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Beyond tin, tungsten, tantalum and gold – Cobalt mining in the DRC

Just over a year ago, Amnesty International published its This is what we die for report to highlight human rights abuses in the Democratic Republic of Congo (DRC) in relation to the mining of cobalt.

Supply chain
The DRC, one of the poorest countries in the world, accounts for over half of the world’s supply of cobalt, a mineral widely used in smartphone devices and batteries in electric vehicles. The report called on the world’s leading electronics and car companies to take action, just months after the introduction of the UK Modern Slavery Act. The Act requires companies with a yearly turnover of over £36 million ($44.1 million) to publish an annual statement that outlines the steps they have taken to ensure that slavery and human trafficking do not occur in their businesses or global supply chains. The Cobalt Pipeline report by the Washington Post added to the momentum by featuring artisan miners working barefoot and digging with their bare hands, and without any health and safety measures.

Industry initiatives
To address this issue, there have been a number of positive steps made by policy-makers and the technology industry.

The OECD and the Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), a unit of China’s Ministry of Commerce, had its first meeting in May 2016 to examine the application of the OECD due diligence guidance on responsible supply chains in a Chinese context. The reports mentioned above had cited a few Chinese smelters and refiners as crucial to the cobalt supply chain, stating that 90% of China’s cobalt originates from the DRC.

In November 2016, the EICC launched the Responsible Raw Materials Initiative with 20 founding signatories that are also its members, including Apple, Cisco, Dell, Ford Motor, Google, HP, Intel, Lenovo, LG Electronics, Microsoft, Sony and Samsung Electronics.

In the same month, the CCCMC- and OECD-supported Responsible Cobalt Initiative (RCI) began with commitments from companies such as Apple, Huawei and Sony, as well as upstream players, including battery manufacturers such as Samsung SDI and Chinese smelters and refiners such as Zhejiang Huayou.

Investor action
In parallel, in 2016, a concerned group of investors decided to take action. For us, this meant contacting a number of companies which featured in the reports, but we soon realised that merely engaging with companies is insufficient given the complexities of the global supply chain. Many downstream companies are several tiers removed from cobalt processors and refiners and have little visibility beyond their direct suppliers.

As part of our engagement, we spoke to the first tier suppliers of the companies concerned, including battery and product manufacturers, and approached the industry association responsible for setting up the Conflict-Free Smelter Program audit, the Electronic Industry Citizenship Coalition (EICC), in order to work collaboratively with companies on the responsible sourcing of cobalt.

We identified a number of critical components in the auditing systems of supply chains, such as transparency in the audit process, the need for metrics that go beyond conflict and security risks and more granular information about the individual mines to be able to address human rights issues, such as forced and child labour. In our engagement, we observed that companies often lack the expertise and resources to conduct human rights due diligence at the mine level. This highlights the need for working closely with local governments and communities and supporting collaborative platforms which facilitate the sharing of costs, expertise and access to a wider range of companies.

In January 2017, we were invited to attend the EICC board meeting and outreach seminar in Brussels, where we provided the investor perspective. We called for a project platform among the existing initiatives to direct funding to a range of coordinated due diligence and community building activities aimed at tackling child and forced labour issues. We believe that funding should also focus less on projects and more on topics and needs – such as education, healthcare, access to information – in order for a holistic programme on the cobalt supply chain to work effectively and cost efficiently.

We encouraged companies to adopt the concept of a circular economy by re-using minerals, such as cobalt, that have already gone through the human rights due diligence cycle, to reduce waste and costs. We also want them to consider using block chain technologies to identify human rights issues and trace minerals without having to disclose to third parties the name of the suppliers, which may help them maintain their competitive advantage. Finally, we suggested that there is an opportunity to improve the reporting guidelines on human rights issues for association members, referencing the UN Guiding Principles Reporting Framework, integrated reporting and the Sustainability Accounting Standards Board as good examples.

The multi-party conversation continued in February 2017 when it also involved upstream refiners and smelters. We again promoted the shareholder voice at a CCCMC-organised meeting behind closed doors and gained insights into the pilot work conducted in the DRC, which has been sponsored by five RCI founding members.

Outlook
The momentum among the companies committed to the pilot is promising, and we look forward to further positive actions in relation to the management of human rights risks in cobalt supply chains. We will encourage companies that could benefit from collaboration to join the available initiatives and make a contribution to addressing human rights issues.

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Magnus Kristensen, Director - Business Development, Nordics
Paul Voute, Head of European Business Development