The True Extent of the DRC's Artisanal Cobalt Industry?

Source:crugroup?

Artisanal cobalt mining has been the focus of lot of media attention since mid-January following the publication of an Amnesty International report that highlighted the hazardous conditions faced by artisanal miners in the DRC (Democratic Republic of Congo). The report stated that children as young as seven were directly involved in mining cobalt that is ultimately used in electronic devices such as Smartphones and laptops. CRU has identified a number of processors located in southern DRC that sell concentrates believed to be principally derived from local small scale and artisanal operations. CRU estimates that these processors purchased around 10,500 tonnes of artisanal cobalt in 2015 alone - equating to around 10% of global annual mine supply. Even though positive steps are being taken to reduce "un-regulated" mining it is unlikely that artisanal supply will be faded out in the next ten years. 

How Does the Supply Chain Work?

The DRC is responsible for around 60% of global cobalt mine supply and accounts for the vast majority of artisanal cobalt units that enter the supply chain. Approximately 100,000 diggers, sorters and washers are likely to work in the trade, commonly earning just $3/day. Artisanal miners often work independently and sell their ore to local "co-operatives" who leave little room for bartering and rarely take into account fluctuations in metal price and exchange rates. The ore is then sold to local merchants and traders who in turn sell to international traders or operating mines that have established transport links. The vast majority of artisanal units mined in the DRC head into the technology supply chain via China, who, based on CRU estimates, accounted for around 50% of global refined cobalt production in 2015 and are the world's leading supplier of refined chemicals to the rechargeable batteries sector.

What is the true extent of artisanal supply?

Due to the complexity of the supply chain and the guarded nature of companies involved in purchasing artisanal cobalt, it is difficult to estimate the extent of artisanal cobalt production. CRU has identified a number of processors located in and around Kolowezi, Likasi and Lubumbashi that sell concentrates believed to be derived from local small scale and artisanal operations. CRU estimates that these mines supplied approximately 10,500 tonnes of cobalt in concentrate in 2015 alone. This equates to around 17% of the DRC's mine production and approximately 10% of global annual mine supply in 2015. Indeed, if artisanal mines represented their own nation, they would be the world's second largest producer of mined cobalt, exceeding Russia and Australia by around 4000 tpy each.

NGO's are concerned that the unregulated nature of artisanal mines makes them susceptible to unethical practice including substandard working conditions and the use of child labourers. In 2012, UNICEF  estimated that approximately one third of artisanal miners in Southern Katanga were children. If we assume that a maximum of 3,500 tonnes of cobalt was mined by children in 2015 and that global production was around 110,000 tonnes, then recent claims that "half of the cobalt in our batteries is mined by children" are clearly overestimated. Despite this, the scale of the problem is still severe and NGOs will continue pressuring leading technology companies to reassess and monitor their supply routes.    

  Figure 1 cobalt insight

What is the future of artisanal supply?

There are three main reasons for artisanal material to leave the market - increased government restrictions, increased regulation by end-use companies and variations in metal prices that inhibit the purchasing of material by international traders. Based on current price forecast and increasing regulations, CRU estimates that artisanal output could decrease by 25-30% by 2020.

The DRC government has taken positive steps to increase the mechanisation of projects and improve its control of natural resources to reduce illegal and unethical exploitation. A number of artisanal cobalt projects now only employ adults that have undergone prior training by SAESSCAM - the government agency responsible for monitoring artisanal operations. These measures are helping limit unethical activity whilst maintaining the livelihoods of those that rely on the industry. A number of major mining and refining companies have already made commitments to ensure that they do not purchase materials from artisanal sources. Over the next few years, technology companies will increasingly favour these companies leading to a reduction in demand for artisanal activity.

Unlike by-product output, which accounts for 80-85% of global production and is primarily driven by developments in copper and nickel, artisanal ore is handpicked for the cobalt content alone. Consequently, the extent of artisanal supply shows a clear correlation with cobalt prices. Despite this, artisanal production is also inherently linked to copper and nickel prices. Today CRU estimates that 30-35% of cobalt units come from loss making operations (mostly nickel). If some of these operations are forced offline due to low base metal prices, we could see artisanal units filling the void in supply. However, the reduction in DRC mine production could also be nullified as Sicomines continue to ramp up production, as Glencore increase output at Mutanada and restart Mopani and as Eurasian Resources Group (ERG) bring their Roan Tailings Reclamation project online.

| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 |



Mining industry must spread social and environmental progress to small-scale mines

  1. Artisanal and small-scale mines, normally operating in the informal economy, produce a big chunk of the minerals we use every day -- about a fifth of the world's gold produced each year, for example. …
  2. {read by 20 people}


Artisanal miners being duped

  1. Fidelity Printers and Refiners (FPR) said on Monday artisanal miners, who are contributing significantly to the country's gold production, were being duped by middle-men who are buying the yellow meta…
  2. {read by 33 people}


How a young German director documented illegal gold mining in Ghana

  1. Filmmaker Johannes Preuss has received a student Oscar for his film, "Galamsey," which was shot in Ghana and looks at the illegal gold trade there. DW met him to discuss how the country could "turn in…
  2. {read by 53 people}


Gold war in Colombia: traditional miners against the state

  1. Luz Dary has spent more than half of her life in the mine. This 47-year-old Colombian woman is a chatarrera, a scrap collector: she toils away, every day, from six in the morning to six at night, alon…
  2. {read by 54 people}


Daily Grind: Women Stone Crushers Feed Demand for Construction in Kenya

  1. KISII, KENYA - On a fine afternoon in Nyantitira village, about 192 miles (310 km) west of Nairobi, Gladys Nanzala emerges from her house armed with a spade, a bucket and a few sacks. She is heading b…
  2. {read by 49 people}


SA's influence felt in start of African tin mine

  1. Two global events have led to development of a long-dormant deposit at Bisie - in thick forest in the war-torn corner of the Democratic Republic of Congo - in what will become Africa's only formal tin…
  2. {read by 72 people}



khjg