Commodity trading company Trafigura has entered a five-year cobalt supply deal with the Democratic Republic of the Congo’s (DRC) state buyer Entreprise Générale du Cobalt (EGC).

The agreement is aimed at financing the creation of “controlled artisanal mining zones” as well as the installation of ore purchasing stations.

It also includes provisions for funding related to the delivery of cobalt hydroxide to Trafigura.

The DRC established EGC last year in order to enable control of artisanal supplies and increase the government’s revenue through price controls. It is DRC’s state-owned buyer which markets cobalt from artisanal miners.

EGC managing director Jean-Dominique Takis Kumbo stated: “This partnership responds to the will of the Government through its initiative for the defence and promotion of national artisanal production.

“For our country to benefit from the intrinsic value of cobalt, currently boosted by the development of carbon-free energies, it was essential that measures be taken to support the formalisation of this industry.”

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Backing the trading agreement, EGC would establish a technical committee through which the commodities trader and the international nonprofit organisation Pact, alongside others, would promote responsible cobalt sourcing diligence.

In 2018, Trafigura and non-governmental organisation Pact first partnered on the responsible sourcing of cobalt from producer Chemaf’s Mutoshi concession, the company’s semi-mechanised operations in the Congo.

The DRC holds more than 70% of the world’s reserves of cobalt.

Trafigura executive chairman and CEO Jeremy Weir said: “Artisanal mining or ASM provides an important livelihood in the DRC. Ultimately, the legitimacy of efforts to formalise and bring controls to the sector will depend on broad-based consultation and assurance that OECD standards will be upheld.”

In July last year, Trafigura signed an agreement to provide a $15m loan to K92 Mining, as well as an offtake agreement for the purchase of 100% of K92’s copper/gold concentrate produced at the Kainantu gold mine in Papua New Guinea.