Roskill: a more sustainable cobalt supply chain will require huge improvements to the safety and security of ASM workers
11 February 2021
The Democratic Republic of Congo (DRC) is expected to be the source for approximately 69% of mined cobalt in 2020—i.e., a significant quantity of the world’s supply originates from areas ranking poorly in terms of corruption and working conditions, notes critical materials supply chain intelligence company Roskill.
Cobalt producers within the DRC, as well as refiners, have been the subject of numerous allegations relating to illegal mining practises, a lack of supply chain oversight and governmental corruption. With demand for EVs and energy storage set to increase significantly over the next decade, downstream investors are becoming increasingly concerned with supply chain sustainability across all battery metals, particularly cobalt. These concerns will only increase as greater volumes of production are required to feed demand.
Artisanal and small-scale mining (ASM) is of fundamental importance to the livelihoods of hundreds of thousands of individuals in the DRC. Estimates of the number of individuals engaged in the mining, sorting, washing, transporting, and trading of cobalt in the DRC wary widely but consensus is that in excess of 100,000 individuals may be involved.
ASM cobalt value chain in the DRC. Source: Roskill
In its current form, the production conditions are causing many automotive manufacturers to question their reliance on cobalt in battery technology. The result is renewed calls for Responsible Sourcing Initiatives (RSIs) from manufacturers and governments aiming to drive higher standards of production via active oversight of the supply chain to ensure future production can both meet demand and provide optimal working conditions and compensation for those providing it.
Over the longer term, as downstream investors begin to demand greater operating standards and viable project development within cobalt production, Roskill expects to see a shift towards more sustainable cobalt supply in the market.
From a cobalt ESG (Environmental, Social, and Corporate Governance) perspective, ASM is an essential element of the social component. The cobalt supply cannot exist without the DRC, and thus, the development of a more sustainable cobalt supply chain will require huge improvements to the safety and security of ASM workers.
Although ASM is regulated by the DRC’s mining code, the stipulations of this code are widely ignored, and rarely enforced, Roskill notes. Few artisanal miners are officially registered owing to the perceived cost, difficulty, and lack of benefits associated with the process. Consequentially, artisanal mining in the DRC is generally speaking an inefficient, dangerous enterprise.
The mechanics of ASM cobalt are complex, and ever-changing. Owing to the exponential growth in cobalt demand, technology, geopolitics, increasing preferences for sustainable investment, concern over raw material provenance, regulatory changes, the involvement of NGOs, and new plans to nationalize ASM in the DRC—the landscape is set to change significantly over the coming decade, says Roskill.
Roskill’s Cobalt Sustainability Monitor examines the key environmental, social and governance (ESG) factors which face the industry. The monitor includes an analysis of CO2 emissions associated with production, both now and in the future, as well as information and a discussion regarding artisanal mining and child labor practises and their prevalence within the supply chain.