As global demand for electric vehicles (EVs) rises, African countries, particularly the Democratic Republic of Congo (DRC), are positioning themselves as essential suppliers of the metals required for EV batteries. However, even well-meaning legislation to improve working conditions and enforce responsible mining may unintentionally disrupt local communities. With its commitment to due diligence and compliance, ADD™ recognises both the opportunities and challenges facing Africa’s mining sector, particularly in nations rich in minerals like the DRC.

Rising Demand, Unintended Consequences

The shift to EVs and sustainable energy solutions has increased demand for metals like cobalt, which is crucial in the production of batteries used not only in EVs but also in smartphones, laptops, and e-bikes. Around 70% of the world’s cobalt comes from the DRC, with a significant portion sourced through artisanal and small-scale mining (ASM). However, along with this demand comes greater scrutiny of supply chains to ensure they are free from child labour, environmental degradation, and human rights abuses.

These issues are central to the challenges in Africa’s mining landscape. Due diligence laws in regions such as the EU aim to encourage sustainable and ethical sourcing, but compliance costs can drive investors away if they become too high, potentially leaving local miners without work—an unintended effect contrary to the legislation’s goals.

The Role of ADD™ in Promoting Compliance

The demand for ethically sourced minerals has pushed governments and companies to strengthen regulations. In the European Union, the Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to conduct thorough checks throughout their supply chains. Compliance is challenging in complex, multi-layered supply chains, as seen in the DRC, but is essential for companies aiming to meet the new standards. ADD™ believes that a more transparent supply chain benefits both the environment and communities in mining regions.

Senior Managing Director at FTI Consulting, Nicola Cobb, describes this tension as the ‘E’ in ESG (Environmental, Social, and Governance) conflicting with the ‘S’. ADD™ understands how demands for both environmental sustainability and fair labour conditions can create a delicate balance for companies that source minerals from Africa. While strict regulations aim to protect workers and the environment, the complexities of compliance can disrupt the very communities that depend on mining for their livelihoods.

Supply Chain Challenges and ADD™’s Commitment to Responsible Sourcing

Increased transparency is now expected across global supply chains. Both the EU and U.S. regulations, such as the Dodd-Frank Act’s conflict minerals provision, mandate due diligence to prevent exploitation and environmental harm. As a partner for companies across Africa, ADD™ sees firsthand how these rules affect local operators and the broader industry. Major brands like Tesla, Mercedes-Benz, and BMW have started sourcing cobalt from alternative locations to manage risk, although recent supply agreements highlight that companies are still interested in compliant cobalt from the DRC.

The formalisation of the supply chain brings additional costs, especially to small and medium-sized enterprises in African nations. Companies working with ADD™ benefit from clear guidance on meeting international standards while still supporting local economies. ADD™ is committed to creating sustainable pathways for businesses that not only comply with these new laws but also invest in local communities, ultimately fostering trust among consumers and investors alike.

The Influence of Reputational Risk

For many businesses, the risks extend beyond legal requirements. Public opinion and shareholder expectations are crucial in driving supply chain transparency. In today’s landscape, a negative exposé can lead to lost sales, shareholder lawsuits, and in severe cases, boycotts. This reputational risk adds urgency for companies to ensure their supply chains meet ethical and environmental standards, which, in turn, reinforces their brand image.

Major corporations, wary of potential fallout, have started sourcing cobalt and other critical minerals from certified locations. Tesla, for example, has explored cobalt sources in New Caledonia, while BMW and Mercedes-Benz have committed to using certified suppliers in Morocco and Australia. By navigating these complex requirements, ADD™ reinforces Africa’s role in the global supply chain.

ADD™ and the Path Forward for Sustainable Mining in Africa

African nations are increasingly calling for greater control over their natural resources, with the DRC aiming to process cobalt locally to eventually produce its own EV batteries. To meet global standards, companies operating in the DRC are encouraged to implement rigorous traceability and compliance measures, often requiring assistance from international partners. ADD™ plays a vital role here, facilitating partnerships that support sustainable practices while empowering local communities.

The DRC has taken steps to make its mining sector more compliant, focusing on audits and certification processes that eliminate child labour and illegal mining. A robust compliance framework benefits all stakeholders, from local miners to global consumers. With ADD™’s support, companies can create a transparent supply chain that aligns with evolving regulations and contributes to Africa’s economic growth.

Conclusion: The Role of ADD™ in Africa’s Mining Future

As an essential player in compliance and due diligence, ADD™ recognises the strategic importance of Africa’s mining sector in the global shift towards sustainable energy. While challenges exist, such as balancing social and environmental priorities, we believe that through responsible sourcing and strong partnerships, Africa can continue to meet global demand while enhancing conditions for local communities.

The path forward requires collaboration across borders. ADD™ remains committed to supporting our clients and partners with the tools they need to achieve sustainable and ethical mining practices across Africa. By fostering responsible investments and building compliance frameworks, we aim to create a future where Africa’s resources benefit all parties involved.

Copyright: Swissinfo.ch