Nicolas Niarchos: Cobalt mining in the DRC resembles

The Democratic Republic of Congo (DRC) produces over 70% of the world's cobalt—a mineral critical to electric vehicle batteries and renewable energy storage. Yet this dominance masks a troubling reality: cobalt extraction in the DRC increasingly resembles modern-day slavery, with exploitative labor conditions, minimal environmental oversight, and a supply chain controlled by Chinese companies that prioritize volume over ethics.

As global demand for cobalt surges alongside the clean energy transition, investors and policymakers face a paradox: the minerals needed to decarbonize the planet are often extracted under conditions that undermine human dignity and environmental sustainability in Africa's poorest regions.

## What does the current DRC cobalt supply chain look like?

Chinese firms have systematically consolidated control over DRC cobalt mining and processing. Companies like China's Zhejiang Huayou Cobalt and CMOC operate mines and processing facilities that source ore from thousands of small-scale and artisanal miners. These informal operations—often family-run pit mines with minimal safety equipment—employ workers, including children, for $2–5 per day. Chinese companies then export raw or semi-processed cobalt at massive markups to battery manufacturers globally, capturing 80%+ of downstream value while DRC communities receive minimal benefit.

This concentration creates a structural vulnerability: battery makers in Europe, North America, and China depend almost entirely on opaque supply chains where labor abuses and environmental degradation are either unknown or deliberately obscured.

## Why should investors care about cobalt ethics now?

Regulatory pressure is accelerating. The EU's Critical Raw Materials Act (2023) and proposed Battery Regulation mandate supply chain transparency and conflict-mineral due diligence. The U.S. Inflation Reduction Act conditions EV tax credits on cobalt traceability. Failing to demonstrate ethical sourcing will soon exclude manufacturers from premium markets, devaluing DRC cobalt and destabilizing Chinese-controlled supply chains.

Second, ESG-conscious capital is redirecting. Institutional investors and asset managers are divesting from supply chains linked to labor abuses. Tesla and BMW have already begun pilot programs sourcing from ethically certified DRC miners—signaling that premium pricing favors responsible producers.

Third, geopolitical risk is rising. Over-reliance on Chinese control of DRC cobalt gives Beijing disproportionate leverage over the West's energy transition. Diversification into alternative sources (Indonesia, Papua New Guinea, Australia) and recycling initiatives threaten DRC's market share unless the country can credibly differentiate on ethics.

## How can DRC cobalt become a competitive advantage?

The DRC has an unrealized opportunity. By establishing a domestic certification system for artisanal miners, improving workplace safety standards, and capturing more value-add in processing, the DRC could brand itself as the source of "ethical cobalt"—commanding premium prices in ESG-sensitive markets. Rwanda and Tanzania have experimented with blockchain traceability for minerals; the DRC could do the same.

Companies willing to invest in cooperative structures, direct-purchase models, and worker training can build moats against competition while improving livelihoods. For international investors, the play isn't commoditized cobalt—it's financing the infrastructure to transform DRC mining into a showcase for responsible resource extraction.

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