Mining companies collaborate in search of African riches

Cobalt mining in the DRC. Image credit: Photographer: Simon Dawson/Bloomberg

By LM Louw

26 August 2020 – In a bid to find new deposits in Africa, and to mitigate any adverse impacts, multinational mining companies and other stakeholders have decided to collaborate.          

Statements by two of the biggest mining companies in the world caught my attention this week. Both announcements were glanced over by most, although they might have raised a few eyebrows among those that do not believe in sleeping with the devil. Anyway, they are significant and might show us how business will be conducted in Africa in the future.

With the world economy slowly recovering from the impact of global lockdowns because of Covid-19, several trends are emerging which might be an indication of what to expect in the future. With global trade patterns set to change, Africa might become a favourite, yet risky, investment destination. The “green revolution”, renewable energy, and Elon Musk’s plea to mine more nickel, has prompted several resource companies to unfold the geology maps, and many geologists to dust off their exploration boots. Technology start-ups in Silicon Valley have an insatiable thirst for “new” metals, of which most occur (in abundance) across Africa, and more specifically in the Democratic Republic of the Congo (DRC).

But it is not only the Silicon Valley dwellers that are looking for the big deposits in Africa. The continent is replete with Australian and Canadian junior exploration companies in search of the proverbial gold at the end of the rainbow. Moreover, large state-owned Chinese companies have been trying to get a foot in the African door for at least the last fifty years. This has resulted in an uncoordinated, extremely competitive and at times, illegal rush for the riches. The result was to the detriment of African communities and the natural environment. Whether this will change at all, is an open question. Nevertheless, Canadian based Ivanhoe Mines and Swiss headquartered Glencore’s recent partnerships and collaborations with various stakeholders across the supply chain, might be an indication that things are indeed changing for the better, and that collaboration and partnerships with African governments and even with Chinese companies, is the way forward in Africa.

Ever controversial and outspoken Robert Friedland, co-chairman of mining giant Ivanhoe mines, has never been shy to partner with Chinese interests and he has done so again in a bid to discover and develop new deposits in Africa. Friedland and Yufeng “Miles” Sun, co-chairman of Ivanhoe, recently announced that the company has entered into a strategic partnership agreement with China Nonferrous Metal Mining (Group) (CNMC), one of China’s leading mining companies, to jointly examine exploration, development and acquisition of mineral projects, as well as production, smelting and logistics opportunities, on the African continent.

CNMC, headquartered in Beijing China, is a world leader in the development of nonferrous metal projects; with exploration, construction and engineering, mining, smelting and logistical operations spanning more than 80 countries and covering more than 40 nonferrous metals, including copper, nickel, cobalt, gold, silver, tantalum, niobium, beryllium, zinc and lead.

“Our long-standing relationship with CNMC goes back decades to when Wu Jianchang was the general manager of China National Nonferrous Metals Industry Corporation − a pioneer industrial group specialising in the mining and metallurgy sector. Our good friends at CNMC are aware of the enormous challenges of discovering and building a new world-scale copper, nickel, zinc, or platinum-group metals mine. They also appreciate that ‘grade is king’ and that the DRC, and indeed all of Africa, has by far and away this planet’s best potential for major, new, high-grade mineral discoveries,” says Friedland. Ivanhoe is advancing three mining projects in Southern Africa: Kamoa-Kakula copper in the DRC; the Platreef palladium-platinum-nickel-copper-gold-rhodium discovery in South Africa; and the extensive upgrading of the historic Kipushi zinc-copper-lead-germanium mine, also in the DRC. The new partnership will not only strengthen its ability to discover new deposits in double quick time, but enable it to bring these projects on-line within the next two to eight years, just in time for Musk and Co in the US, and of course the Chinese in Beijing, to start manufacturing their new “clean” technology on mass scale.

Although I am not suggesting that Musk has any power over any of the mining executives in the world, or that the pressure exerted by numerous NGO’s over many years had no impact, but Musk’s call to mine more responsibly seems to have hit a chord with several companies reliant on the often controversial cobalt supply chain in the DRC.

