Congo, child labour and your electric car

Industry

2019-07-07 / www.ft.com




Kongolo Mashimango Reagen used to spend his days carrying 25kg sacks of cobalt from small mines in a southern corner of the Democratic Republic of Congo, which is so rich in minerals that large deposits can be found just metres below the surface. 

Those days in Kolwezi would start at 5am and accidents were common as tunnels dug by hand in the bright red earth collapsed. Miners drank beer, whisky and smoked to get through the day, he recalls. His uncle sold the cobalt - a critical metal for electric car batteries - to local traders known as négociants, and Kongolo received free food and accommodation as his payment.

 "It was very tiring, very difficult," he says, standing on the edge of a makeshift football pitch by a school in Kolwezi in the DRC's south-east. "I watched too many collapses. I have seen children dying in the mines." The 17-year-old escaped the mines and now attends the school with the help of Good Shepherd, a Catholic charity.

The world's largest mining companies rub shoulders with miners who dig copper and cobalt out of the earth by hand with little or no safety protection. 

 While the majority of Congo's cobalt comes from large mining sites where rock is dug up by trucks from the bottom of deep pits, a growing proportion is coming from an estimated 150,000 "artisanal" or informal miners who dig by hand in Kolwezi. The unregulated practice is increasingly drawing in children like Kongolo. And last year accounted for an estimated 30 per cent of Congo's cobalt - the country mines more than 70 per cent of the global total - according to Gecamines, Congo's state-owned miner. 

Congo's dominance presents a growing dilemma for carmakers and those in the supply chain as they look to meet a rapid increase in demand for electric vehicles and batteries. If they try to improve conditions on the ground they face a series of additional risks, from the threat of corruption to monitoring and enforcing measures to avoid deaths from informal mining and the presence of children on these sites. And while manufacturers cannot afford to ignore Congo they must also know that untraceable metal - from these informal miners - leaks into the global supply chain via refineries in China, ending up in batteries, cars and smartphones sold in the west. 

 Thanks in part to high cobalt prices in 2018, a lot of this activity now takes place within the sites of the large mining groups, including Switzerland-based Glencore and Hong Kong-listed China Molybdenum, which sprawl across large areas of border villages. In June 43 informal miners died when part of a pit collapsed at Glencore's largest mine outside Kolwezi. State authorities sent the army to the site as well as China Moly's giant copper and cobalt mine 90km east in Tenke Fungurume to remove up to 10,000 informal miners who were trespassing.

The provincial Lualaba government wants to formalise the sector by corralling miners into licensed co-operatives that are allowed to mine in authorised zones as a way to reduce accidents and the presence of children.

The scale of the challenge can be vividly seen in the bustling village of Kasulo, on the outskirts of Kolwezi. In early 2014 residents discovered rich seams of cobalt beneath their houses. But after people started to dig in their gardens, cracks began to appear in the houses triggered by the mining frenzy. 

Facing the risk of a full-scale collapse of the village, the Lualaba authorities evacuated all 600 households from the site in 2017. The relocation was financed in part by China's largest cobalt producer Huayou Cobalt, a $3.6bn company listed on the Shanghai Stock Exchange that is a supplier to some of the world's largest battery companies including South Korea's LG Chem. In return, Huayou has the right to buy all the copper and cobalt from the area. 

After the 40-hectare area in Kasulo was cleared of houses a perimeter wall was erected around the site.About 600 miners work on the site, down from around 5,000 last year, though this is partly due to the fall in cobalt prices from a 10-year high of over $40 a pound in early 2018 to $13.50 a pound, according to Fastmarkets. 

The miners are organized into co-operatives which take a cut of the number of bags sold by the workers in return for assistance such as covering medical bills, helping family members in the case of death and representing the miners at political meetings. After digging the cobalt, the miners take their sacks to be crushed, weighed and graded in on-site depots, after which the material is authenticated and sold to local traders and then to Huayou. 

RCS Global, a UK supply chain audit is monitoring the site. A smartphone app is used to report accidents or deaths, or forced labour. These reports go straight to a central data point - with immediate alerts sent to Huayou.The theory is that if conditions on site deteriorate, RCS can directly push Huayou to help improve them, since the data can be shared with its customers.

In the three months after the project began operating in July 2018, there were three deaths, but since then there have been none, RCS says, and the company is looking at scaling up the model to other sites in Congo.

The Good Shepherd charity, which helps children leave mine sites by providing free schooling, decided to end its engagement with Huayou over concerns about the relocation of the residents and their compensation packages. Emmanuel Umpula Nkum of African Resources Watch, a local non-governmental organisation, says local miners should be able to sell their cobalt to whoever they want to rather than being forced to sell all their metal to one company, Huayou.

 Cobalt mining in numbers 

 There are around 200,000 informal copper and cobalt miners in the DRC- Source: Trafigura

72% Portion of cobalt that came from Congo last year - Source: Darton Commodities

Carmakers and cobalt buyers have been reluctant to source from the Congo, one of the poorest countries in the world that is also ranked as one of the most corrupt. In April BMW told an OECD conference that it would source its cobalt for its electric cars from Morocco and Australia and not the DRC. 

Belgian-based Umicore, the largest producer of battery materials in Europe, whose predecessor company Union Minière recruited forced labour to mine copper in the region in the early 20th century, says it does not buy from informal sites in the country. Instead, in May Umicore announced a long-term deal to buy cobalt from Glencore's mines in Kolwezi. 

But the deaths of the 43 miners on June 27 at Glencore's site has increased pressure for a solution because many informal miners operate on land that is part of official concessions. Glencore says about 2,000 informal miners a day trespass on the site of its Kamoto Copper Company mine outside Kolwezi, which stretches over 21 sq km and is next to a community of around 250,000 people. 

The deaths occurred after the miners entered the site's main pit, which is around 6 sq km wide. To prevent similar incidents, the company is digging trenches to make it more difficult to gain access and collapsing dangerous areas of the pit, Glencore says. 

For Huayou's clients there is no way of knowing whether the cobalt comes from an industrial or informal mining site since it is all mixed at Huayou's plant in the DRC before being exported to China.

Carmakers should know the source of their cobalt and lean on their suppliers to improve conditions on the ground, says Tyler Gillard, head of the OECD's responsible business conduct unit. 

"We are supportive of industry efforts to engage with the mining community, despite the risk. The challenge is how to manage that risk and communicate it properly. Disengagement is not the right approach, but the threat of disengagement has to be real and combined with technical and financial support to drive improvement."

Swiss commodity trader Trafigura, which is one of the largest buyers of Congolese cobalt and copper, says artisanal-mined minerals can be a source of supply for carmakers. When Trafigura signed a three-year deal to buy all the cobalt produced from DRC-based Chemaf last year, it faced the problem of how to manage the more than 5,000 informal miners working on the site near Kolwezi. 

Miners were regularly dying in tunnels that went as deep as 100m into the earth, recalls James Nicholson, head of corporate responsibility at Trafigura. Today the site has been fenced in and the miners are provided with hard hats and overalls. The project has helped reduce deaths to zero this year from about 14 last year before controls were introduced, Mr Nicholson says. 

 Congo has a limited window of time to fix its informal mining problem before cobalt is replaced in electric car batteries by other minerals, he says.

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