Trafigura to finance artisanal cobalt in supply agreement with DRC’s EGC

COMMODITIES trading house, Trafigura, has agreed a cobalt off-take agreement with Entreprise Générale du Cobalt (EGC), a Democratic Republic of Congo (DRC) state-owned company.

Trafigura said in a statement today it would also finance the creation of artisanal mining zones and install ore purchasing stations in an effort to build in controls to prevent human rights abuses commonly imputed to the DRC cobalt extraction business.

The cobalt hydroxide supply chain established from EGC through to export would be fully traceable and comply with OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, said Trafigura.

The agreement also bears the cooperation of PACT, a non-profit organisation, which will join a technical committee established by EGC.

“Ultimately, the legitimacy of efforts to formalise and bring controls to the sector will depend on broad-based consultation and assurance that OECD standards will be upheld,” said Trafigura executive chairman and CEO, Jeremy Weir, in a statement.

Artisanal output of cobalt soared when the mineral’s price rallied in 2017 and early 2018, providing as much as 20% of the DRC’s production. The DRC accounts for as much as two-thirds of world cobalt production.

Pressure from customers and rights groups concerned about child labour in the DRC cobalt industry has been brought on miners and supply chain participants to improve governance of the cobalt industry, however. In May, Huayou Cobalt, China’s biggest cobalt producer which supplies to LG Chem of South Korea as well as Germany’s Volkswagen, said it would stop buying from individuals in the DRC.

“For our country to benefit from the intrinsic value of cobalt, currently boosted by the development of carbon-free energies, it was essential that measures be taken to support the formalisation of this industry,” said Jean-Dominique Takis Kumbo, MD of EGC.

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