Pioneering Partnerships with ASMs

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An innovative approach to community inclusion.

Chemaf has been a key figure of the DRC’s mining landscape for more than 20 years. In that time, the Company has become all too aware of the country’s complexities and socio-economic challenges and has dedicated considerable resources to providing support aimed at uplifting and improving the circumstances of the stakeholder groups within its sphere of influence. This commitment was highlighted through Chemaf’s proactive participation in a globally pioneering project known as the Mutoshi Pilot Project.

This project, which ran from January 2018 to early 2020, sought to formalise and improve artisanal and small-scale mining (ASM) activity on its copper-cobalt-rich Mutoshi concession located on the outskirts of Kolwezi, Katanga Province, as a foundation for the responsible sourcing and secure delivery of cobalt into the global supply chain. It was undertaken as a world-first collaborative effort between Chemaf, as the large-scale mining partner, the Trafigura Group, internationally respected NGO Pact, and a collective of artisanal and small-scale miners (ASMs) working under the umbrella of COMIAKOL.

This pilot project involved assisting ASMs on their site with stripping, delivery of various forms of training of COMIAKOL members, provision of safety equipment, and other related activities to increase productivity, improve working conditions, and enhance the value of cobalt produced.

Chemaf provided technical support and training on responsible mining practices, while Trafigura helped to create a better supply chain for the mine’s cobalt ore. PACT provided support for the miners themselves, helping to build a cooperative structure that would give more bargaining power and improve conditions.

At its height, more than 2,000 accredited artisanal miners were involved in the scheme. The project was by no means perfect, but did provide a range of benefits to those stakeholders involved, including, but not limited to:

Improving health and sanitary working conditions
Improving safety of the ASMs in particular due to the use of open pits rather than shafts
Significantly increasing productivity and output
Reducing workplace harassment for women
Preventing child labour activities and generally improving family life
Facilitating the expansion of local businesses and upliftment of surrounding communities

It was with the threat of the COVID-19 virus that spread to the DRC in March 2020 and the need to safeguard the health of workers onsite and their surrounding communities that operational activities at the Mutoshi Pilot Project were suspended. It was later determined that operations would not restart owing to changes in DRC law which saw the establishment of Entreprise Générale du Cobalt (EGC), the DRC State Owned Entity responsible for the purchasing of all ASM cobalt.

Ultimately, the project demonstrated that it is possible to improve conditions for artisanal miners in the DRC and provided a blueprint for similar initiatives in the future. It showed that collaboration between mining companies, commodity traders, and development organizations can have a positive impact on both people and the environment.

Background

The concession upon which the Mutoshi Project is situated is a mineral-rich area and has been mined for various commodities by different companies and artisanal miners for more than a century.

Chemaf acquired the Mutoshi concession from the Congolese State-owned mining company Gecamines in 2015 under a 25-year lease agreement. This acquisition formed the bedrock of Chemaf’s growth strategy to expand its mining footprint across the mineral-rich Katanga Province. As part of that agreement, Chemaf negotiated to pay the sum of the full lease in instalments over a three-year period, with the final payment being made in December 2017. Until that final payment was made, Chemaf had limited rights and management of the Mutoshi concession the exception being that it was allowed to conduct some drilling activity to firm up resource estimates.

When Chemaf obtained full concession rights in December 2017, the site was occupied by a number of communities and ASMs who were mining surface cobalt deposits. While Chemaf fully intended to develop its Mutoshi concession into a state-of-the-art mechanised mine, the Company realised that there was a mutually beneficial interim opportunity to work with the ASMs as a mining contractor.

Chemaf subsequently appointed a single cooperative, COMIAKOL, authorised by the DRC Regulatory Authorities and representing approximately 5,000 ASM workers, to operate as a mining contractor on a designated area of its Mutoshi concession known as ‘Mutoshi Cobalt’. This would be managed as a pilot scheme while feasibility studies for a mechanized mine and processing plant were undertaken.

To sell the cobalt hydroxide, Chemaf entered into a three-year marketing agreement with international commodities trader and logistics company, Trafigura Group. Given the complexities around artisanal mining, particularly social and environmental impacts, a key component of this agreement was that all ore bought from the ASM cooperative had to meet Trafigura’s Responsible Sourcing Expectations as well as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

The main tenets of these expectations included that suppliers should:

Not contribute to serious abuses, such as torture, degrading treatment, compulsory labour, the worst forms of child labour or other human rights violations.
Not engage with upstream suppliers linked to serious abuses.
Engage with partners to avoid or minimise the exposure of vulnerable groups in their upstream supply chains.
Screen security forces to ensure that those known to be responsible for gross human rights abuses are not hired or required to demonstrate mitigation measures are in place.
Implement measures to prevent or mitigate risks of bribery.
Implement measures to prevent or mitigate risks of money laundering.
Implement measures to ensure that all required taxes, fees and royalties are paid to governments.

