Cobalt-rich Congo province to centralise mineral sales

(Reuters) - All minerals produced through small-scale artisanal mining in Democratic Republic of Congo’s southeastern Lualaba province must be tested and sold at a centralised trade hub from June 29, the provincial governor said in a document seen on Thursday.

FILE PHOTO: Artisanal miners work at the Tilwizembe, a former industrial copper-cobalt mine, outside of Kolwezi, the capital city of Lualaba Province in the south of the Democratic Republic of the Congo, June 11, 2016. Picture taken June 11, 2016. REUTERS/Kenny Katombe

The move, which the provincial governor said was intended to fight mining fraud and maximise state revenues, reflects a national push to centralise cobalt trading through a state monopoly created in January, the Entreprise Generale de Cobalt (EGC).

The sale of all non industrially-sourced material, including large quantities of cobalt, was temporarily suspended until the new arrangements were put in place, Lualaba’s governor Richard Muyej said in a June 22 letter seen by Reuters.

Two government sources confirmed the letter’s authenticity.

The new regulations are intended to improve transparency in the supply chain, Muyej said.

Artisanal miners account for around 20% of the cobalt output from Congo, the world’s largest producer of the metal. The majority is mined in Lualaba and neighbouring Haut-Katanga province.

The metal is a key component in rechargeable lithium-ion batteries used in mobiles phones, laptops and electric cars.

Trading of artisanal cobalt, which is extracted with rudimentary tools and often associated with child labour and dangerous working conditions, is dominated by Chinese middlemen.

This material is often mixed with industrially-produced cobalt, raising the risk of contaminating supply chains for end-users such as Apple, Tesla, and Microsoft.

Earlier this year the central government created the EGC as a subsidiary of the state mining company Gecamines to purchase and market all cobalt that is not mined industrially in an effort to exert greater influence over prices.

It was not clear how Lualaba’s new regulations were connected to the EGC, which has not started operating because of an ongoing money laundering and fraud investigation into Gecamines.

Reporting by Hereward Holland; Editing by Jan Harvey