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All eyes on DRC Mining Week 2024

The role of DRC over the next 20 years will cement the future of technological advancement through its wealth of mineral resources.

The country’s strategic importance due to its vast cobalt reserves—a critical component for batteries in electric vehicles and renewable energy storage—places it at the centre of global geopolitical interests. Relationships with major economies, particularly China and the United States, will shape the investment landscape and access to mining technologies. China’s current dominance in the DRC’s mining sector may face competition from Western countries seeking to diversify their supply chains for critical minerals.

The social dimension of mining in the DRC cannot be overlooked. The industry has historically been associated with severe human rights abuses, including child labour and poor working conditions. Over the next two decades, improving the social impacts of mining will be essential.

On a more positive note, let’s explore the success and depth of what the country has achieved in recent years.

The DRC has seen significant growth in the production of key minerals, particularly cobalt and copper. The country is the world’s largest producer of cobalt, essential for batteries in electric vehicles and other high-tech applications. In 2020, the DRC produced over 70% of the world’s cobalt. Copper production has also increased, with the DRC becoming Africa’s largest producer. This boost in production has bolstered the country’s position as a critical player in the global mineral market.

The DRC has successfully attracted substantial FDI in its mining sector. Major international mining companies, including Glencore, China Molybdenum, and Barrick Gold, have established significant operations in the country. These investments have brought advanced mining technologies and practices, improving the overall efficiency and output of the sector. Notably, China Molybdenum’s acquisition of the Tenke Fungurume mine is one of the largest mining deals in the country’s history, highlighting the DRC’s appeal to major investors.

There have been notable strides in improving the regulatory framework governing the mining sector. The 2018 Mining Code revision introduced measures aimed at increasing state revenues from mining activities. These include higher royalty rates, increased government stakes in mining projects, and stricter regulations on environmental and social responsibilities. While these reforms have faced criticism and challenges, they represent an effort to ensure that the benefits of mining are more equitably shared within the country.

The mining sector remains a cornerstone of the DRC’s economy, contributing significantly to GDP, export revenues, and employment. In 2021, mining accounted for about 95% of the DRC’s export revenues and a substantial portion of government revenues. This economic contribution has been vital for national development, funding public services and infrastructure projects. The sector also provides numerous jobs, both directly in mining operations and indirectly through related industries.

The DRC has engaged in various international partnerships and initiatives aimed at improving the mining sector. For instance, the country is a member of the Extractive Industries Transparency Initiative (EITI), which promotes transparency and accountability in the management of natural resources. Participation in such initiatives has enhanced the credibility of the DRC’s mining sector on the global stage and attracted more responsible investment.

However, addressing child labour in the mining sector requires a multifaceted approach that involves government actions, corporate responsibility, community engagement, and international support. EV manufacturers are increasingly being held accountable for the ethical and sustainable sourcing of minerals used in their batteries, including cobalt, which is predominantly mined in the DRC. This accountability is driven by a combination of regulatory pressure, consumer demand, and corporate social responsibility initiatives.

These include due diligence laws, such as governments, particularly in Europe and the United States, have introduced legislation requiring companies to conduct due diligence on their supply chains to ensure that minerals are sourced responsibly. For example, the European Union’s Conflict Minerals Regulation, effective from 2021, requires companies to ensure their supply chains are free from conflict minerals, including those sourced from the DRC. Regulations such as the Dodd-Frank Act in the United States mandate that companies report on the use of conflict minerals, including cobalt, to the Securities and Exchange Commission (SEC). This promotes transparency and accountability in the supply chain.

Many leading EV manufacturers, including Tesla, BMW, and Volkswagen, have made public commitments to source minerals responsibly. These commitments often include strict supplier codes of conduct, regular audits, and collaboration with third-party certification schemes. But how much weight do these schemes carry? Let’s focus on Tesla, as it is the first manufacturer that most people refer to and look to in terms of innovation.

The short version is, Tesla knows how to dodge a bullet. Tesla says it is committed to sourcing only responsibly produced materials. This means having safe and humane working conditions in its supply chain and ensuring that workers are treated with respect and dignity reads a corporate document.

“In addition to the Tesla Supplier Code of Conduct, we also have the Human Rights and Responsible Materials policies that outline our expectations to all suppliers and partners with whom we work, as well as our commitment to responsible sourcing. We strictly follow all U.S. as well as foreign legal requirements and ask our supply base to do the same,” it continues. In simple form, accountability is split between several points of the supply chain – but the company’s paperwork is in order.

Companies are partnering with organisations like the Responsible Cobalt Initiative (RCI) and the Global Battery Alliance to improve supply chain transparency and sustainability. These initiatives often involve multiple stakeholders, including mining companies, NGOs, and governments, working together to address issues like child labour.

Independent third-party audits of supply chains are becoming standard practice among responsible companies. These audits assess compliance with ethical sourcing standards and identify areas for improvement. Participation in certification programmes, such as the Fair Cobalt Alliance, ensures that cobalt is sourced from mines that adhere to stringent ethical and environmental standards.

Certification provides assurance to consumers and stakeholders that the minerals used in EV batteries are responsibly sourced. Technologies such as blockchain are also being used to enhance traceability in the supply chain. In addition, advanced data analytics and AI are being employed to monitor and manage supply chains more effectively. These technologies can help identify potential risks and ensure compliance with ethical sourcing standards.

There have been instances of legal actions against companies accused of benefiting from child labour in their supply chains. Lawsuits and legal scrutiny can compel companies to improve their sourcing practices to avoid legal repercussions. Some EV manufacturers and their suppliers are investing in community development programmes in mining regions. These programmes aim to improve living conditions, provide education, and create alternative livelihoods, thereby reducing the reliance on child labour.

Tesla has explored the use of blockchain technology to enhance traceability in its supply chain. Blockchain can provide a transparent and immutable record of transactions, helping to verify the origins of cobalt and ensure it is sourced from responsible suppliers. Tesla has faced legal scrutiny and lawsuits regarding its sourcing practices in the past. In response, the company has reinforced its commitment to ethical sourcing and taken steps to mitigate risks associated with child labour and other human rights abuses.


Minerals Meridian

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