Artisanal cobalt mining in the Democratic Republic of Congo could emerge as a key chess piece in global efforts to diversify battery material supply chains if the practice can be cleaned up and made safer.

The DRC accounts for over 75% of global cobalt output and holds the most reserves, with China owning 17 of the country's 35 mining properties containing cobalt, according to an analysis of S&P Global Market Intelligence data.

Artisanal mining represents about 10% of the Democratic Republic of Congo's (DRC's) cobalt production but is considered high risk due to unsafe practices, including child labor. The Fair Cobalt Alliance (FCA), which includes the world's biggest cobalt producer, Glencore PLC, is working with the government to formalize existing artisanal operations. This would in turn unlock global battery supply chain investment to help clean up the sector.

"The fact is that most of DRC's industrial cobalt mines are Chinese-controlled, and then you have this roughly 10% sliver of artisanal production that is currently most likely flowing through China but is not yet committed to long-term offtakes," David Sturmes, head of corporate engagement and partnerships at the FCA, told S&P Global Commodity Insights.

"So strategically, that [artisanal] material is in principle up for grabs by non-Chinese offtakers, if the health and safety, social and environmental issues that are associated with artisanal mining can be addressed to meet standards expected by the market."

"There needs to be some re-thinking of this, not as a 'problem child' necessarily, but as a potential source for responsibly sourced critical minerals, which is what we've advocated for since the beginning."

Gordon Flake, CEO of Australian foreign policy think tank Perth USAsia Centre, told Commodity Insights that 10% is therefore "nothing to sneeze at," given global efforts to "build a sufficient supply chain external to China."

"That makes artisanal mining more attractive, despite the relatively small percentage and scale of production," Flake said.

"We can't just be concerned about what Glencore and other big players are doing in DRC, but all the small artisanal miners and where they're getting their money and technology," Flake said.

Legal hurdles

Pay above the national average attracts workers to artisanal mining despite the health and safety risks and ongoing use of child labor highlighted in a 2016 Amnesty International report, according to Sturmes.

The FCA, whose members also include Tesla Inc. and China's CMOC Group Ltd. and Zhejiang Huayou Cobalt Co. Ltd., believes that these conditions could be improved by investment from battery supply chain players if artisanal mining was formalized.

The DRC government aims to help artisanal miners move into small- and large-scale mining involving "comprehensive reforms to ensure environmental responsibility, safety and fair working conditions for miners," Benitha Tambwe, head of digitization and partnerships at the DRC's Technical Cell for Coordination and Mining Planning department, said in an email interview.

"The government is actively studying possibilities to allow artisanal and industrial mining to coexist on the same concession, with appropriate regulations to ensure sustainable practices," Tambwe said.

The 2018 mining code provides for an artisanal mining zone to be superimposed on an industrial mining or quarrying concession with the title holder's permission, but "no written authorization from permit holders nor waiver has been recorded since the law was passed," Tambwe said.

Downstream potential

In addition to trying to clean up its cobalt image, the DRC government is also "looking into the possibility of participating in manufacturing battery materials and, ultimately, batteries and electric vehicles" in-country, Tambwe said.

"The DRC has decided to develop a value chain for producing batteries for electric vehicles to control the entire supply chain, from the extraction of raw materials to processing, manufacturing and assembly," Tambwe said.

The DRC signed a technical assistance framework agreement with the US and Zambia in December 2022 to support a May 2022 bilateral agreement between the DRC and Zambia to cooperate on developing a battery value chain to meet demand for electric vehicle batteries for domestic consumption and export.

The DRC could also explore "tax incentives for industrial miners or battery manufacturers operating in the region — either reducing or exempting minerals from royalty payments if further processed in the region or, alternatively, introducing punitive, increased royalties for minerals that leave the country as concentrate," Sturmes said.