Published on 26 April 2018

CSR

Cobalt: blockchain tested in the DRC in an effort to combat child labor

Global demand for cobalt is exploding amid an era of energy and digital transition. More than half of this mineral’s supply comes from the Democratic Republic of Congo, where nearly 40,000 children are employed in mines. In an effort to better trace cobalt, major contractors are joining forces to create more ethical supply chains by using blockchain.

Cobalt RDC amnesty international
In the Democratic Republic of Congo, 20% of cobalt mines involve manual mining, often using child labour.
@AmnestyInternational

Demand for cobalt has exploded in recent years, leading to a threefold price increase in 18 months. Nearly 60% of this mineral’s supply comes from the Democratic Republic of Congo (DRC), where one-fifth of the production comes from manual mines, often employing children. Investors, NGOs and the world's leading non-ferrous metals exchange, the London Metal Exchange (LME), are sounding the alarm. They call on consumer companies to better trace the origin of their supplies.

The solution could - again - come from blockchain, through "The Better Cobalt Pilot". The initiative aims to ensure production of "ethical cobalt" in small mines. This experiment will be monitored and documented by the UK audit firm, RCS Global, which is a supply chain specialist.

An Apple supplier

The principle is to allocate cobalt products from five artisanal or low-mechanised mines with electronic tags, all monitored by a blockchain. RCS Global agents, present at the production sites, will be responsible for reporting any discrepancies to OECD labour guidelines, and monitoring child labour specifically. Information will be displayed on a dashboard accessible to all members participating in the initiative.

These members include global brands, whose names have not yet been disclosed, two car manufacturers and cobalt refiners. Specifically, the initiative highlights the Chinese corporation, Huyaou Cobalt, which is the largest cobalt refiner in the world. The corporation is a supplier for Apple and other big names in the digital sector.

A questionnable process

The effectiveness of such a process remains to be seen. Several NGOs have shown their scepticism by comparing the "Better Cobalt Pilot" initiative to the Kimberley Process, which aims to establish a traceability charter to eliminate "blood diamonds", or diamonds mined in African conflict zones. Two NGOs have even decided to withdraw: Global Witness and Impact.

In an interview conducted by Reuters, Christine Chow of Hermes Investment Management explained that the traceability of cobalt is much more complex than that of diamonds. According to her, cobalt’s supply chain has twelve layers, compared to just five for precious gems.

At the end of 2017, Amnesty International cited major companies on the subject of cobalt. "Industrial giants are not doing enough to deal with child labour allegations in cobalt supply chains for eventual use in batteries," they proclaimed. The automotive sector was especially targeted: "Renault and Daimler show particularly bad results". The NGO has called on Renault to "assume its duty of vigilance in the Democratic Republic of Congo".

Ludovic Dupin, @LudovicDupin

 

 


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