ASM needs stronger initiatives, regulation

An image of rough cobalt stone

CYNICAL OUTLOOK Artisanal miners are often distrustful of government policies and promises that are aimed at creating responsible cobalt supply chains

17th February 2023

By: Nadine Ramdass

Creamer Media Writer


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Owing to the prevalence of the artisanal and small-scale mining (ASM) sector in the Democratic Republic of Congo (DRC), it has been difficult for government to regulate the industry.

However, government is attempting to transform and regulate the industry through new initiatives, says law firm Beech Veltman CEO Warren Beech.

The ASM sector accounts for between 20% and 30% of the DRC’s cobalt extracts. Despite the dangers associated with the sector, it has continued to operate – even transporting cobalt and other minerals, such as copper and gold, throughout the Covid-19 pandemic and the subsequent restrictions.

“The true circumstances under which artisanal miners work cannot be described in words, and while photos convey some of the extremely dangerous conditions, one can only truly understand by visiting ASM sites,” Beech states.

He explains that ASM is typically the product of social and economic drivers, which include extreme poverty and the failure of the State to ensure that benefits flow from mining operations to the relevant communities.

However, ASM is also unable to address the challenges these communities face and often contributes to social and economic issues, such as crime, and the cycle of poverty.

Artisanal mineworkers typically do not benefit materially from the artisanal mining activities, which are unsafe, unhealthy and exploitative, particularly for women and, as ASM is typically illegal, it “creates opportunities to exploit vulnerable members of society, including children, who are used, essentially, as modern slaves”.

Regularisation Programmes
To mitigate, and eventually eradicate, the exploitation prevalent in the ASM sector, government must regularise ASM through a measured programme, which has the support and acceptance of artisanal mineworkers.

If they do not support the regularisation programme, it will not succeed, adds Beech.

However, he notes that end-buyers of the ASM sector’s output also need to be regulated because ultimately, they drive demand.

Further, owing to the significance of ASM in the DRC, it will be difficult for government to regularise the sector, although it has made good strides in transforming and formalising aspects of ASM.

This includes the establishment of the State buyer, the Entreprise Générale du Cobalt (EGC), and the conclusion of the “take and financing agreement” with multinational commodity trading company Trafigura.

As part of the agreement, the EGC will buy cobalt from the ASM sector and supply it to Trafigura, which has, in turn, agreed to a five-year deal of cobalt supply with the EGC.

The agreement will assist in financing regularisation initiatives of ASM, including the establishment of buying centres and associated infrastructure and logistics, which will, ultimately, also benefit the DRC government.

The EGC’s primary role is to buy, process and sell cobalt to offtakers, such as Trafigura, thereby introducing structures to assist the ASM sector. Under the EGC’s regularisation programmes, key aspects, such as health and safety and the artisanal working environment, are expected to improve, explains Beech.

Through the EGC, the DRC government has already started buying cobalt from the ASM sector. However, this has been on a limited scale. As the initiatives expand, including investment by Trafigura, the scale is expected to improve.

The DRC Minister of Mines also joined the Cobalt Action Partnership (CAP) Steering Committee in early 2021, in support of responsible and sustainable cobalt supply chains, with the underlying goal of improving health and safety, and addressing social and economic conditions.

Initiative to Change
Beech elaborates that various initiatives have been implemented under DRC President Félix Tshisekedi to address concerns regarding the country’s mining legislation, including in relation to ASM.

The initiatives appear to be working; however, there is still a long way to go to fully address concerns.

He adds that, until the government’s initiatives have been successfully implemented, ASM remains a high-risk activity in the DRC, particularly for the mineworkers and those assisting them, as well as the broader community that is often affected by the negative environmental impacts of ASM.

“Actual concerns or perceptions surrounding historical government involvement in corruption and exploitation of ASM mineworkers will continue to plague the ASM sector, despite Tshisekedi’s initiatives and public commitment to addressing ASM.”

The initiatives aimed at improving ASM mining conditions will take time to not only implement but also affect improvements.

Further, in some cases, those in the ASM sector do not want to have operations regularised because of factors such as possible higher prices deterring illegal buyers.

The DRC government also committed to implement the Extractives Industry Transparency Initiative (EITI), which will assist in creating trust between government, investors and ASM stakeholders. However, its impact ultimately depends on how well it is implemented, Beech adds.

Transparency, as committed to under the EITI, includes visibility of monthly revenues collected from royalties, and how they are allocated. Recent disclosures have shown that government did not, for a lengthy period, distribute revenues as required, including to provincial authorities and the territories.

Therefore, more disclosures, such as this one, would renew faith in government’s commitments to proper infrastructure development and the flow of benefits to DRC citizens, and could possibly contribute to the regularisation of ASM, Beech concludes.

Edited by Nadine James
Features Deputy Editor



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