Congo, child labour and your electric car

Congo, child labour and your electric car

Congo, child labour and your electric car

Informal workers produce almost a third of the country’s cobalt. Can mining groups address the problem?

Kongolo Mashimango Reagen used to spend his days carrying 25kg sacks of cobalt from small mines in a southern corner of the Democratic Republic of Congo, which is so rich in minerals that large deposits can be found just metres below the surface.

Those days in Kolwezi would start at 5am and accidents were common as tunnels dug by hand in the bright red earth collapsed. Miners drank beer, whisky and smoked to get through the day, he recalls. His uncle sold the cobalt — a critical metal for electric car batteries — to local traders known as négociants, and Kongolo received free food and accommodation as his payment.

“It was very tiring, very difficult,” he says, standing on the edge of a makeshift football pitch by a school in Kolwezi in the DRC’s south-east. “I watched too many collapses. I have seen children dying in the mines.” The 17-year-old escaped the mines and now attends the school with the help of Good Shepherd, a Catholic charity.

For more than a decade the global digital revolution has been enabled by places like Kolwezi, a mining town dotted with small Chinese casinos and faded Belgian colonial bungalows. The world’s largest mining companies rub shoulders with miners who dig copper and cobalt out of the earth by hand with little or no safety protection.

Informal miners on site at Kasulo, near Kolwezi © Bloomberg

While the majority of Congo’s cobalt comes from large mining sites where rock is dug up by trucks from the bottom of deep pits, a growing proportion is coming from an estimated 150,000 “artisanal” or informal miners who dig by hand in Kolwezi. The unregulated practice is increasingly drawing in children like Kongolo. And last year accounted for an estimated 30 percent of Congo’s cobalt — the country mines more than 70 per cent of the global total — according to Gecamines, Congo’s state-owned miner.

Congo’s dominance presents a growing dilemma for carmakers and those in the supply chain as they look to meet a rapid increase in demand for electric vehicles and batteries. If they try to improve conditions on the ground they face a series of additional risks, from the threat of corruption to monitoring and enforcing measures to avoid deaths from informal mining and the presence of children on these sites. And while manufacturers cannot afford to ignore Congo they must also know that untraceable metal — from these informal miners — leaks into the global supply chain via refineries in China, ending up in batteries, cars and smartphones sold in the west.

Thanks in part to high cobalt prices in 2018, a lot of this activity now takes place within the sites of the large mining groups, including Switzerland-based Glencore and Hong Kong-listed China Molybdenum, which sprawl across large areas of border villages. In June 43 informal miners died when part of a pit collapsed at Glencore’s largest mine outside Kolwezi. State authorities sent the army to the site as well as China Moly’s giant copper and cobalt mine 90km east in Tenke Fungurume to remove up to 10,000 informal miners who were trespassing.

“A lot of people [buyers] realise they can no longer shut their eyes and pretend it’s not happening, which was the strategy for quite a while,” says Indigo Ellis, an Africa analyst at Verisk Maplecroft. “There are no real viable alternatives to cobalt from the DRC at the moment so they will have to start engaging with it.”

A solder stands next to an electric car that uses cobalt batteries, seen parked at a mining conference in the Democratic Republic of Congo last year © Alamy

The road into Kolwezi is dotted with dozens of corrugated-roofed depots with names like “Boss Wu” — traders who buy cobalt and copper from whoever is willing to sell to them. Most of that metal makes its way to China, where it enters the global battery supply chain. The provincial Lualaba government wants to formalise the sector by corralling miners into licensed co-operatives that are allowed to mine in authorised zones as a way to reduce accidents and the presence of children.

The scale of the challenge can be vividly seen in the bustling village of Kasulo, on the outskirts of Kolwezi. In early 2014 residents discovered rich seams of cobalt beneath their houses. But after people started to dig in their gardens, cracks began to appear in the houses triggered by the mining frenzy.

“You would come out of your house and there’d be a big hole,” says one Chinese executive. There were regular deaths and injuries, and the local road had to be closed after tunnels were dug into its foundations.

The cell of a Shenzhen BAK Battery vehicle battery pack displayed at the Shanghai Auto Show in China in April © Bloomberg

Facing the risk of a full-scale collapse of the village, the Lualaba authorities evacuated all 600 households from the site in 2017. The relocation was financed in part by China’s largest cobalt producer Huayou Cobalt, a $3.6bn company listed on the Shanghai Stock Exchange that is a supplier to some of the world’s largest battery companies including South Korea’s LG Chem. In return, Huayou has the right to buy all the copper and cobalt from the area.

After the 40-hectare area in Kasulo was cleared of houses a perimeter wall was erected around the site and a security gate introduced to check miners on arrival. A Chinese security guard points proudly to a sign that says no children or drinking are allowed on site. Tunnels still dot the roughshod land but pits have already been dug for the miners.

About 600 miners work on the site, down from around 5,000 last year, though this is partly due to the fall in cobalt prices from a 10-year high of over $40 a pound in early 2018 to $13.50 a pound, according to Fastmarkets.

The miners are organised into cooperatives which take a cut of the number of bags sold by the workers in return for assistance such as covering medical bills, helping family members in the case of death and representing the miners at political meetings. After digging the cobalt, the miners take their sacks to be crushed, weighed and graded in on-site depots, after which the material is authenticated and sold to local traders and then to Huayou.

The trucks heading out of the site are also checked and sealed to make sure they are not tampered with before they arrive at Huayou’s subsidiary in the country, Congo DongFang Mining.

