Cobalt Mining in the DRC: Carving Out an Equitable Future
By: Ethan Shi
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Mining for a Low-Carbon Future
The global race for critical raw materials is underway, as the ongoing energy transition from fossil fuels to renewable energy requires their extraction from the Earth. In September 2022, European Commission President Ursula von der Leyen announced the European Critical Raw Materials Act, an initiative that signals the strategic importance of metals and minerals to Europe’s green transition. In her 2022 State of the European Union address, President von der Leyen stated, “Lithium and rare earths will soon be more important than oil and gas.” Other nations, including the United States, Canada, Japan, and Australia, have also developed critical raw materials strategies in recent years.
Cobalt is one of these critical raw materials. As a key metal used in electric vehicle batteries, wind turbines, and other power-generation technologies, cobalt consumption has tripled globally over the last decade and is forecasted to double again by 2035. Notably, around 70 percent of the world’s cobalt supply comes from the Democratic Republic of the Congo (DRC). The DRC’s mining industry is made up of large-scale mining (LSM) — multinational mining firms with high degrees of mechanization — and artisanal and small-scale mining (ASM) — informal collectives of workers using less advanced equipment to mine. Up to 30 percent of the DRC’s cobalt comes from artisanal and small-scale mining. Although the majority of the DRC’s cobalt is produced by large-scale mines, many large mining firms and original equipment manufacturers (OEMs) source their materials from ASM.
The Growing Pains of the Cobalt Supply Chain
Artisanal and small-scale mining is a significant source of employment and income for local communities in the DRC. An estimated 150,000 to 200,000 people work directly in artisanal cobalt mines, and more than one million people are economically dependent on their activity. Moreover, 90 percent of all mining labour in the DRC is in ASM. Despite its economic benefits, ASM has struggled with health, safety, human rights, and environmental issues, such as child labour and land degradation.
These issues have driven some multinational firms to not source from ASM sites to avoid risks to their reputation. However, disengagement from ASM harms the livelihoods of local communities that depend on mining. Another approach that firms have taken is conducting supply chain due diligence and only sourcing from sites that meet specific social and environmental standards. Traceability and certification schemes have emerged as measures to ensure sustainable, ethical, and conflict-free supply chains. One of the leading guidelines for responsible mineral sourcing is the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. These guidelines apply to all mineral supply chains around the world and provide recommendations to help companies respect human rights through their purchasing decisions and practices.
The Push to Formalize ASM
The largely informal nature of ASM makes it difficult to regulate, posing a barrier to its full inclusion in the global economy. Both the DRC government and multinational mining firms have sought to formalize ASM through various laws and policies. In 2002, the DRC government enacted a law that aimed to formalize ASM through the creation of artisanal exploitation zones (AEZs), designated areas where ASM is permitted to operate. In 2010, a Ministerial Decree required all miners to group together as cooperatives to consolidate and more easily regulate mining in the country. However, these legislations are often not heeded, as ASM continues to operate outside of designated zones. Many artisanal miners work in land concessions operated by large-scale mines, leading to tensions between artisanal miners and large mining firms.
More recently, there has been a wave of corporate-led formalization of ASM, as multinational mining firms seek to mitigate the reputational risks from their sourcing practices. Recognizing that ASM is often an unavoidable source of metals and minerals, these mining firms employ artisanal miners in contracted, wageless labour regimes while enforcing health and safety standards. Artisanal miners have thus become a pool of flexible labour that firms can use as they need.
Although the formalization of ASM has led to improvements in occupational health and safety, it has also created economic insecurity for artisanal miners. Many mining cooperatives struggle with corrupt organizations and unequal wealth distribution, as the power to sell metals and minerals is concentrated in the hands of a small number of elites. Artisanal miners thus lose their ability to sell their goods at the prices they set. By sourcing materials from mining cooperatives, multinational mining firms are able to shift responsibility for miners’ income to the cooperatives. These conditions create an environment where miners are vulnerable to being exploited for their labour.
