Teaching case: Digging into the ethics of cobalt mining
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Demand for electric vehicles has increased sharply in response to concern about climate change. Yet battery-powered cars and trucks depend on cobalt, a mineral found primarily in the Democratic Republic of Congo (DRC), where child labour and unsafe mining conditions are common. The typical battery for an electric vehicle contains about 8kg of cobalt and global demand is projected to triple by 2035.
At least 70 per cent of cobalt comes from the DRC, of which between one-sixth and one-third is produced by informal or artisanal small-scale mining (ASM). Operating on the periphery of large industrial mining sites, ASM miners use makeshift methods to dig deep tunnels from which they collect cobalt ore and employ an estimated 25,000 children. Because of the proximity of informal and formal operations, and a lack of effective regulation, artisanal operations are intrinsic to the overall cobalt supply chain.
The challenge of making mining accountable
Most car-manufacturing and electronics companies try to avoid including ASM cobalt in their supply chains. They regard it as a risk to their reputation, a perspective reinforced by investors. Aware of this concern, large mining companies such as Glencore, based in Switzerland, typically assert that their output includes only cobalt from large industrial mines. However, the situation is complex.
Every day, tens of thousands of people in the DRC try to scrape out small amounts of mineral ore on the periphery of the large-scale mining operations. They sell the cobalt to local traders, most of whom are Chinese. The traders then send the ore to refineries in the DRC and later in China, where almost 80 per cent is processed. These intersections during extraction and refining make it virtually impossible to separate ASM cobalt from industrially mined material.
To improve working conditions in ASM operations, companies need to set and enforce basic human rights standards at artisanal mine sites. This means controlling access, enforcing strict safety protocols for extraction processes (such as tunnel depth) and requiring the use of boots, helmets and other personal protective equipment.
Formalisation will also empower women workers, helping overcome traditional superstitions that they bring bad luck to mine sites and increasing household income, which enables families to send their children to school rather than to work in the mines. This model was successfully tested by the Swiss trading firm Trafigura at the Mutoshi mine from 2018 until early 2020, when operations were suspended because of Covid-19.
These measures come with costs that most companies are not willing to absorb. While large-scale operators acknowledge pressing human rights issues in artisanal mining sites, they enter extraction contracts that exclude ASM to avoid these risks and costs in their operating environment.
Politics and bureaucracy slow progress
The weakness of the DRC government has impeded progress. The government launched its Responsible Sourcing Standards for artisanal cobalt production in 2021 and created the Entreprise Générale du Cobalt (EGC), a new state entity to regulate the buying and selling of artisanal cobalt. It seeks to ensure that only artisanal cobalt extracted in accordance with the standards can be shipped out of the country. But to date, they exist only on paper, and the EGC has not begun to operate, hampered by political and bureaucratic problems.
Because of a temporary oversupply of cobalt, artisanal miners have also started digging for copper on the same ASM sites. This will require the expansion of responsible sourcing standards to include both cobalt and copper.
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European governments are enacting various regulations on the sourcing of cobalt, such as the new German Supply Chain Due Diligence Act, which requires companies doing business in Germany to address labour rights issues throughout their supply chains. The EU is developing similar requirements for all 27 member states.
Pressure is likely to increase as more electric vehicles come onto the market — partly because the EU and other governments are demanding the phasing out of those with combustion engines. Yet activists argue that companies such as Glencore and large western auto and electronics businesses are still failing to take the stringent, effective measures needed to ensure basic human rights standards in the ASMs.
Instead, they have joined various industry-led initiatives such as the Global Battery Alliance, the Fair Cobalt Alliance and the Responsible Minerals Initiative, which express concerns about child labour and mine safety, but do not require the participating companies to engage directly in formalising artisanal mining, for example by bringing it within their own business operations.
Read the articles below and consider the questions:
• Artisanal mining: the struggle to clean up a murky industry
• Cobalt Mining in the Democratic Republic of the Congo
Should businesses in the cobalt supply chain, such as automakers and electronic companies, seek to address the human rights risks in artisanal cobalt mining in the DRC regardless of whether they directly or indirectly procure material from the country?
How should these companies respond to EU regulation of global labour supply chains?
How should companies collaborate to develop mine safety and child labour standards at artisanal mining sites? To what extent should they involve Chinese-owned companies?
What steps does the DRC government need to take to strengthen its regulatory framework for ASM cobalt? What can western governments do to expedite and support its efforts?
Michael Posner is director of New York University Stern Center for Business and Human Rights. Dorothée Baumann-Pauly is head of the University of Geneva Center for Business and Human Rights