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Conflict cobalt uncertainty continues to haunt consumer industries

by Greg Klein | October 3, 2016

Nine months after issuing a report on cobalt produced by child labour, Amnesty International says major manufacturers still can’t guarantee conflict-free sources.

The organization’s January report focused on the Democratic Republic of Congo, where children work in dangerous conditions up to 12 hours a day, making between $1 and $2 a day. “In 2014 approximately 40,000 children worked in mines across southern DRC, many of them mining cobalt, according to UNICEF,” Amnesty noted.

Conflict cobalt uncertainty continues to haunt consumer industries

DRC children sorting ore.
(Photo: Amnesty International/Afrewatch)

“Frankly companies owe it to their consumer to be transparent about their supplies and to map out their supply chains so that they know where it’s coming from,” Amnesty researcher Mark Dummett told Thomson Reuters Foundation, the charitable arm of the Thomson Reuters news agency. He maintains there’s no guarantee that the lithium-ion batteries in brand name consumer items, including vehicles, phones, computers and other devices, aren’t tainted with conflict cobalt.

Oddly enough, U.S. laws barring conflict minerals don’t cover cobalt. The Amnesty report stated at least half the world’s supply originates in the DRC, with about one-fifth of the national total coming from artisanal mines.

Benchmark Mineral Intelligence attributes over 60% of global output to the DRC.

While several manufacturers said they were scrutinizing their sources, Dummett countered that they weren’t disclosing what efforts they made to exclude child labour from their supply chains.

Last month Industrial Minerals reported that RealLi Research analyst Mo Ke told a Beijing conference there would “probably be a shortage next year” of the commodity. “Some commentators, such as Ian Pringle, managing director of Bayrock Materials and Pacific Basin Bluestone, thinks that this is an understatement,” IM added.

Already suffering from civil and political unrest, the DRC was hit by corruption allegations last week from the U.S. Securities and Exchange Commission. An SEC lawsuit claims that a DRC partner of the Och-Ziff Capital Management Group bribed government officials with more than US$100 million over 10 years.

An anonymous source alleged the partner was Dan Gertler, Bloomberg reported. “Glencore and Gertler’s Fleurette Group are partners in the $1.8-billion Mutanda copper and cobalt mine in the African country, with Glencore owning 69% and Fleurette the remainder,” the news agency added. Gertler and Fleurette denied allegations of wrongdoing.

In May Freeport-McMoRan NYSE:FCX announced a definitive agreement to sell its stake in the DRC’s Tenke copper-cobalt mine to China Molybdenum for US$2.65 billion and a contingent consideration of up to US$120 million. But a Bloomberg dispatch from last month stated that Gécamines, the DRC’s state-owned mining company and a co-owner of Tenke, said any decision by Lundin Mining TSX:LUN to divest its 24% share of the mine could threaten the deal.

Download the Amnesty International report.

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