Cobalt mining in the DRC

In November 2019, I had the opportunity to visit Kolwezi in southern DRC to meet local stakeholders and visit mining sites and trading centres. It was a terrific opportunity to hear from people on the ground about what can be done to improve the situation. It was clear that a comprehensive and collaborative approach is needed. Supply chains can look neat and orderly on paper; the reality is often complex and messy. What struck me in particular was the close connection between ASM and LSM operations. Their proximity and the intermingling of materials at the refiner level is a challenge for any company that wants to source cobalt in a responsible manner. And a responsible approach needs to include both types of operation. I visited sites where formalised artisanal mining has been implemented with access control and continuous monitoring of working conditions, creating significant improvements. This demonstrates that ASM can be carried out in a more responsible way. Considering the risks and negative publicity associated with ASM operations, it can be tempting for companies to adopt LSM-only sourcing policies, but these are unlikely to be effective. Artisanal mining represents an important source of income for impoverished communities, which exclusion would likely exacerbate. Large-scale mining poses different risks. Tax avoidance, money laundering and corruption, and use of excessive force by security forces have been reported. The implication is that comprehensive due diligence is needed. Several initiatives to improve conditions exist, including the Responsible Mining Initiative and the Global Battery Alliance. Specific projects, such as Better Cobalt, aim to provide traceability and continuous reporting of working conditions. The UN Guiding Principles and the OECD Due Diligence Guidance provide a process for how to approach high-risk supply chains. The OECD roundtable gathered together a wide range of stakeholders along the value chain. It was an opportunity to listen to local stakeholders and develop a better understanding of community impact and dynamics. As the only investor representative present, I shared our perspective on how investors can support improvements. The local environment is also changing. Initiatives by the DRC government, such as a new trading centre, have the potential to create fairer trading conditions and increase traceability. It has also stated the need to control the artisanal supply chain and provide greater oversight of working conditions. Companies need to assess how to leverage such initiatives to drive improvements in their supply chains.