By Peter Kennedy
BMW Group is teaming up with BASF SE, Samsung SDI and Samsung Electronics to launch a cobalt pilot project in the Democratic Republic of Congo (DRC) in a bid to improve working conditions in artisanal mining operations as well as living conditions in surrounding communities.
Cobalt, which is produced primarily as a by-product of copper and nickel, has recently become a hot investment area due to its key role in the production of rechargeable batteries used in the manufacture of electric vehicles and electronic devices.
However, companies aiming to source cobalt through artisanal mines in the DRC are facing challenges in the areas of environment, health and safety, and human rights, BMW said.
That prompted Amnesty International to warn electric car companies and other consumers to seek out alternatives to the DRC, which is renowned for its mineral wealth, but also civil wars, corruption and poor working conditions in mines.
A report released by Amnesty International in November, 2017 ranked industry giants including Apple, Samsung Electronics, Dell, Microsoft, BMW, Renault and Tesla on how much they have improved their cobalt sourcing practises since January 2016.
The report, titled Time to Recharge, found that while a handful of companies have made progress, others are still failing to take even basic steps like investigating supply links in the DRC.
“Our initial investigations found that cobalt mined by children and adults in horrendous conditions in the DRC is entering the supply chains of some of the biggest brands,” said Seema Joshi, Head of Business and Human Rights at Amnesty International.
“When we approached these companies, we were alarmed to find out that many were failing to ask basic questions about where their cobalt comes from,” he said.
Pressure from Amnesty International presents a big challenge for industrial consumers because 60% of the world’s cobalt supply comes from the DRC.
As cobalt is produced as a by-product of other metals, production cannot easily be increased to meet demand from companies such as Apple, Samsung, SDI Co. Volkswagen and other major consumers.
Some of those companies have been signing deals or talking with cobalt produces in a bid to secure futures supply or build stocks.
BMW said the scope of the DRC project will involve one pilot mine within the next three years. But BMW and its partners will not operate the mine.
“This fully privately financed project seeks to pilot an approach to address challenges in artisanal mining,” BMW said. “As it is limited to one pilot mine site and the surrounding community, it seeks to contribute to identifying workable solutions that lead to better working conditions at the mine site,’’ it said.
“If proven effective, these measures could then be scaled up to other legal artisanal mine sites and enhance systematic challenges in the longer run.’’
The world’s largest known reserves of cobalt are found in the DRC. Industrial mining accounts for approximately 80-85% of Congolese cobalt production, with artisanal mining operations producing the remaining 15-20%.
Meanwhile, some mining executives in Canada see the DRC’s image problem as an opportunity.
Fortune Minerals Ltd.’s [FT-TSX] CEO Robin Goad said his company is attracting interest because it is one of only a handful of global companies that could be producing cobalt in the near future, in Fortune’s case from the NICO mine in Canada’s Northwest Territories.
Goad said Fortune could also position itself as a possible supplier of “ethical cobalt” to consumers seeking an alternative to the DRC. That opportunity is also available to companies like Cobalt 27 Capital Corp. [KBLT-TSXV, 270-FSE], owner of the world’s largest stockpile of cobalt, as well as Canada Cobalt Works Inc., [CCW-TSXV], which is actively exploring in the historic Cobalt, Ontario camp.