Collaborative partnership

This was a world-first pilot project and agreement, for at no other time had an ASM collective, an established mining company and a commodities trader partnered on a responsible sourcing cobalt hydroxide agreement. As such, strict parameters had to be designed and implemented for the pilot scheme as well as measures to ensure effective monitoring against due diligence requirements. It was for this reason that Pact, an internationally respected NGO with extensive experience working with artisanal miners in challenging environments, was engaged by Trafigura to manage the practical implementation of responsible ASM sourcing at Mutoshi. As well as providing all the technical support and on-the-job training on occupational health and safety, Pact was also responsible for monitoring the project and all data collection to ensure working conditions improved and complied with Trafigura and the OECD’s requirements. Trafigura also appointed third-party assessor Kumi Consulting whose mandate was to scrutinise the project in depth and report back on performance to Trafigura, Chemaf, and Pact, as well as selected downstream partners.

Scope of the project

This pilot project essentially involved assisting ASMs on their site with stripping, delivery of various forms of training of COMIAKOL members, provision of safety equipment, and other related activities to enhance productivity of ASMs, and improve their working and safety conditions. Chemaf provided geological data to the miners, heavy earth moving equipment for waste stripping, controlled areas for the washers, and trucks for moving the cobalt to depot where it is cleaned graded and purchased. In addition, Chemaf was in charge of safety procedures, health services, safety equipment, community liaisons, and managing the excavators. In this context, excavators were required to remove waste and ensure that at no point do pits dug by AMs exceed 10 metres in depth. DRC’s State Regulator for ASM Service for Assistance and Supervision of Artisanal and Small-Scale Mining (SAEMAPE) conducts safety inspections, and, until recently, had as many as 11 officials on site. Together, the various stakeholders monitor different aspects of safety, including child labour. A price agreement for the cobalt mined by the ASMs was negotiated between Chemaf and COMIAKOL members, which partly protected the miners from income risks related to volatility in market prices and fraud among traders. All ore was purchased through Chemaf’s single buying station, situated on the concession. In order to participate in the scheme, all artisanal miners had to be members of COMIAKOL and had to carry with them identity cards developed for the site. In order to ensure restricted access, the site was fenced-off to avoid external miners or family from entering the area. For security reasons, no more than 5,000 ASMs were allowed to register for the project or allowed on site on any given day.

Impact

The project had a significantly positive impact on the COMIAKOL ASMs over the two-year period it was piloted. These benefits permeated all aspects of their lives. Undoubtedly, the most significant impact related to the improved safety and health of the ASMs. A key component of the scheme was the formation of a Health and Safety Committee through which Chemaf, COMIAKOL and Pact raised hazard awareness and safety management capacity amongst the ASM workforce. This, together with the use of open pits rather than shafts to extract the cobalt, and the provision of a range of personal protective mining equipment, resulted in enhanced safety performance over the two-year period. Chemaf established two first aid clinics in the concession area with all medical supplies and health staff, including a doctor, nurses and a paramedic, available free of charge. Chemaf’s Radiation Officer also conducted monthly assessments to ensure exposure to naturally occurring radiation from cobalt remains within safe limits. Improved health conditions were also facilitated by the supply of clean drinking water and the installation of on-site toilets. The productivity of the ASMs was also boosted on the back of better working conditions. Eight-hour work shifts were introduced with most ASMs choosing to work a six-day week. These more stable working hours facilitated a far more stable home-work balance. Buses for transportation between the site and buying station also contributed to productivity levels as ASMs had to spend less time travelling by foot.

Outcome

The initiation of the pilot project coincided with the beginning of a very rapid decline in cobalt prices, due in part to a significant oversupply to the market by ASM activity in the DRC. Prices fell markedly, from an all-time high of US$90,000 per ton in early 2018, to below US$30,000 by mid-2019. For this reason, the implementation and outcome of the scheme was severely affected evidenced by the fact that by September 2019, less than 900 ASMs were actively participating. The project was dealt a further blow with the onset of the global Covid-19 pandemic in early 2020. In response to the threat of the spread of the influenza virus and with a view to safeguarding the health of workers onsite and their surrounding communities, in March 2020 operations at the Mutoshi Pilot Project were suspended. It was later determined that operations would not restart owing to changes in DRC law which saw the establishment of Entreprise Générale du Cobalt (EGC), the DRC State Owned Entity responsible for the purchasing of all ASM cobalt. While noting that the Mutoshi Pilot Project is no longer in operation, Chemaf is proud of the role played in the pioneering scheme and of the many and varied benefits it delivered.

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