Umicore and ethical cobalt sourcing
Description of global cobalt landscape and sourcing issues
Cobalt is an essential element in the booming electrification of our society. This metal is required to stabilize rechargeable lithium-ion batteries in applications like electronics that enhance our connectivity and in automotive as part of the transition to clean mobility and the achievement of the Paris Agreement’s goals. As such, demand for cobalt is expected to further increase.
More than 65% of the global annual Cobalt supply is produced in the DRC (Democratic Republic of Congo), and approximately 15-20% of the Congolese cobalt is produced by artisanal small-scale mining (ASM).
Artisanal miners mine by hand using the most basic tools to dig out rocks from tunnels underground or scavenge for rocks containing cobalt in the discarded by-products of industrial mines.
ASM is linked to high risks of child labor, human rights abuses, poor safety conditions and health risks from exposure to, for example, cobalt dust and particles. ASM often happens through illegal intrusions or within communities which are often located on concession sites of up to 20 km2 of large-scale industrial mines (LSM).
Cobalt production in the DRC cannot be separated from its wider context of geopolitical challenges, such as ethnic conflict, corruption, and poverty. To ensure sustainable and ethical supply of this key metal, thorough due diligence is crucial but challenging.
How Umicore is situated in this global context
Umicore is fully aware of the risks linked to the sourcing of cobalt. In 2004 already, Umicore decided to exclude entirely from its supply chain cobalt obtained from Artisanal and Small-scale Mining (ASM).
Umicore became the first company in the world to create a dedicated framework to prevent unethical practices in its supply chain specifically related to cobalt and the first to have its due diligence process validated, every year, by a third party. We remain committed to continual improvement. More details are described below.
In 2020, around 75% of the cobalt raw materials entering our supply chain originated from large-scale mining (LSM) activities in the DRC. The remaining quantities are sourced in other countries or come from our recycling feed. In 2020, about 4.8% of total supplied quantity of cobalt came from recycling.
For other metals in Umicore’s supply chain and their sustainable and ethical sourcing, we apply the principles outlined in our Global Sustainable Sourcing Policy.
Umicore and ethical supplies
Elements we can control – our proactive and pioneering steps in dealing with cobalt issues
Umicore aims to ensure that no unethically mined cobalt enters its process. Our Sustainable Procurement Framework for Cobalt helps ensure the traceability of its materials supply chain and the due diligence we recurrently perform on our suppliers is aligned with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
Our recurring ethical assessments and due diligence
Our due diligence process consists of four steps and regularly recurs for every existing and new supplier and entails market insights and on-site visits throughout.
They are detailed in the Framework. In summary:
Our supply chain traceability system builds on a thorough transaction and logistical system that allows Umicore to track the origin of all its cobalt raw materials to the level of the mine. For this, we use a lot-receipts or a labelling process to ensure that all transactional and logistical documents are obtained and registered as custody documents.
We perform regular quality checks on the cobalt received. For instance, “chemical fingerprinting” allows us to look for and identify specific impurity patterns that help establish the exact origin of the ores and provide us with additional assurances.
Elements that are harder to control but that we mitigate as best as we can
There are elements inherent to the local context in the DRC that are more difficult to control, such as the illegal intrusions and ASM practices on large LSM concession sites and the vast number of workers and subcontractors for LSM sites.
Our thorough and recurring due diligence processes and third-party assessment of suppliers makes us confident that there is no unethically sourced cobalt in Umicore’s supply chains.
In addition, Umicore closely collaborates with international stakeholders to create and incorporate elevated standards for the industry and to provide assurance about the sustainability of raw materials while protecting business dynamics.
For example, Umicore has co-created and is actively involved in the Global Battery Alliance and its Battery Passport. It is committed to ongoing work to develop a standard that formalizes responsible sourcing through ASM. A platform like Re|Source uses blockchain technology to track and trace raw materials. This will help enable such extensive collaboration in the cobalt value chain and deliver “mine-to-market” visibility and accountability.
Umicore is also pleased to see that the European Commission, in its proposal for a revised Battery Regulation, embraces the principles of the Battery Passport and traceability.
Specifically, regarding child labor, on top of our commitment to exclude all ASM and child labor from its supply chain, Umicore has initiated and backs a number of initiatives to support local communities and their children.
- For example, Umicore was the first contributor to UNICEF’s (United Nations Children’s Fund) Fund for the Prevention of Child Labour in Mining Communities.
- In 2011, Umicore started a school construction project in Lubumbashi in collaboration with a local NGO. The school hosts daily more than 900 primary and secondary school children and from the start has offered education to thousands of children in the neighborhood of Lubumbashi. Since 2011, Umicore invested nearly $1 million in the school.
- A smaller initiative is our support to an NGO called EIGHT, to set up a system of unconditional cash transfers for a local Congolese community and keep children from working in the mines.
Continuous work in progress
Due diligence has been receiving increased attention in recent years, thanks to company and industry initiatives, NGO reports and new or upcoming regulations such as the EU (European Union) Battery Regulation and EU Due Diligence Regulation.
Such initiatives and legislation help to set and raise new standards for the entire supply chain and is leading to a growing and wider realization that sustainability is an essential part of business.
Different standards and schemes have been developed or are being implemented for refiners and mines concerning human rights risks (OECD Annex II). We also see standards covering Environmental, Health, Safety and Social emerge.
Based on these developments, Umicore is currently reviewing its Framework including certification, to ensure that we remain an industry leader that guarantees ethical supplies.
Only by acting together, can we change the status quo and achieve a genuinely sustainable cobalt value chain that respects its workers and the environment.