Monthly Archives: August 2017

Congo-Kinshasa: Is Child Labor the Price for E-Cars?

Edited

23rd August 2017

ANALYSIS
By Helle Jeppesen

Whether in cars, laptops or smartphones, cobalt is in nearly all batteries. The biggest supplier is the Democratic Republic of Congo, where human rights are often violated in the mines.

Young men, armed with only torchlights and tools climb down in a deep, dark hole, without helmets or security gear. The path becomes even smaller as they go further down into the unsecured tunnel. To remove the cobalt, the young miners use chisels and hand hooks and then place the gem rocks into bags, which are then pulled up by another miner above ground.

The rights group Amnesty International witnessed this scene during a research trip in Kasulu, the former Katanga province in the Democratic Republic of Congo (DRC). These mine workers are known in the DRC as Creuseurs, loosely translated as the diggers.

The mining work is divided among everyone. Men dig for the rocks in the tunnel, women wash the rocks in the river, and children are tasked with separating the cobalt from the rock with their bare hands. “Neither the children nor the adults who we met had any form of security equipment”, said Amnesty International’s researcher Lauren Armistead.

In May 2015, Armistead, her colleague Mark Dummett and a staff of the African mining resources monitoring group, AFREWATCH, researched the conditions of cobalt mining in the DR Congo for an article they titled: “This is what we die for.” When the report was published in January 2016, it caused a lot of stir due to its damning documentation of child labor in the artisanal mining sector.

“The youngest child we met was just seven years old when he first went down into the mines,” said Armistead in a DW interview. “Most children involved in sorting little rocks or crushing the stones on the surface in old industrial mines are teenagers.”

Toxic dust from cobalt stones if inhaled could lead to fatal lung diseases.”Children and adults are both struggling with respiratory problems, cough and sinus infections,” Armistead added. Moreover, the rights researcher said the sacks with the cobalt are too heavy for the children to carry. In addition, a normal working day consists of 10 to 12 hours in the blazing sun, cold or rain.

No batteries without the DR Congo

The world’s largest deposit of cobalt lies in the Copperbelt region in the DR Congo. During the mining for copper or tin, cobalt was discovered as a by-product. Through the dark tunnels of the mining fields in Haut Katanga and Lualaba, the raw cobalt materials go through several distributors before being exported. The clean cobalt is delivered to manufacturers of lithium-ion batteries, which are in high demand.

“The price of cobalt has increased by 100 percent since the beginning of this year,” said Siyamend Ingo Al Barazi, a geologist with the German raw material agency, DERA (Deutsche Rohstoffagentur). “The biggest consumer is electro-mobility.”

Al Barazi is sure that the demand for cobalt will continue to boom. However, among experts there are disagreements whether the current demand which is at 100.000 tons per year will rise to 180.000 or 300.000 tons per year, by 2025. “Which ever way you turn it, one thing remains clear, an increase in demand will take place. This leads us to the main question, whether demand can be met by supply,” Al Barazi added.

The high demand is also related to the technological developments of batteries and accumulators, according to Michael Ritthoff, an expert on recycling economy at the Wuppertal Institute for Climate, Environment, and Energy in Wuppertal, Germany. “Currently most lithium-ion batteries contain cobalt. But there are alternatives that have been developed and some can already be used,” Ritthoff said.

Daily pay: A few dollars

The price for a ton of cobalt is currently a bit under 60,000 dollars (51,000 euros). The children, women and men, removing, crushing and sorting the stones, receive around one to three dollars a day. Industrial mines, which are run by international companies, use high technology, whereas small-scale mines, which make up ten percent of the world’s supply, rely a lot on children to work under miserable conditions.

“These people have no other alternatives for survival,” said Amnesty’s Lauren Armistead. “If the companies choose to boycott cobalt from DR Congo, this would have huge unintended consequences for the people and could drive them further into poverty.”

Since Amnesty International’s damning report, some slight changes can be seen in the DR Congo. “Currently, Congolese mining authorities are trying to give artisanal miners licenses that were once only meant for major corporations,” said geologist Sebastian Vetter from the German organization, Federal Institute for Geo-science and Natural Resources (BGR).

The BGR developed a certification process for gold, tantalum, tin and wolfram in a so-called “Certified-Trading-Chains” or CTC process, where small-scale products can be tracked back to their origins. “The ability to find the origin of the resources is part of the certification. The certification itself encompasses many other criteria or standards and promises freedom, job security, the absence of children at the mines and also social standards,” said the BGR geologist in an interview with DW. According to Vetter, it would be possible, with little adaptations, to apply the CTC process on cobalt.

Cobalt no conflict mineral

However, laws in the United States, including the so-called Dodd Frank Act, and the new European Union regulation on imports, list only four minerals from conflict regions as “conflict minerals; these include gold, tantalum, tin and wolfram.” For those four minerals, companies listed in the US and the EU, which import minerals, have to state the origin of the resources and evidence of compliance with the regulations, whereas the Dodd Frank Act in the USA is restricted to the DR Congo and the region.

For other resources, an evidence of origin is not a necessity and companies usually do not deliver any proof of origin. Firms, which produce laptops, smartphones or cars, use this complex supply chains for their accumulators and battery components.