In another newsworthy announcement this week, Fairphone, Signify, Huayou Cobalt, The Impact Facility, Glencore, the Responsible Cobalt Initiative, Sono Motors and Lifesaver announced the launch of an initiative called the Fair Cobalt Alliance (FCA). In response to poor economic, social and working conditions for many mining communities in the cobalt supply chain, the members of the FCA will be working closely with both national and provincial DRC government and with civil society and implementing partners towards three objectives:

  • To drive the supply of fairer cobalt by supporting the professionalisation of Artisanal and Small-Scale Mining (ASM) management and safer and environmentally more responsible sites.
  • Work towards child-labour free Kolwezi mines by supporting ASM operators in establishing credible control and monitoring mechanisms to keep children out of the mines and support the enrolment of children into school, allowing children and youth access to education and vocational training.
  • Increase household incomes by investing in community programmes, designed to create sustainable livelihoods other than mining, focused on the promotion of agriculture, entrepreneurship and financial literacy support projects.

The FCA was set up by social enterprise Fairphone, with partners Signify, the world leader in lighting; Huayou Cobalt, a leading cobalt supplier and The Impact Facility, an organisation designed to convene supply chains to empower ASM communities and enable diversification of mining economies.

Cobalt is a key mineral in battery production and the longer-term transition to a low-carbon economy. This initiative connects cobalt from the ASM operations in Lualaba Province, in the DRC, to the global electronics and automotive supply chains. The founding members are joined by one of the world’s largest global diversified natural resource companies, Glencore; the Responsible Cobalt Initiative (RCI), a programme established by Chinese cobalt refining and mining companies active in the DRC to tackle risks facing workers at artisanal mines in the cobalt supply chain; German mobility provider, Sono Motors and Lifesaver, which delivers hire and return portable power banks for events and venues.

Knowledge and development organisations, amongst them Miller Center for Entrepreneurship, and Congolese civil society, including the Centre Arrupe pour la Recherche et la Formation (CARF) are also actively supporting and participating in the initiative.

The Dutch Ministry of Foreign Affairs and Ministry for Foreign Trade and Development Cooperation, implemented by The Netherlands Enterprise Agency, contributes to the alliance through a multi-year grant.

Full implementation will take five years and will start in mines located in Kasulu and Kamilombe in the DRC, with the ambition to scale to more mines.

In 2020, the FCA will strengthen cooperation with the Responsible Cobalt Initiative and the Responsible Minerals Initiative with the aim of working with key stakeholders to achieve wider recognition of responsible ASM cobalt and encouraging joint action of upstream and downstream players to increase the supply of responsible ASM cobalt.

With the global energy transition to more sustainable, battery-led technology, the demand for cobalt is widely expected to increase. A fairer battery is the key to making this shift. However, global cobalt supply is not projected to meet demand, and there is a risk that informal ASM under poor working conditions will increase to fill this gap. ASM is often associated with hazardous working conditions, child labour, and limited access to legitimate, transparent markets – falling well below international standards.

Today more than two-thirds of global cobalt supply comes from the DRC. Although the majority originates from large scale mining operations, a significant portion is extracted by ASM. Best estimates suggest that in 2019 about 11% of cobalt exported was from ASM, while at the peak of cobalt prices in 2018 ASM counted for as much as 20%. More significantly, cobalt ASM is a source of direct employment for more than 100 000 people, with the number of workers fluctuating based on market prices and especially now in light of the ongoing pandemic. Across metals and gemstones, experts estimate there are a total of 1.5 to 2 million artisanal miners in the DRC.

According to Dr. Assheton Stewart Carter, executive director of The Impact Facility and the Fair Cobalt Alliance the security of cobalt supply chains is more important than ever as our need for this highly relevant mineral in the new digital economy becomes evident. “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. The Fair Cobalt Alliance is a bold move to do just that – to bring about systemic change by working with the local partners and engaging all businesses in the supply chain to achieve a common goal,” he says.

As the race for the discovery of the “new metals” in Africa heats up, collaboration and responsible mining seems to have taken the front seat, which is good news for Africa.

 

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