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Cobalt is one of the most important raw materials today, without which the production of electric cars, mobile phones and many other technological devices is almost inconceivable, devices that have now become an integral part of daily life in the most of the world. And between half and three-quarters of the amount of cobalt entering the world market comes from just one country, the Democratic Republic of the Congo. And there, they are aware of the value that cobalt places the country in the eyes of the great economic players: for example, as Origo reported, at the cost of unheard-of material sacrifices, an entire city is relocated to access the reserve that hides below. her.
Therefore, cobalt is a killer raw material
But the current cobalt mining practice casts dark shadows. Mining is basically done in two main ways. Industrial extraction is carried out by large international companies with solid technical training. In addition to the companies, there are small-scale (or artisan) miners who work with their rudimentary tools on the surface, in excavations, in cavities. The problem is not in itself that these two extraction methods are mixed in practice, even on one site, although it is a fact that does not help the transparency of the industry. The main problem is that, especially in small-scale mining, the phenomenon of exploitation, forced labor and (illegal) child labor arises from time to time.
The situation is further complicated by the fact that, according to local regulations, child labor over the age of 15 is not considered illegal. However, this circumstance does not affect the fact that some children work in extremely difficult and dangerous conditions in cobalt and copper deposits and some are younger than this.
And a relatively recent development in many of the controversial aspects of cobalt mining is the fact that Congolese families have sued several large corporations, families whose children have died in the mines or suffered lifelong injuries. The true meaning of the case is that this time around, the big companies at the end of the supply chain (cobalt users), Tesla, Applet, Dell, Google’s parent company and some other big-name giants were also sued. Never before has there been an example of this in the world of African cobalt mining, which otherwise reliably delivers discovered violations.
Terrible things could have happened deep in the cobalt mines
Several large companies have been sued for deaths and illicit child labor in cobalt mines in Congo, resulting in the death of several minors. According to a Reuters report, the class action lawsuits may mark the first time that the question of where and how they source the cobalt essential to make their products is becoming a tech giant today.
Therefore, and for various reasons, it may seem surprising that Tesla has now joined an initiative called the Fair Cobalt Alliance. This industry, a non-governmental organization, has set itself the explicit objective of improving the purity of extraction and improving its working conditions by supporting artisanal miners who often work in difficult conditions. This includes the complete elimination of child labor in the mining of gold and cobalt. The alliance was joined by Glencore, an unavoidable player in Congolese cobalt, as well as the large Chinese processing company, Zhejiang Huayou Cobalt.
However, this apparently not very significant development may lead to more far-reaching changes in the future. Based on the Mining.com report, we briefly present the implications that may arise in relation to Tesla and other companies.
Reassure customers
The recent lawsuits against companies are significant because the plaintiffs would not only seek to investigate extraction practices by legal means, but would also enforce the liability of large companies. According to the Congolese families, the companies were aware from time to time of the violations related to the entry of cobalt into the equipment, but did nothing to solve their supply chain. He also briefed Tesla’s shareholders meeting in July on human rights concerns, child labor and corporate risks related to Congolese cobalt.
Although the exact consequences are obviously unpredictable, if companies are doomed, it can even lead to earthquake-like changes in the way their clients and investors perceive companies. This can even result in an immediate (dollarizable) forint, an ugly stock market deterioration. Joining the alliance is nothing more than proving that half of the buyers and shareholders The company takes the issue of ethical cobalt very seriously and, in fact, has zero tolerance for mining-related violations.At the same time, it supports artisanal miners living in difficult financial conditions, as well as seeking technological opportunities to decouple their own products from problematic raw materials such as cobalt and nickel.
More and more cobalt with greater security of supply
Congolese cobalt mining is sometimes not even locally transparent, its conditions are sometimes astonishingly confusing, and certain forms of corruption are not unrelated to the process. And some of the amounts mined by artisanal miners often go back to industrial production and its statistics. This, on the one hand, hides possible abuses against artisanal miners and, on the other hand, makes the emission data uncertain, challenging its authenticity. Tesla and other large cobalt buyers, on the other hand, have an interest in making artisanal miners successful in one way or another, because more and more cobalt is needed.
And artisanal miners can also achieve results in areas where large companies are not worth marching with their enormous technical prowess and energy needs.
The world of miners, this semi-informal sector of the Congo employs tens of thousands of people. Even OPEC has been urging for some time that large companies finally reach a mutually beneficial agreement with these producers and contribute to the development of their activities, generally by manual means. At the moment, it is impossible to jump from the fact that the world needs more and more cobalt. Just one figure shows how important this is: In 2020, the world will demand a total of about 120,000 tonnes, 62 percent of which will go to lithium-ion batteries, which also work in most smartphones. In 2016, demand was still just 94,000 tonnes, with 51 percent going to the battery industry. And by the end of the decade, the demand will increase even more.
The cobalt line lengthens
Tesla has been on incredible momentum for some time, with its stock market value launching in early September (though it has suffered a very serious weakening since then), launching production in Europe and China. Without a doubt, this year is one of Elon Musk’s biggest successes and financial growth. But in addition to his company, classic car manufacturers, from Volkswagen to BMW, want to boost the production of electric cars. Everyone needs cobalt, and a special addition to this is that Tesla had already made a deal with said Glencore in mid-summer to supply cobalt. And this is not a small quantity, 6 thousand tons a year.
By comparison, in 2019, according to Statistics, the Congo shipped approximately 100,000 tons.
Small-scale mining is estimated to account for 20 percent of the Congo’s total cobalt production.
Glencore’s own announcement last year was for some 46,000 tonnes of cobalt mined, the majority coming from Congolese territories. In the first half of this year, the volume was around 14,000 tons, below the semi-annual volume of the previous year.
There is only one more interesting circumstance: Glencore, as a supplier, has long argued with its cobalt customers that a large company is worth choosing because cobalt mined from industrial mines provides greater security of supply and the company’s mines they have higher safety and environmental standards. are also kept in the extension. In addition, however, Glencore recently joined the Cobalt Alliance, one of the companies that Congolese families would sue in a lawsuit filed last December, arguing that they had not done everything possible to ensure workplace safety in areas where they operated.
Goals are important
Of course, there is no reason to doubt that the goals set in the “pure cobalt” initiative are really important to these companies. Supporting very poor artisanal miners, helping their communities It can be important to companies, regardless of their financial goals, as well as having commercially interpretable positive returns.
There is another recent example of a similar effort: Reuters reports that Volvo, among others, is supporting a recently launched program to essentially continuously monitor work in Congolese small-scale mining areas to curb exploitation. So now they have an idea of the work activities of 5,000 miners and the opportunities to improve their conditions. Currently three mining sites are being monitored, and the number would increase to twelve by 2023, monitoring and supporting the work of 20,000 artisanal miners, preventing abuses against them.
However, it is also conceivable that the above causes and considerations coexist with Tesla or other companies.
In any event, Bloomberg asked the company to comment on its move, but received no response.
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