Context

To facilitate the market acceptance of responsibly produced ASM copper-cobalt, the Fair Cobalt Alliance (FCA) – together with Fairphone, a co-founding member of the FCA – launched the Cobalt Credits (CC) mechanism in August 2023 through the purchase of cobalt credits worth approximately USD 12,000 for around 2.5 tonnes of cobalt from the mine site for the pilot of this project commensurate to their full cobalt consumption in 2023. This initiative coincided with the launch of the Fairphone 5, a mobile device by the Dutch social enterprise known for building a movement towards fairer electronics.

The funds from the credit sales have been used to so far implement one project at the artisanal cobalt-copper mine site of Kamilombe, run by the Coopérative Minière pour le Développement Social (CMDS), the cooperative that manages the Kamilombe artisanal cobalt-sopper mine site, and a partner of the FCA since 2020. The cooperative operates the mine’s day-to-day operations, including the registration of mine workers, on-site production enhancement, mineral purchasing and access control.
In the Democratic Republic of Congo (DR Congo), despite legal recognition of ASM in the national mining code, currently no official market channels allow ASM material to formally enter the global battery supply chain. Fairphone aims to ensure it plays its role in creating responsible mineral supply chains and fostering new relationships between people and their products.

Miners coming up after a shift underground digging cobalt ore.

A description of the credit system and its governance 

CCs represent an innovative new approach to addressing the complex issues associated with ASM cobalt mining. The CC mechanism is a ‘book and claim’ based credit system that allows downstream companies to financially contribute to improvements at artisanal mine sites committed to professionalising their operations – enabling and incentivising the responsible production of artisanal cobalt through a collaborative effort.

To purchase a credit, downstream actors pay a premium of USD 5,000 per tonne of cobalt produced at the mine site, equivalent to 10% of the commodity’s average price over the past three years. A credit within this system proves that a certain amount of cobalt has been produced and sold with a certain level of environmental, social, and governance (ESG) performance.

The funds generated from the sale of CCs are managed by The Impact Facility, the permanent secretariat of the FCA, with a dedicated Fund Allocation Committee (FAC) that includes the FCA, CMDS, and four groups: women washers, diggers, transporters and sailiseurs (the workers that lift the product from the pit bottom to the surface) overseeing the articulation and prioritisation of funds for mine development. The four mine-site priority areas for interventions are listed here: 1) Good governance, 2) Safe and dignified working conditions, 3) Environmental protection, and 4) Inclusive economic development. The governance procedure of the mechanism has been articulated and has been finalised in collaboration with the other members of the FAC.

Through this model, companies can buy credits commensurate with their cobalt use and support continuous mine improvements that, over time, will enable the mine to comply with downstream requirements for responsible production, such as those stipulated in the ASM Cobalt Normative Framework—published by the RMI in mid-2023.

RMC socialisation mechanism with the mining community

The project selection process began with the FCA team conducting sensitisation and awareness sessions with Kamilombe Cooperative partner mine site members, holding meetings with the different worker groups to introduce the mechanism and facilitating elections to select representatives for the FAC.

A workshop was organised for the elected representatives to demonstrate how to submit proposals for consideration under the mechanism. With funds available from the pilot with Fairphone, representatives were also guided on the procedure to submit proposals using the template developed by The Impact Facility. To date, the Fund Allocation Committee (FAC) has received the following approved projects from the different worker groups:

Provision of dynamos coupled to engines for mine ventilation (underground diggers)
Supply of gloves for women washers to protect them against direct contact with the water during ore washing (women washers)

Impact projects

A> The provision of dynamos coupled to engines to support mine site ventilation

Challenge: The deeper an underground pit, the lower the natural air circulation and, subsequently, lower oxygen levels for miners underground. The lack of ventilation underground is a material risk that can lead to the risk of oxygen depravation, which may lead to suffocation and, in some cases, fatalities for miners. To remedy this, miners often use blowers powered by dynamos to increase air circulation underground.

At the Kamilombe mine site, the dynamos belonged to private individuals, who are often the shaft owners, who rented them out to the miners, as the cooperative does not possess any. On top of the rental fee, the diggers were obliged to maintain the dynamos and purchase fuel – an easy profit-making scheme for the owners of the machines.

Proposed solution: A proposal submitted for consideration by the committee of artisanal and small-scale miners on-site at the Kamilombe mine site suggested that the miners leverage the funding from the CC sales to purchase more dynamos and engines to power the blowers on-site, increasing air circulation underground and providing efficient ventilation. The project was estimated to benefit 3,200 underground miners.

Status of the project: The FCA identified a cost-effective supplier for eight(8) dynamos and eight (8) engines, each costing USD 1,000 for a total of USD 8,000. The diggers approved the quality of the devices, after which a purchase order was made. Simultaneously, the cooperative supported the diggers in creating an installation and management plan for the dynamos to ensure their efficient use and maintenance.

