Categories:
Energy
/
General Market Commentary
Topics:
General Energy
/
General Market Commentary
Congo's move to control artisanal cobalt is double-edged
LONDON, Feb 7 (Reuters) - The government of the Democratic Republic of Congo has announced ambitious plans to take control of the country’s wild-west artisanal cobalt sector.
A new state company, Entreprise Generale du Cobalt (EGC), has been given monopoly powers to purchase and market cobalt from the informal sector.
The move is being hailed by the government as a way to clean up a sector that is tarnished with a reputation for child labour, lax safety and illegal activity.
That would be very good news for the cobalt market.
The human cost of mining in the Congo, which accounts for more than 60% of global cobalt production, is one of the reasons companies such as Tesla are actively trying to engineer the metal out of their battery supply chain.
Congo’s humanitarian goals however go hand-in-hand with financial motives, firstly to boost tax revenues and secondly to exert more control over the cobalt price.
That may be less good news for the cobalt market.
TAINTED COBALT
“We are going to eliminate child labour, we are going to eliminate labour by pregnant women and we are going to eliminate fraud in this sector so that the cobalt (...) will be responsible cobalt,” according to Albert Yuma, chairman of state mining company Gecamines, which will oversee the EGC.
The idea is the new company will act as monopoly buyer of cobalt from the cooperatives that pool the output of artisanal miners.
At the moment much of this “grey” production stream is bought by middle-men, mostly Chinese, who then sell the cobalt ore on to first-stage processors, also mostly Chinese.
Artisanal product becomes mixed with official-sector product, causing traceability problems for end-users desperate to avoid being tainted by allegations of using a metal generated by child or “slave” labour.
The EGC will use its purchasing power to extend official oversight on working conditions in the artisanal sector, using non-government organisations to select cooperatives based on their compliance with responsible sourcing criteria.
Those that don’t qualify will be “sanctioned”, according to Yuma. That may be a euphemism for being closed.
Such state intervention is a welcome development for the cobalt market.