Monopoly for Cobalt now in the hands of the Congolese government

The Democratic Republic of the Congo (DRC) has officially launched Entreprise Générale du Cobalt (EGC), a state-owned company with monopoly rights to buy and sell the country's artisanal cobalt.   EGC, which was founded a year ago to control artisanal supplies and increase government revenue through price controls, will sell cobalt hydroxide under a five-year contract with trading house Trafigura. The non-exclusive supply agreement also stipulates that Trafigura will finance the establishment of strictly controlled artisanal mining zones, shopping centers and logistics to track deliveries. The Democratic Republic of the Congo has approximately 70% of the world's cobalt reserves, which are critical to the lithium-ion batteries of the fast-growing electric vehicle (EV) sector. The artisanal miners in the Congo are the second largest source of cobalt in the world after the country's industrial mines. Consulting firm CRU estimates the DRC will produce more than 100,000 tons of cobalt this year, accounting for 71% of the world's total, of which 8,000 will be from artisanal sources. Child labor and a lack of safety measures in artisanal mining are the reason for many initiatives to formalize the sector. According to Amnesty International, children in the Democratic Republic of the Congo were found tracing cobalt-bearing rocks as young as seven years old. The group also claims to have evidence that the cobalt these miners mine has found its way into the supply chains of some of the largest brands in the world. "All of us who are involved in this endeavor are determined to work transparently with our stakeholders to ensure that we work together to create effective solutions for responsibly sourced cobalt," said Jeremy Weir, Trafigura Executive Chairman and CEO, in the statement. "Ultimately, we believe that a formalized artisanal mining sector can change lives and act as a catalyst for economic growth in the DRC," he said. Refurbish the image of the sector Electric car makers like Tesla and Volkswagen recently promised to improve working conditions in the Democratic Republic of the Congo. The metal, a by-product of copper or nickel, is an essential metal in the production of batteries that power electric vehicles and high-tech devices. China's largest cobalt producer, Huayou Cobalt, which supplies both LG Chem and Volkswagen, said last year it would no longer buy from artisanal miners in the Democratic Republic of the Congo. Trafigura has been involved in efforts to monitor and improve the artisanal cobalt mines in the Central African nation since 2018. That year it opened a pilot project to formalize informal miners at Chemaf Sarl's Mutoshi mine. After Trafigura raised $ 450 million for the facility in 2019, the project was suspended in March last year due to the global pandemic. Official figures show that more than 200,000 people earn their living mining cobalt and copper in Congo's southeastern Katanga region. EGC is a wholly owned subsidiary of the state mine operator Gécamines. The new company has not disclosed the terms of its agreement with Trafigura.