Glencore backs cobalt mining pact in Democratic Republic of Congo
A Glencore backed alliance aims to eradicate child labour from mining sites and improve working conditions, as well as support educational opportunities in the DRC.
Keystone / Schalk Van Zuydam
Glencore has backed a new alliance to support small-scale cobalt mining in the Democratic Republic of Congo, in a move aimed at creating a responsibly sourced standard to promote the metal’s use in electric cars.
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Henry Sanderson, The Financial Times
The Switzerland-based miner, which this year struck a deal to supply Tesla with cobalt, believes the launch of the Fair Cobalt Alliance will encourage carmakers to use Congolese cobalt in their batteries rather than engineering it out.
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The alliance aims to eradicate child labour from mining sites and improve working conditions, as well as support educational opportunities in the DRC. It is also backed by Huayou Cobalt, China’s largest cobalt refiner, which supplies carmakers including Volvo Cars and Volkswagen.
“Where we find environmental, social or labour problems in supply chains, we should not avoid them, we should not disengage, but rather it is our duty to take action and make improvements,” said Assheton Carter, executive director of the Fair Cobalt Alliance.
The DRC supplies 60 per cent of the world’s cobalt, a key raw material in batteries, but more than 10 per cent comes from informal miners digging by hand, including children. Last year, Apple, Google, Microsoft, Dell and Tesla were sued by a human rights group on behalf of families of children killed or injured while mining cobalt in the DRC.
Glencore believes that human rights concerns have helped to accelerate moves to substitute the metal in lithium-ion batteries used in electric cars. CATL, China’s largest battery maker, said last week it was developing a battery without nickel or cobalt.
Glencore’s industrial operations in the DRC are also under scrutiny because of the company’s relationship with Dan Gertler, an Israeli businessman who was placed on a US sanctions list in December 2017. In June, the Swiss government opened a criminal investigation into Glencore over its failure to prevent alleged corruption in the DRC.
The launch of the alliance comes as the DRC government plans to clean up the cobalt mining sector by controlling supply. Gecamines, the government’s state-owned miner, has said a new agency, Entreprise Générale de Cobalt, will buy and market all the cobalt from informal miners in the DRC.
The Fair Cobalt Alliance will start with two artisanal mining sites — Kasulu and Kamilombe — near Kolwezi in the south-east of the DRC, with the ambition to expand to three more by the first quarter of next year, Carter said.
The group will improve the sites by providing protective equipment, clean water supplies and removing the surface rock for local miners, said Monique Lempers of Fairphone, an Amsterdam-based company that produces smartphones that aim to have less environmental impact. The sites will be monitored by RCS Global, a supply chain auditing company.
The other members include lighting company Signify, the Impact Facility, the Responsible Cobalt Initiative, Germany’s Sono Motors and battery company Lifesaver.
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Tesla to buy cobalt from Glencore for new car plants
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Tesla will buy cobalt from Glencore for use in two new car plants. in a deepening of ties between Elon Musk’s electric car maker and the Swiss mining group.
Glencore will supply Tesla’s new Shanghai Gigafactory and its planned Berlin facility with the metal used in lithium-ion batteries, according to people familiar with the matter.
The deal, which increases Tesla’s reliance on supplies from the Democratic Republic of Congo, is a boost for Glencore’s cobalt business after a two-thirds slide in the metal’s price over the past two years to about $30,000 a tonne.
Tesla said last week it supported sourcing from the DRC, one of the poorest countries in the world, “where we can be assured that minerals, including cobalt, are coming from mines that meet our social and environmental standards”.
The comments highlight how Tesla is increasingly securing its own raw materials as it expands production in China and Europe. Other carmakers, including Volkswagen, have relied on external battery producers to secure supplies of cobalt.
More than 60 per cent of the global cobalt supply comes from the DRC, where up to a fifth is mined by hand, often by children.
While Tesla uses less cobalt than rival electric carmakers, the deal with Glencore could involve up to 6,000 tonnes a year.
Buying from Glencore allows Tesla to control supply from the mine in Congo to where it is processed into battery precursor materials in China.
Tesla’s 2019 Impact Report, published last week, said the company had “made a significant effort to establish processes” to remove the risk of child labour. It added that it recognised “that mining conducted in a responsible and ethical manner is an important part of the economic and social wellbeing of those communities”.
“Tesla’s new disclosures are a positive step towards recognising the reality of copper and cobalt supply chains on the ground,” said Tyler Gillard, a senior adviser at the OECD in Paris.
Tesla said its battery cell suppliers were required to buy from refiners qualified by the Responsible Minerals Initiative, a body that produces standards for responsible sourcing. Glencore is one of only two miners in the DRC on the list to be certified by the RMI.
Tesla and Glencore declined to comment.
Shares in Tesla last week rose above $1,000 for the first time, giving it a market capitalisation of $185bn. They have since fallen back to $935.
Tesla’s battery production capacity is expected to increase 570 per cent over the next decade to 248 gigawatt hours, according to consultancy Benchmark Mineral Intelligence. One GWh of battery capacity is enough for about 18,000 electric cars on average.
Glencore, which is led by billionaire Ivan Glasenberg, is the world’s largest producer of cobalt from its two mines in the DRC and its nickel mines in Australia and Canada. Since a steep fall in cobalt prices in 2018, the miner has focused on signing long-term agreements with companies in the electric car supply chain.
Copyright The Financial Times Limited 2020
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