Cobalt sourcing risks remain high on the agenda

By RCS Global Group

The Democratic Republic of Congo (DRC) is estimated to supply two thirds of global cobalt used for battery manufacturing. Unfortunately, the country also constitutes one of the weak links in responsible global supply chains. This past month is no exception although efforts by different stakeholders are taking shape to catalyse change and address concerns around cobalt responsible production and sourcing by upstream and downstream companies and stakeholders alike.

Incident monitoring highlighted the continuing high risks in the DRC not only in terms of serious human rights abuses but also weak Occupational Health and Safety (OHS) practices and fragility of traceability systems.

To answer these concerns, German car manufacturers have reached strategic decisions characterised by divergent approaches. While Daimler announced its partnership with the non-profit Good Shepherd International to support forward-looking educational projects in the Congolese Copperbelt, BMW’s determination to cease cobalt sourcing from the country by 2020/21 appears to be a short-term view with potentially negative consequences for the local economy.

The Munich-based automaker’s choice is supported by the expanding attempts to find cobalt deposits outside conflict-affected and high risk areas (CAHRAs), a goal promoted by major investments including the Gates-sponsored Breakthrough Energy’s financing of Kobold Metals.

Perhaps in response to these developments that shift attention away from the DRC, the new Congolese government has increasingly tried to reassure investors and customers to keep sourcing from the country through direct engagements with stakeholders. The new president, Felix Tshisekedi, recently met with downstream and upstream companies during a private event in Washington D.C. while the government announced the organisation of a mining conference in Kolwezi.

The government will further maintain the moratorium on exports of concentrated cobalt and copper products, which allows miners to ship raw materials to overseas refiners.

Cobalt has also been at the centre of responsible sourcing policy developments this month, including in the European Union (EU). The European Commission has drafted a new law requiring ICT companies to disclose the amount of the mineral used in their products.

Based on the efforts of the European Commission’s European Battery Alliance to place the union on the world map of sustainable battery minerals supply chains, RCS Global foresees the inclusion of certain new metals in subsequent revisions of the EU Conflict Minerals Regulation 2017/821.

This general focus, spurred by the electric vehicles (EV) market growth, remains a critical point of engagement and scrutiny by international NGOs as well. For example, Amnesty International is increasing the scope of its cobalt responsible sourcing research, and partnering on tackling environmental issues with Greenpeace. Furthermore, the Brussels-based NGO Resource Matters is scrutinising corruption-related issues in the cobalt industry.

Lastly, beyond cobalt, other minerals have also been the topic of important updates in the field of responsible sourcing. The industry’s response to the Vale disaster prompted the development of a new standard in partnership with the International Council on Mining and Metals (ICMM), the United Nations Environment Program (UNEP) and the Principles for Responsible Investment (PRI), with best practices being established by the Global Minerals Professional Alliance (GMPA).

Metal-specific sourcing standards are also on the rise with the World Gold Council consulting on the Responsible Gold Mining Principles and the Responsible Minerals Initiative (RMI) defining a revised methodology for its Risk Readiness Assessment (RRA). In this context, the upcoming OECD Forum to be held in Paris will likely see exciting announcements in sustainable mineral supply chains.

The RCS Global Group provide intelligence, advisory and auditing in minerals responsible sourcing with a focus on battery metals, including cobalt and 3TG.

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