Trafigura enters artisanal cobalt offtake with DRC government body

Commodities trader Trafigura and local government body Entreprise Générale du Cobalt (EGC) have penned an offtake agreement specifically for the supply of artisanal cobalt in a deal designed to concurrently formalize the sector.

This could make artisanally mined cobalt in the Democratic Republic of Congo (DRC) a more attractive prospect to multinational companies that demand greater supply chain transparency and wish to only buy cobalt free from child labor.
It is the latest is a series of actions taken by companies in the cobalt supply chain to invest in the artisanal sector to professionalize it, securing jobs for locals who rely on artisanal mining for an income and simultaneously help remove child labor from the sector.
Glencore, the world’s largest cobalt miner, earlier this year announced the creation of a body aimed at developing working standards in the artisanal mining sector called the Fair Cobalt Alliance. Two weeks later, it was joined by electric vehicle manufacturer Telsa.
EGC is a DRC government enterprise which “holds the monopoly for the purchase, treatment, transformation, sale and export of cobalt extracted by artisanal miners or artisanal mining companies in the DRC,” according to a jointly-made press statement released on Monday November 23.
“EGC has been entrusted with the mission of organizing and supervising artisanal and small-scale mining of cobalt in the Democratic Republic of the Congo, by developing a responsible value chain,” the statement added.
Trafigura will be providing finance “to further creation of strictly controlled artisanal mining zones, the installation of ore purchasing stations and costs related to the transparent and traceable delivery of cobalt hydroxide to Trafigura on an export cleared basis,” the press release said.
The press release did not disclose the volumes of the offtake deal.
Through the deal, the EGC will ensure all ore marketed by Trafigura complies with Organization for Economic Co-operation and Development (OECD) due diligence guidance.
“Artisanal mining provides an important livelihood in the DRC. Ultimately, the legitimacy of efforts to formalize and bring controls to the sector will depend on broad-based consultation and assurance that OECD standards will be upheld. We will continue to engage and collaborate with stakeholders to be part of the solution to supply cobalt responsibly,” Jeremy Weir, executive chairman, Trafigura, said.
More than half of the global supply of cobalt comes from the DRC, with Glencore estimating that in 2019 about 11% of exported cobalt from the DRC was from artisanal mines.

Michael Greenfield

michael.greenfield@fastmarkets.com

Published

Michael Greenfield

November 23, 2020

17:07 GMT

London