Johannesburg – Wednesday, March 31st, 2021: Entreprise Générale du Cobalt (EGC) was established by the Government of the Democratic Republic of the Congo (DRC) in November 2019. Today, EGC officially launches its activities to support the commercialisation of responsibly sourced artisanal cobalt. EGC has also published its “Responsible Sourcing Standards” to define the operational principles that EGC will require to support the establishment of safe and strictly controlled artisanal cobalt mining zones.
The artisanal and small-scale mining (“ASM”) of cobalt in the DRC is a sector responsible for millions of livelihoods and is a key growth driver for the country’s economic development. DRC’s cobalt accounts for more than 63% of global production, with ASM activity responsible for approximately 20% of this production.
Global demand for cobalt is rapidly increasing alongside the growth in electric cars manufactured as well as new mobile networks development. The innovative 5G mobile handsets require 20% more cobalt than equivalent 4G models. Overall, cobalt demand has been projected to double from 145,000 tonnes in 2020 to 290,000 tonnes by 2030, with the DRC supplying an even larger share of the world’s total production.
Faced with such an opportunity, the DRC Government established EGC to work alongside DRC’s Agency for Regulation and Control of Strategic Mineral Substance Markets (ARECOMS) and to formalize the ASM cobalt supply chain with a primary focus to preserve and protect respect for human rights, safety, and environmental standards. These principles are embodied within EGC’s ‘Responsible Sourcing Standards’ (the ‘EGC Standard’), launched today. The EGC Standard has been developed by the EGC Technical Committee, built upon global best practice and concurrent with DRC legislation. The EGC Standard defines the operational requirements for artisanal production that EGC is committed to following at all EGC controlled production sites.
As part of EGC’s formalization strategy, EGC is responsible for purchasing all domestically produced ASM cobalt ore, prior to processing and/or transformation and marketing. Through the consistent application of the EGC Standard, and its associated control framework, cobalt buyers and supporting financial institutions can be rest-assured that EGC cobalt has been brought to market in a responsible manner.
EGC has structured their activities around two strategic pillars; production and marketing. “EGC’s production phase will cover the mining of cobalt ores by artisanal miners from artisanal mining areas, their transit to trading centers, and their subsequent processing into cobalt hydroxide in local plants. This phase, which involves a large number of stakeholders, requires the execution of the contractual activities with the subcontractors in charge of operational support and the effective implementation of various activities on the sites. A critical aspect is providing guidance to the artisanal miners in their day-to-day activities in terms of safety, or to the neighboring communities,” explained Jean-Dominique Takis, EGC Managing Director.
For additional support for the marketing, EGC has entered into trading agreement with Trafigura, a market leader in the global commodities industry. A component of the agreement includes support by Trafigura to EGC and its partners for the development of controls and traceability associated with ASM cobalt production. Another area where EGC is to be assisted by the international trading company Trafigura is to identify industrial buyers for the cobalt sold by EGC. The partnership also includes financing for the creation of strictly controlled ASM mining zones, the financing of ore excavated by the artisanal miners and additional costs related to ensuring the transparent and traceable delivery of cobalt hydroxide.
EGC is currently making arrangements for the development of its first site, to be announced in due course, with a view to the production of cobalt hydroxide commencing in the coming months.
“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. Cobalt’s role in the global energy transition is vital. Artisanal mining is a sector that supports thousands of people’s livelihoods. At Trafigura, we’re proud of the role we are playing to support the formalization of this sector through the development and implementation of rigorous standards and traceability controls. Our efforts hinge on continuous improvement in what we all recognise is a challenging context. Ultimately, we believe that a formalized artisanal mining sector can transform lives and serve as a catalyst for economic growth in the DRC” said Jeremy Weir, Trafigura Executive Chairman and CEO
Through its strong partnerships with several government institutions in more than 40 countries, the not-for-profit organisaton PACT will also support continuous improvement against the EGC Responsible Sourcing Standard.
“The intrinsic value of our integrated approach is the ability to intervene from multiple angles to design programs tailored to vulnerable communities, including artisanal miners, to enable local populations to earn a dignified living while reaping the benefits of their environment,” added Yves Bawa, Pact’s Regional Director for the Great Lakes Region of Africa.
The response to the launch of the EGC initiative has been positive and welcoming from stakeholders in the DRC, throughout African and indeed from around the world. His Excellency Mr. Bene M’Poko, Ambassador of the DRC to South Africa, reiterated the confidence placed in the EGC and its partners in formalizing and overseeing artisanal cobalt mining by developing a responsible value chain.
“EGC’s mission is to ensure that artisanal and small-scale cobalt production is undertaken in accordance with defined standards to increase the economic attractiveness of the DRC internationally, and to ensure that Congolese citizens benefit from the wealth of their environment. The goal of these standards is to ensure decent working conditions and to eliminate the major social, ethical, and environmental risks that have historically affected artisanal cobalt production in the DRC,” recalled Mr. Bene M’Poko.
The reorganization of the artisanal cobalt sector is a crucial step in structuring this industry in the DRC. As the world transitions to a different, more sustainable energy mix, cobalt represents an opportunity to improve the business climate in the DRC, boost its economic attractiveness, and the fight against poverty.