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Trafigura signs supply deal with Congo's state cobalt buyer

11/23/2020 | 04:38am EST

KINSHASA (Reuters) - Trafigura on Monday agreed to a supply deal with Congo's state cobalt buyer under which the international trading house will finance the creation of controlled artisanal mining zones, buying centres and logistics to trace supply.

Congo's Entreprise Generale du Cobalt (EGC) and Trafigura would also create a technical committee along with non-governmental organisation Pact to oversee responsible sourcing, the companies said in a joint statement on Monday.

The EGC will ensure the cobalt bought and marketed by Trafigura meets Organisation for Economic Co-operation and Development (OECD) responsible mineral supply guidelines, the companies said.

The Congolese authorities announced a state cobalt buying monopoly in a November decree last year, saying it aimed to control the artisanal supply chain and boost government revenue through price controls.

"For our country to benefit from the intrinsic value of cobalt... it was critical that measures be taken to support the formalisation of this industry," said EGC director-general Jean-Dominique Takis Kumbo.

"By cleaning up this sector, subject for many years to illegality and fraud, from which artisanal miners are the first to suffer, society as a whole will benefit."

The Democratic Republic of Congo produces about 60% of the world's cobalt and has around 70% of the world's reserves of the metal used in mobile phone batteries and lithium-ion batteries for electric vehicles.

While most of Congo's cobalt is mined by industrial operators such as Glencore and China Molybdenum, artisanal miners account for about a quarter of production.

Child labour and a lack of safety precautions in artisanal cobalt mining have driven multiple initiatives to try and formalise the sector, including Mutoshi, a site run by Trafigura and Chemaf.

There are some 42 million artisanal miners worldwide, according to Delve, a database created by Pact.

(Reporting by Hereward Holland; writing by Helen Reid; editing by Ramakrishnan M. and Jason Neely)

By Hereward Holland

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CHINA MOLYBDENUM CO., LTD. 2.09% 5.38 End-of-day quote.6.32%
GLENCORE PLC -1.79% 279.9 Delayed Quote.20.13%
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