Levelling Out the Mining Field
It cannot be denied that artisanal and small-scale mining is a key player in the global cobalt supply chain. To unlock the full potential of ASM as a vehicle for economic development and growth, the DRC Ministry of Mines should collaborate with mining technology companies to designate more artisanal exploitation zones where ASM can operate.
Currently, the number of zones where ASM is permitted to operate is too few to accommodate the size of the ASM labour force. This leads to artisanal miners either operating in unmonitored areas and putting their safety at risk or mining in concessions licensed to large-scale mining firms, which can bring about conflict or exploitative labour regimes. If the DRC Ministry of Mines invests the resources to designate more artisanal exploitation zones (AEZs), this could create the conditions for ASM to formalize more easily. Creating more designated zones where ASM can operate opens a reliable pathway for artisanal miners to obtain the necessary permits to mine and thus become more visible to the government. The government could then provide artisanal miners with the necessary support and resources to mine in a safer and more environmentally friendly way.
The process of designating more AEZs will require geological data to map potential areas where ASM can operate. Using an evidence-based approach to designating AEZs could connect artisanal miners to more productive sites, decrease environmental degradation, and improve miners’ livelihoods. The prevailing methods of prospecting for new mining sites require large investments of time and resources. Geological exploration is a risky venture, as it is not guaranteed to result in the discovery of critical metals and minerals. Thus, a barrier to mine development is the difficulty of securing capital to finance the initial prospecting and exploration phases of mining.
Searching for Riches with Artificial Intelligence
As the demand for critical raw materials needed in the energy transition continues to rise, more efficient mineral discovery methods are required to provide the necessary supply. More than 99 percent of exploration projects fail to become mines, and 60 percent fewer discoveries are being made compared to 30 years ago. Surveying areas for new deposits can be slow, inefficient, and costly, as mineral exploration is a complex, multi-stage process.
KoBold Metals is a mining technology company creating a solution to this problem through the use of artificial intelligence and data science. By inputting a wide range of data sources, including geochemical and electromagnetic data, into predictive models, KoBold’s proprietary technology finds patterns in the data to predict and detect hidden ore bodies in the Earth. KoBold’s unique method of mineral discovery has the potential to scale quickly and make the discovery process faster, more efficient and economical. Founded in 2018, KoBold is already searching for metals and minerals around the world, with positions in over 30 projects across three continents. In December 2022, KoBold announced that it would make a $150 million investment to explore and develop the Mingomba copper-cobalt mine in Zambia.
With its cutting-edge technology and nimble, scalable operating model, KoBold would make an opportune partner to help the DRC government streamline the process of designating new AEZs. ASM is better suited to mine in areas with characteristics that are not economically exploitable for large-scale mining firms, such as surface deposits of high-grade, low-tonnage ores. Recognizing that ASM and LSM have unique, differentiated advantages, KoBold could survey unexplored regions and provide geological data to the DRC government. The government could then use this data to allocate productive zones more equitably, based on whether ASM or LSM is best suited to mine it. This partnership would expedite the process of designating new mining zones and make it easier to formalize ASM.
Creating a Future Where Local Communities Thrive
In recent years, artisanal and small-scale mining has been portrayed in a negative light by media outlets, making companies and the general public wary of ASM. Although ASM continues to face challenges with health, safety, and environmental issues, significant improvements have been made in these areas as a result of formalization efforts and multi-stakeholder partnerships between governments, the private sector, and non-governmental organizations. Disengaging from ASM is not the answer. Doing so risks worsening the challenges artisanal miners face as they struggle to support their families and communities.
Not only is ASM a vital contributor to the economic development of local communities in the DRC, but it would also be a key source of cobalt production needed to meet the rapidly rising global demand for the metal. The time is now for the DRC government to give full legitimacy to ASM as a key economic sector of the country. This means investing more resources into helping artisanal miners grow their businesses sustainably and equitably. One of these actions should be partnering with a company such as KoBold Metals to designate more zones where ASM can operate so that artisanal miners do not have to compete with large-scale mines for the same mining concessions. This would be a step towards recognizing ASM in its own right and creating a future where local communities can thrive.
