Responsible sourcing progresses despite setbacks linked to army intervention in DRC industrial mines

By RCS Global

Much news has spurred from the Democratic Republic of Congo (DRC) of late. While rumours are swirling around a potential sale of Eurasian Resources Group (ERG) Congo assets, downstream OEMs and other companies should carefully monitor the impacts of the drop in global copper prices and the decline and subsequent rebound of cobalt prices, due to Glencore’s bombshell decision to place the Mutanda operation into care and maintenance at year end.

Much of the local population in the DRC’s copper belt remains dependent on artisanal and small-scale mining of copper and cobalt. And a squeeze in prices, coupled with a hardline approach by key industrial miners to intrusions on their properties have resulted in protests and violence.

The deployment of the Congolese army at Kamoto Copper Company (KCC)’s KOV mine site and at Tenke Fungurume Mining (TFM) operations as a security response to systemic intrusions by artisanal miners and highly mobile waste rock gatherers shows heightened tensions. Reports from on-the-ground organisations and news outlets highlights growing concerns around violence due to the deployment of these military units, including that shots have been fired, homes of dozens of farmers and miners’ were torched and a lady perishing at TFM.

Drawing on the Army is a high risk development, given the Congolese Army’s past Human Rights record coupled with a prevalent sector wide under investment into the training of security forces in the Voluntary Principles on Security and Human Rights. As a risk listed in Annex II of the OECD Due Diligence Guidance, the involvement of public military forces in the sector should trigger increased supply chain due diligence by supply chain actors.

Amnesty International’s public statement on this issue underlined the risks of increased violence in and around the mine sites and provided companies with recommendations. Calling for the withdrawal of the army from the mine sites, the international organisation is also asking big miners to engage with ASM producers and their representatives to develop authorised and viable mining zones.

Industrial miners often hold large land masses, some of which could be considered as ASM zones, but the process of delineating areas for ASM mining is fraught with difficulties and one that industrial mining companies only reluctantly engage in, as it exposes them to numerous risks. The fact that large brands like BMW, BASF and Samsung SDI and Huayou Cobalt (as a critical supplier to the global automotive, battery and electronics industry) are investing in pilot ASM sites is a sign that this attitude may change over time, as risks can be spread across actors in the entire supply chain, creating incentives for companies to work together to effect change.

Still in the cobalt market, Umicore announced that its Belgium-based Olen refinery received full certification against the Responsible Minerals Initiative (RMI) Responsible Minerals Assurance Process (RMAP) specific to cobalt. This first of a kind certification occurred at a critical time for responsible supply of cobalt and may well push other refiners to follow the same path. It also parallels the increasing integration of the cobalt market, with companies increasingly present in every stage of the minerals transformation. In this sense, LG Chem’s decision to invest $424 million to build a significant cathode plant will result in further market rationalisation simplifying supply chain due diligence.

Multiple publications recently have also highlighted the pressure on corporate actors to enhance due diligence processes and increase their responsible supply. While PricewaterhouseCoopers (PwC) highlighted the materiality of environmental, social and corporate governance (ESG) practices for mining companies, the Responsible Mining Foundation (RMF) released the methodology of its 2020 Responsible Mining Index (RMI), the leading assessment report of large-scale miners sustainability. Finally, the green transition is also under scrutiny with the Business and Human Rights Resources Center (BHRRC)’s survey of 109 companies highlighting their generally poor performance on Human Rights issues.

Lastly, non-battery minerals have also been at the forefront of responsible sourcing developments. The jewellery industry’s leading certification body, the Responsible Jewellery Council (RJC) has been criticised by 27 civil society organisations, including Human Rights Watch (HRW), for the lack of expectations in the 2019 update of the Code of Practice (CoP) regarding diamonds. In the meantime, an accident in a jade mine in Myanmar leading to 14 deaths reflects similar incidents in the past six months and underlines the need for increased scrutiny in the sector. Finally, the 3TG industry is still at the center of attention with the European Partnership for Responsible Minerals (EPRM) awarding Optima Mines and Minerals the development of a traceability scheme in Uganda aimed at ensuring to safeguard the integrity of the supply chain.

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