Most of these firms claim to be carrying out responsible acquisition of their resources and respect human rights. “The responses from the companies show that as long as they are not required to do something, many of them will not do it,” said Armistead.

First stop: China

The largest wholesale buyer from artisanal mined cobalt in the DR Congo is the Chinese firm Zhejiang Huayou Cobalt Co. Ltd. This corporation obtained its license from the government-owned mining company Gecamines, which was accused of corruption, favoritism and fraud in a report by the organization, Global Witness.

The price of cobalt is determined by its weight and clarity. The creusers hardly have any means to control whether they are receiving an appropriate amount for their rocks or not. Zhejiang Huayou’s subsidiary in the DRC exports the cobalt to China, where it is smelted and sold on the global market.

First attempts for human rights

Since Amnesty’s report was published in 2016, Huayous said work has been done to improve the working conditions in the Congolese cobalt mines. The aim, according to the Chinese company, is to comply with the OECD guidelines on due diligence in the supply chain.

BGR’s Sebastian Vetter confirmed that the Chinese company has changed its working policies. “Huayous’s subsidiary, Congo Dongfang Mining, is working to improve transparency in the supply chain and for better management and formalization of the mines,” Vetter said. “The will for improvement has been communicated. But whether this is enough, I cannot tell at the moment.”

In autumn, Amnesty International intends to publish an update and analyze what has changed since the previous report was published in January 2016.

SOURCE: http://allafrica.com/stories/201708250282.html

Africa: Governments Put Pressure on Mining Groups

By Daniel Pelz
19th August 2017

Strict laws, high taxes: Africa’s governments are looking more closely at foreign mining companies. In future, more locals will benefit from the extraction of raw materials. But the strategies are controversial.

Tanzania’s President John Magufuli does not need any more opponents than he already has. Since taking office, he has contended with critical journalists, lazy officials and the European Union. The temperamental president, nicknamed “bulldozer” by the people for his strict leadership style, is now targeting foreign mining companies.

“We must profit from our God-given mineral resources,” the president said at a rally last month. His parliament made good on his words: At the president’s initiative, a new mining law was passed. In future, foreign companies will have to pay higher taxes. Their operations in the country must be 16 percent locally owned. Existing agreements with the government will be allowed to be renegotiated.

What is more, the British mining company Acacia is in trouble with local financial authorities. It is accused of deliberately downgrading its gold exports in the past to save on taxes. The group asserts that it was not aware of such practices and says it is cooperating fully with authorities. To no avail: Foreign employees are currently not being granted new visas.

Harsh allegations against corporations

New mining licenses for other companies will be given only when “things are in order,” Magufuli said. This is expected to be well-received by the people. Tanzania is the fourth-largest gold producer in Africa, but almost no one in the country benefits from the fact: One-third of the population lives in poverty.

In other parts of Africa, too, there is growing pressure on foreign companies. “It is unfortunately a populist line that many African governments have tried to follow,” Ross Harvey from the South African Institute of International Affairs told DW.

He describes the tack they take as follows: “The country is not benefitting sufficiently from mining; mining is […] simply extracting resources and repatriating profits elsewhere, [leaving] the country with nothing but a hole in the ground and no socio-economic benefits.”

This has consequences for the industry. Zimbabwe’s government wants to seize nearly 28,000 hectares (69,000 acres) of land belonging to a subsidiary of the South African mining company, Impala Platinum. The case is currently before the court. In South Africa, the government has ruled that 30 percent of shares in all mining companies must be in South African hands. Until June, that figure was 26 percent.

Experts can understand some of the measures. In some countries, foreign companies have to pay lower taxes on mineral resources than is customary today because they are still benefitting from old contracts, Robert Kappel of the GIGA Institute of African Affairs told DW. As long as world market prices remained high, African governments earned good money despite the low taxes, thanks to export charges. But those times have gone. “The prices of raw materials have been declining for years, which is why the tax on profits from the production of raw materials has fallen in the respective national budget,” Kappel said. Because their source of income has been interrupted, many African governments are now kicking into gear.

Little likely benefit to the poor

But higher tax revenues would not necessarily benefit the poor, Kappel said. “What governments do with their tax revenue is up to them. If you look at the budgets of most countries, there is not much money to help improve the situation for the poor populations.”

Even economics expert Ross Harvey says it is right for African countries to renegotiate some contracts. But he is critical of the way they are going about it. “Fighting this battle in a populist, public way through the media and through very random impositions, like an export ban introduced overnight, does not install confidence.”

And the countries need mining companies despite all. In South Africa, for example, more than 70,000 jobs within the mining industry have been lost in the past five years. This comes as the country is already suffering from a high unemployment rate.

Instead of hasty symbolic politics, governments should quietly negotiate with corporations, Harvey says, pointing to what he sees as positive examples in Burkina Faso, Namibia and Kenya.

“They [African governments] understand they need foreign investment, but also that their countries need to profit in the long term,” Harvey said.

Kappel, in his turn, says that governments should insist that people in the regions where the mines are located profited in a practical way.

“There are many way to get companies to do something for infrastructure, health care and the education system in their production areas. There are already countries that have written that into their contracts,” he said.

SOURCE: http://allafrica.com/stories/201708200103.html