(Reuters) – Congo’s state cobalt buyer announced a responsible sourcing standard for artisanal cobalt on Wednesday as it launched its ambitious move to bring all informal cobalt mining in the country under state control.
Artisanal cobalt miners extract the metal using rudimentary means, often on unregulated sites and sometimes within industrial mine sites. Unsafe working practices and child labour have been widely reported on such sites.
The Entreprise Generale du Cobalt (EGC), officially launched on Wednesday, will be the sole legal purchaser of artisanal cobalt, a key ingredient in batteries, produced in the country.
It aims to formalise the sector to meet increasing demand for cobalt as the world transitions towards electric vehicles, and bring a stop to illegal exports which deprive the state of tax revenue.
“From now on all Congolese artisanal cobalt will be bought by EGC, processed by EGC, and marketed by EGC,” said Albert Yuma, chairman of the EGC and of state miner Gecamines.
He said EGC’s activities would begin in earnest in end-April and that there would be a six-month grace period.
The shift to a state monopoly will impact an estimated 150,000 to 200,000 subsistence cobalt miners in the Congo’s southern copperbelt, and could fundamentally change the world cobalt market.
Congo produced 99,000 tonnes of cobalt in 2020 – around 70% of the world total – with 9,000 tonnes coming from artisanal miners, research house CRU Group estimates.
EGC’s regulations could create “a large source of traceable, flexible cobalt supply which would lend a large amount of stability to the cobalt price in the long-run,” said George Heppel, head of battery metals at CRU.
But a heavy-handed premature enforcement of rules would curtail a lot of current production, leading to prices spiking, although that scenario is less likely given EGC’s weak enforcement capacity, Heppel said.
Trafigura, which signed a supply deal with the EGC last November, said the state buyer model and the new standard will improve oversight and worker safety, but that there would be challenges.
Under the new regulations, tunneling is banned on EGC-approved sites, and pits are not to exceed 10 metres in depth. Miners are required to wear personal protective equipment and carry a site registration identity card.