SITUATION UPDATE BRIEF: DRC – NEW COBALT INITIATIVE REFLECTS GROWING ESG PRESSURES

Key takeaways

The launch of the Free Cobalt Alliance last week brings together mine operators, social enterprises and civil society groups in an effort to improve working conditions for informal and artisanal miners in the DRC. This promises to improve ESG risks in cobalt supply chains, benefitting the tech and automotive sectors in particular.

Artisanal mining has been a particular problem for mine operators in Africa in recent years, as efforts to control their activities have largely failed and resulted in Western firms being blamed for either not providing safe environments for them or abusing local nationals by heavily policing mining sites.

The Free Cobalt Alliance offers a replicable model that could improve standards both within Congolese cobalt production and other extractives industries on the continent. However, in the DRC, the state’s monopoly on purchasing artisanal cobalt may undermine progress towards better ESG standards.

Substantive improvements are therefore likely to be conditional on the state permitting direct outsourcing relationships between operators and artisanal mining collectives. The Free Cobalt Alliance will increase pressure on the government to enable this by demonstrating the willingness of licensees to oversee artisanal mining. However, progress will be complicated by authorities’ concern
over tax revenues from informal operations.

Overview

On 24 August a new initiative was launched in the Democratic Republic of Congo (DRC) in response to growing environmental, social and governance (ESG) concerns involving cobalt supply chains. The Fair Cobalt Alliance (FCA) is a partnership between several major mining corporations, civil society groups and social enterprises and aims to improve conditions for artisanal miners and provide secure, trusted supply chains for cobalt users. The move reflects repeated instances of licensed mine operators being held responsible for safety failures impacting artisanal miners and of several lawsuits targeting firms making inadvertent use of cobalt that has been produced in exploitative conditions. The FCA could become a model for other mining operators in Africa to follow in order to counter ESG risks in the extraction of rare earths and precious metals.


Cobalt Mining in the DRC

The DRC produces around 60% of the world’s cobalt, but of that figure between 10-20% is mined by informal, unlicensed artisanal miners. Artisanal mining can be highly dangerous, illegal and frequently involves child labour, but nevertheless its output consistently merges with licit supply chains to the reputational detriment of international firms who make use of it….

 

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