All eight (8) dynamos have been installed and are in use on-site, providing underground ventilation to 129 pits at the mine site benefitting 5,220 underground workers.

Two dynamos ready for delivery at the Kamilombe mine site

Dynamos being installed at the Kamilombe site.

Miner Testimonial: On 15th November 2024, two months after the delivery of the equipment to the miners, the FCA team met with some of the beneficiaries to collect their feedback on the installation and use of the machines on site. One miner said,

“Many things have improved with the acquisition of dynamos financed through the RMC project. With the old practice of renting private dynamos, the expenses were enormous. Per day, we used 15 litres of petrol; 1-litre costs 4000 Fc, equivalent to USD 1.41, which means we spent USD 21.15 per day. This means that for every six-day week, we would spend USD 126.9. Maintenance costs are $16 per week, so the overall cost is USD 142.9 per week. With the implementation of this project, the result is very satisfactory. For example, the Dynamo installed at Paul Bambi’s shaft supports 15 shafts. With this system, the cost is shared between the 15 shaft owners.”

One of the underground diggers benefitting from the provision of dynamos for underground ventilation.

Impact of the project

• – A reduction in ventilation costs: By dividing the costs among the 15 shaft owners, each shaft only spends USD 32 per week, which means that the expenses are reduced to USD 16 per week for fuel and USD 16 per week for maintenance. This leads to a saving of USD 110.9 per week. Therefore, the rental cost is significantly reduced.
• – Improved worker safety: Installing the dynamos has reduced the risk of suffocation and gas poisoning in underground galleries, ensuring a safer working environment for miners. As a result, the number of diggers and stabilisers has increased due to improved underground ventilation. Instead of the usual 40 diggers per shaft, there are currently 70 diggers per shaft.

One of the dynamos delivered on-site.

B> The provision of elbow-length gloves for the washerwomen on-site

Challenge: To increase the purity of the ore, many artisanal sites ‘wash’ the minerals before they are sold to mineral buying depots on site or in the region. Women, locally known as washers, predominantly execute the task of washing. Women washers receive payment per bag of ore washed. They rinse off any dirt by repeatedly lifting a metal net or a plastic bag lightly filled with ore and applying pressure to keep the ore in motion using their feet.

It is common for women washers to stand directly in the water, often barefoot and without appropriate personal protective equipment (PPE), exposing themselves to chemically infused water. The high concentration of heavy metals in the water can cause skin reactions, inflame open wounds and micro-cuts from handling sharp ore with their feet and hands, and even lead to bladder infections.

With support from the FCA, women washers have received PPE in the form of wader boots, available through a daily rental fee subsidised by the cooperative. This initiative has enabled 117 women to own their PPE. The wader boots have proven effective in preventing direct contact between their feet and the chemical-laden water, although they do not protect their hands.

Proposed solution: To ensure full body protection, the women washers’ representatives submitted a proposal to the FAC to seek gloves adapted for ore washing for use during their work.

Target beneficiaries: 200 women washers at the Kamilombe mine site.

Status of the project: The FCA scoped out different local and regional suppliers for the gloves, but the sample PPE was too big and not suitable for mineral washing, and hence not of adequate quality for the work of the women washers. Whilst the women washers are exploring to propose an alternative project, the FCA team continues to search for more suppliers in order to meet the needs of the women.

Expected impact

• – Reducing the risk of incidents linked to the handling of hazardous substances.
• – Widespread adoption of safety practices within the community of women washers.
• – Compliance with local and national regulatory standards in terms of hygiene, health, and safety at work.
• – The Impact Facility team is working with the miners to develop alternative projects that fit into the model’s scope.

Conclusion

An estimated 150,000 to 250,000 people earn a livelihood from the artisanal cobalt sector in the country, producing over 10,000 tonnes of cobalt per year valued in excess of USD 300.000.000. Although the USD 12,000 from Fairphone has been instrumental in establishing a pilot for the mechanism, only through significant investment can the cobalt credit mechanism be scaled to make a more significant impact in the sector.

To take part in our responsible cobalt credits mechanism to create long-lasting positive change in artisanal and small-scale cobalt mining communities, please reach out to our team at: [email protected]

“Responsible sourcing starts with taking responsibility. This is why Fairphone developed and piloted the Cobalt Credits together with the FCA and The Impact Facility. This book and claim sourcing mechanism works as a way for companies to prevent and mitigate risks in supply chains (step 3 in the due diligence cycle), and to enable more responsible and safer artisanal cobalt production in line with their own cobalt consumption. At Fairphone, of course, this does not reduce our obligation to conduct due diligence into our cobalt supply chain. In fact, both go together – we know that the cobalt we use comes from the DRC and that it is highly likely that at least part of it is sourced from ASM. The purchase of cobalt credits, and generally our engagement in the FCA, is a way for us to address these salient issues in our supply chains and invest concretely in prevention, mitigation, and positive improvement for the mines and workers that need it most – in line with our footprint and responsibility.”

Angela Jorns,
Head of Impact Innovation at Fairphone