In the Democratic Republic of Congo (DRC), a state-owned company called Generale du Cobalt (EGC), which has a monopoly on the purchase and sale of the country's hand-mined Cobalt ore, has officially started operations.
EGC, a wholly owned subsidiary of Gecamines, a state-owned mining company, was set up a year ago to help control the supply of handmade supplies and raise government revenues through price controls.
EGC will sell cobalt hydroxide under a five-year contract with Trafigura, the trading company, but the terms of its agreement with Trafigura have not been disclosed.
Under the non-exclusive supply agreement, Trafigura will also fund the creation of tightly controlled artisanal mines, procurement centres and logistics to track supplies.
The DRC has about 70 per cent of the world's cobalt reserves, a byproduct of copper or nickel, which is an important metal for batteries used in electric cars and high-tech equipment and is crucial for the lithium-ion batteries used in the fast-growing electric vehicle (EV) industry.
Congo's artisanal miners are the world's second-largest source of cobalt, after the country's industrial mines.
CRU, a consultancy, expects the DRC to produce more than 100, 000 tonnes of cobalt this year, or 71 per cent of the world's total, of which 8, 000 tonnes will come from manual sources.
The lack of safety measures in child Labour and artisanal mining is behind many initiatives to formalize the sector.
According to Amnesty International, children as young as seven have been found searching for cobalt-containing rocks in the Democratic Republic of Congo.
It also claims there is evidence that cobalt mined by the miners has found its way into the supply chains of some of the world's biggest brands.
"All of us involved in this effort are strongly committed to working transparentively with our stakeholders to ensure that together we create effective solutions for responsible cobalt procurement," Jeremy Weir, executive chairman and CEO of Trafigura, said in a statement.
"Ultimately, we believe that a formal artisanal mining industry can change people's lives and act as a catalyst for economic growth in the DRC."
Electric car manufacturers, including Tesla and Volkswagen, recently pledged to help improve working conditions in the Democratic Republic of Congo.
Huayou Cobalt, China's largest cobalt producer, said last year it would stop buying cobalt from artisanal miners in the Democratic Republic of Congo.
Huayou Cobalts is a supplier to LG Chem and Volkswagen.
Trafigura has been involved in monitoring and improving artisan cobalt mines in the Central African country since 2018.
That year, the company started a pilot project to formalize informal miners at Mutoshi in Chemaf Sarl.
After raising $450 million for the facility in 2019, Trafigura had to suspend the project in March last year due to the global pandemic.
In the Katanga region of southeastern Congo, more than 200,000 people make a living mining cobalt and copper, according to official figures.