Robert Bitumba, who was born in Kolwezi, helps monitor the site for RCS Global, a UK supply chain audit company. A smartphone app is used to report accidents or deaths, or forced labour. These reports go straight to a central data point — with immediate alerts sent to Huayou, says Mr Bitumba. The theory is that if conditions on site deteriorate, RCS can directly push Huayou to help improve them, since the data can be shared with its customers.

Informal miners at the Mutoshi site with overalls provided by Trafigura © Henry Sanderson

In the three months after the project began operating in July 2018, there were three deaths, but since then there have been none, RCS says. There were five recorded instances of child labour between July and September, but this has also since fallen to zero.

Bryce Lee, who is in charge of corporate social responsibility at Huayou, says the company is looking at scaling up the model to other sites in Congo. If it doesn’t, he says, tainted cobalt will continue to be sold on the open market, putting everybody in the supply chain at risk.

“If the people were still living in Kasulo then there is no way to get rid of the child labour risk,” he says. “We can copy the model and try to assess it.”

While it is supported by the Lualaba government, the Kasulo project still has its critics. The relocation of the villagers triggered protests and has been opposed by some organisations in Kolwezi.

Questions have been raised about who controls the co-operatives. The Good Shepherd charity, which helps children leave mine sites by providing free schooling, decided to end its engagement with Huayou over concerns about the relocation of the residents and their compensation packages. Emmanuel Umpula Nkum of African Resources Watch, a local non-governmental organisation, says local miners should be able to sell their cobalt to whoever they want to rather than being forced to sell all their metal to one company, Huayou.

“We need zones where the miners should be in co-operatives created by themselves and where they can work and sell their minerals to buyers,” he says. “We need them to have the possibility to say ‘this is not a good price’ and go elsewhere to sell their minerals.”

Distrust remains high. Some miners recently broke in and damaged the platform that weighs cobalt trucks, angry at the lower prices for their metal. And no sooner had the Kasulo project begun than a new site opened up outside its walls. The controlled site had to expand to include Kasulo II — a 10-hectare extension, with further relocations. Kasulo III is under consideration.

Mr Bitumba says that in the long run the country must provide alternatives to mining, otherwise people from elsewhere in Congo will continue to flock to the Kolwezi mines. “Almost everywhere [in Kolwezi] there are minerals,” he says. “For me it’s a good thing to have a fence because in that area you then have control. But now you need to put in incentives for all the artisanal miners to go inside that fenced area.”

Carmakers and cobalt buyers have been reluctant to source from the Congo, one of the poorest countries in the world that is also ranked as one of the most corrupt. In April BMW told an OECD conference that it would source its cobalt for its electric cars from Morocco and Australia and not the DRC.

Belgian-based Umicore, the largest producer of battery materials in Europe, whose predecessor company Union Minière recruited forced labour to mine copper in the region in the early 20th century, says it does not buy from informal sites in the country. Instead, in May Umicore announced a long-term deal to buy cobalt from Glencore’s mines in Kolwezi.

But the deaths of the 43 miners on June 27 at Glencore’s site has increased pressure for a solution because many informal miners operate on land that is part of official concessions. Glencore says about 2,000 informal miners a day trespass on the site of its Kamoto Copper Company mine outside Kolwezi, which stretches over 21 sq km and is next to a community of around 250,000 people.

The deaths occurred after the miners entered the site’s main pit, which is around 6 sq km wide. To prevent similar incidents, the company is digging trenches to make it more difficult to gain access and collapsing dangerous areas of the pit, Glencore says.

For Huayou’s clients there is no way of knowing whether the cobalt comes from an industrial or informal mining site since it is all mixed at Huayou’s plant in the DRC before being exported to China.

Carmakers should know the source of their cobalt and lean on their suppliers to improve conditions on the ground, says Tyler Gillard, head of the OECD’s responsible business conduct unit.

Plummeting cobalt price takes toll on Democratic Republic of Congo

“We are supportive of industry efforts to engage with the mining community, despite the risk. The challenge is how to manage that risk and communicate it properly. Disengagement is not the right approach, but the threat of disengagement has to be real and combined with technical and financial support to drive improvement.”

Swiss commodity trader Trafigura, which is one of the largest buyers of Congolese cobalt and copper, says artisanal-mined minerals can be a source of supply for carmakers. When Trafigura signed a three-year deal to buy all the cobalt produced from DRC-based Chemaf last year, it faced the problem of how to manage the more than 5,000 informal miners working on the site near Kolwezi.

Miners were regularly dying in tunnels that went as deep as 100m into the earth, recalls James Nicholson, head of corporate responsibility at Trafigura. Today the site has been fenced in and the miners are provided with hard hats and overalls. The project has helped reduce deaths to zero this year from about 14 last year before controls were introduced, Mr Nicholson says.

Cobalt mined from the nearby site is traded at the market in Kasulo © Bloomberg

Congo has a limited window of time to fix its informal mining problem before cobalt is replaced in electric car batteries by other minerals, he says.

“Our preference is not to ignore it, it’s to find solutions,” he adds. “If we can be a bit creative in developing controls then we could avoid the product just dripping out into the market. We can sell the product. As long as our counterparties are well aware of what they are receiving.”

Nicholas Garrett, chief executive of RCS Global, says companies and consumers are aware of issues in the electric vehicle and battery supply chain.

“Emotionally an EV is supposed to be a good deed — you’re buying an EV you’re thinking you are saving the planet — the last thing you want to hear is that the car is not clean,” he says.

“Companies who work with us are starting to understand what the risks are — and asking what do we do about it. But this is an enormous challenge as we’re starting at such a low base: if people aren’t dying and there are no children then that’s a positive.”