Congo’s Entreprise Générale du Cobalt (EGC) could become the world’s fourth-largest cobalt producer in 2021, a new Roskill report states.
According to the market analyst, if the state-owned company is able to capture all of the 8,000 tonnes of cobalt expected to be produced by artisanal and small-scale miners in the African country, then it may become a major player, only behind Glencore, ERG and China Molybdenum.
The Democratic Republic of Congo holds around 70% of the world’s reserves of cobalt and is also the largest producer, accounting for over 70% of cobalt mine supply in 2020
EGC was created a year ago but it became operative in late March. The company holds monopoly rights for the purchase, treatment, transformation, sale, and export of the DRC’s hand-mined blue metal and will sell cobalt hydroxide under a five-year contract with trading house Trafigura.
The Democratic Republic of Congo holds around 70% of the world’s reserves of cobalt and is also the largest producer, accounting for over 70% of cobalt mine supply in 2020. For 2021, consultancy CRU expects Congo’s large and small-scale mines to produce more than 100,000 tonnes of cobalt, or 71% of the global total.
Artisanal miners’ supply from the country, however, is highly elastic and depends on prevailing cobalt market prices. According to Roskill, over the last five years (2016-2020), it has accounted for an average 14% of the DRC’s annual output.
Besides consistency issues, the Entreprise Générale du Cobalt has been tasked with dealing with a myriad of environmental, social and governance factors affecting artisanal and small-scale mining cobalt production in the country, in particular child labour and lack of safety measures.
This is why the deal with Trafigura also involves financing the creation of strictly controlled artisanal mining zones, buying centres and logistics to trace supply.
In Roskill’s view, however, the creation of these areas entails challenges such as the actual possibilities of policing them and enforcing the law. Most of the designated zones are remote and are not as well mineralized as the large-scale concessions held by the major mining companies.
“As a result, these will continue to attract attention. So, the plan to address and dissuade artisanal miners from invading private mining concessions will need to be carefully determined and implemented,” the report states.
But if these challenges are addressed, changes are implemented and small-scale operations provide the 8,000 tonnes of cobalt expected for this year to EGC, results for what is considered one of the world’s poorest countries, could be outstanding.
“Roskill estimates that over a million Congolese people are dependent on the revenues generated from cobalt ASM and its associated logistics and support businesses. Furthermore, in the DRC it is estimated that each worker supports an average of nine dependents. As a result, the development of a properly organised and thriving cobalt ASM sector in the country could be an immense force for good and one of the few positive legacies likely to arise from the growing demand for battery raw materials,” the review reads.