cobalt producer, Huayou Cobalt, which supplies to LG Chem as well as Volkswagen, said last year it would stop buying from artisanal miners in the DRC.
Trafigura has been involved in efforts to monitor and improve artisanal cobalt mines in the Central African nation since 2018. That year, it opened a pilot project to formalize informal miners at Chemaf Sarl’s Mutoshi mine.
After raising $450 million in 2019 for the facility, Trafigura had to suspend the project in March last year due to the global pandemic.
Official figures show that more than 200,000 people make their living digging cobalt and copper in Congo’s southeast Katanga region.
EGC is a wholly owned subsidiary of state-miner Gécamines. The new company has not disclosed the terms of its agreement with Trafigura.