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Digging deeper into the state of cobalt mining in the DRC
The Democratic Republic of Congo holds around 70 per cent of the world’s reserves of cobalt and is also the largest producer, accounting for over 70 per cent of cobalt mine supply in 2020. More than 70 per cent of the world’s cobalt is produced in DRC, and 15 to 30 per cent is produced by artisanal and small-scale mining. Yves Kabongo, Managing Partner at KBG Capacity joins CNBC Africa for more.
Tue, 13 Apr 2021 10:22:26 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The DRC's cobalt sector experienced a significant production increase in 2020, showcasing robust growth despite challenges.
- Government-led efforts to monopolize cobalt production and transition to green energy emphasize strategic market positioning.
- Infrastructure development, accountability measures, and sustainable practices are key focus areas to ensure the sector's long-term success and contribution to the economy.
The Democratic Republic of Congo (DRC) plays a significant role in the global cobalt market, holding about 70% of the world's cobalt reserves and being the largest producer, accounting for over 70% of cobalt mine supply in 2020. More than 70% of the world's cobalt is produced within the DRC, with artisanal and small-scale mining contributing between 15 to 30% of the total supply. CNBC Africa recently hosted Yves Kabongo, Managing Partner at KBG Capacity, to delve deeper into the state of cobalt mining in the DRC.
Kabongo highlighted the remarkable progress of the mining sector in the DRC, citing an 11-12% increase in cobalt production compared to the previous year. The country's overall cobalt output stood at about 1.6 million tons, with cobalt production alone reaching 80-90,000 tons in 2020. Despite the challenges posed by the pandemic, the outlook for the DRC's mining industry appears promising.
One of the key factors driving the DRC's position in the cobalt market is its commitment to transitioning from fossil fuels to green energy. The government has taken steps to consolidate control over cobalt production, with approximately 20% of the 80-90,000 tons of cobalt being sourced from artisanal mining. This move has allowed the state to establish a monopoly controlled by Gécamines, facilitating strategic pricing and market influence.
In addressing concerns about managing artisanal and small-scale miners, Kabongo emphasized the importance of incentivizing responsible mining practices. With millions of individuals engaged in artisanal mining in the DRC, ensuring their safety, fair compensation, and environmental stewardship is a critical national priority. Collaborations with organizations like FACT and industry stakeholders like Trafigura are helping streamline the supply chain while maintaining a liberalized mining sector.
The surge in cobalt prices, soaring by 70% in the previous year to over $50,000 per metric ton on the London Metal Exchange, has significantly impacted the commodity's export prospects. Given the projected doubling of demand from 140,000 to 240-250,000 tons, securing efficient sourcing channels is vital. New deposits like Kisaufu and the resurgence of interest in existing mines like Musashi underscore the industry's dynamism and potential for substantial export growth.
Infrastructure development plays a crucial role in sustaining the mining sector's growth trajectory. With mining contributing up to half of the country's budget, a portion of production revenues is earmarked for community reinvestment and infrastructure improvements. Key players like Trafigura have committed substantial funds to infrastructure projects, enhancing operational efficiency and supporting local communities.
Governance and sustainability are paramount concerns within the DRC's mining industry. The implementation of a new mining code has empowered civil society and NGOs to hold the government and industry stakeholders accountable for responsible resource management. An investment fund focused on enhancing transparency and equitable resource allocation reflects the sector's commitment to sustainable practices and inclusive growth.
As the DRC's mining sector continues to thrive amid rising global demand for cobalt, the country's strategic initiatives, partnerships, and transparent governance framework position it as a key player in the evolving landscape of critical mineral supply chains.
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