The Democratic Republic of Congo (DRC) has taken a major step towards consolidating its control over the global cobalt market, a key metal for the transition to clean energy. The state-owned mining company Gecamines and its subsidiary Entreprise Generale du Cobalt (EGC) have signed an agreement granting EGC exclusive mining rights to five mining areas, the firms said on Wednesday.
The deal, which was announced at the Investing in African Mining Indaba conference in Cape Town, South Africa, gives EGC the sole authority to buy, process, and sell all the artisanal cobalt produced in the DRC, the world’s top producer of the metal. Cobalt is a vital component of lithium-ion batteries, which power everything from smartphones to electric vehicles (EVs).
EGC was created by a government decree in December 2019, to regulate the informal sector of cobalt mining, which accounts for about 20% of the country’s output. According to Gecamines, the move will help to standardize the quality and traceability of the cobalt, as well as to ensure fair prices and revenues for the miners and the state.
“The provision of these five mining areas from Gécamines to EGC will mark the beginning of the standardization of artisanal cobalt mining and the structuring of local entrepreneurship,” Gino Buhendwa Ntale, EGC chairperson, said in a statement.
The agreement comes amid a surge in demand for cobalt, driven by the global shift to green energy technologies. According to the International Energy Agency (IEA), the demand for cobalt could increase by more than four times by 2040, under a scenario that aligns with the Paris Agreement goals. The DRC currently supplies about 70% of the world’s cobalt but faces competition from other countries, such as Australia, Canada, and Indonesia, that are ramping up their production.
The DRC also faces challenges in ensuring the ethical and sustainable production of cobalt, which has been linked to human rights abuses, environmental damage, and corruption. Many artisanal miners work in hazardous conditions, with little or no protection, and are often exploited by middlemen and armed groups. Some of them are children, who are exposed to high levels of radiation, dust, and toxic chemicals.
The DRC government has pledged to improve the governance and transparency of its mining sector and to comply with international standards and initiatives, such as the Responsible Minerals Initiative (RMI) and the Extractive Industries Transparency Initiative (EITI). It has also joined the Minerals Security Partnership (MSP), a multinational collaboration of more than a dozen countries and the European Union, to invest in a responsible and diversified critical minerals supply chain.
The MSP, which was launched in June 2022, aims to support projects that adhere to high environmental, social, and governance (ESG) standards, promote local value addition, and uplift communities. The MSP has already signed a memorandum of understanding with Gecamines and Japan’s Jogmec, to facilitate European and Japanese investment in the DRC’s mining sector.
“This is a MOU that will expedite European and Japanese investment in the mining sector in the DRC, and it’s also a powerful demonstration of the MSP’s efforts to secure and diversify critical mineral supply chains,” US Under Secretary of State for Energy Jose W. Fernandez told a media briefing.
The DRC’s cobalt monopoly could be a game-changer for the country’s economy and development, as well as for the global energy transition. However, it also comes with significant risks and responsibilities, that require strong political will, effective regulation, and international cooperation. The DRC has a unique opportunity to leverage its mineral wealth for the benefit of its people and the planet, but it must also ensure that it does not repeat the mistakes of the past.
Source: Mining Weekly
