It is widely accepted that to limit global warming to lesst han1.5 degrees and achieve a net-zero of
green house gas (GHG) emissions,we need pay special attention to the sustainable transformation
of the energy sector away from fossil-fueled energies.Currently 75% of global GHG emissionsare
produced by the energy sector, within which the transport sector accounts for about a third. Electric
vehicles (EVs) play a big role in this transition, as 75% of transport emissions come from road
travels. Lithium-ion batteries used in EVs need special metals to be able to store energy and limit
heat generation, one of which is cobalt. A typical EV battery needs about 6-12 kilograms of cobalt. Currently, 60-70% of the global cobalt supply is provided by mines in the Democratic Republic of Congo. The global demand for Cobalt is expected to grow fourfold by the end of the decade. To meet this rise in demand cobalt is increasingly produced by informal „artisanal“, small-scale mining; currently 15-30% of the supply is mined like this.
This way of mining has noteworthy environmental and human rights risks. The miners, often including children, working in these informal mines are putting themselves in danger and exposing themselves to various health risks like high levels of radioactivity due to the closeness to uranium mines, toxic chemicals and gases, overexertion resulting in lethal accidents, and violence. Similar to other types of mining, mining for minerals pollutes close by water sources as well as the air causing health issues for local communities. Still, there is great incentive for the workers to keep up the artisanal mines, because due to the great international economic interest in cobalt, the up to 200.000 people work there for a pay of up to 10 US$ per day, which is much higher than the average of 1.90 US$ in the Congo. Companies, specifically in the EU with the 2023 Corporate Sustainability Reporting Directive (CSRD) and the upcoming Corporate Sustainability Due Diligence Directive (CSDDD), trading with and including cobalt in their products like EVs are faced with the challenge of having intentionally or unintentionally incorporated artisanal mining into their supply chains, which when left unaddressed can result in legal consequences.
But what can companies do about this? They, and really we all, are dependent on cobalt mining for the energy transition. How can we make sure, that this does not happen at the costs of miners and local communities? In 2020 the World Economic Forum proposed some recommendations, starting with the formalization of this informal sector. This strategy provides a great opportunity for multisolving many problems the Congo is faced with. Companies sourcing cobalt and other minerals and metals in third world countries would need to establish and monitor safety standards, including independent cooperatives that oversee that these standards are being met. A formalized mining sector would ideally result in stable employments for adults and increased productivity as a result of better organized production. This will in turn reduce poverty in the regions, which is often the root cause of child labor. But this alone will not fix all problems. To mitigate the root causes of poverty, food insecurity, a lack of an education, health and infrastructure system not just for the local mining communities, but for all people living under these circumstances, the international community must come together and address these problems.
Stakeholder theory could provide another necessary perspective when thinking about how companies should address the human rights risks related to artisanal mining of cobalt, as the miners and local communities in the Congo are stakeholders, who provide value for the firm. R. Edward Freeman, who advanced this theory, is convinced that in the 21st century great companies only endure if they manage to align stakeholder interests in the same direction. Up until now, companies had little reason to acknowledge the miners as stakeholders to listen to, but as the demand for cobalt rises, so does the dependency on them and the need for increased productivity through better organization. Consequently, companies must engage in open dialogue with the miners and listen to feedback. Stakeholders, in general, have two options to give feedback to actions of a company that do not align with their interests. One can exit the relationship or voice their complaint. A miner in Congo is neither able to exit the relationship, as they need to secure their livelihood, nor do they have the power to voice a complaint to a company that is far away and not listening. To be able to create value for their stakeholders, meaning the miners and communities, companies must provide an option for them to use their voices by involving them into the decision-making process. This could be a direct engagement or happen through a third, independent party. The coming EU CSDD-Directive will make this a requirement for companies along their whole supply chain, so it would serve them to start this process now.
In conclusion, formalizing the artisanal cobalt mining sector and giving the miners a voice can help make mining for cobalt, which is currently a necessary evil in the transition to battery electric vehicles and fighting climate change, at least socially acceptable and devoid of human rights risks. A next step would be to investigate how we could make the mining itself more environmentally friendly and resource-efficient.
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Author: Daniela Duschl, Student of MBA Sustainability Management Class 1 (2023-2025)