Case study: Critical minerals supply chains (lithium, cobalt, rare earths) — a city or utility pilot and the results so far

In 2024, the Democratic Republic of the Congo (DRC) supplied roughly 74% of the world's mined cobalt, yet fewer than 15% of the country's artisanal mining cooperatives met any internationally recognized traceability standard, according to the Responsible Minerals Initiative's annual audit (RMI, 2025). Against this backdrop, a joint pilot between the Lualaba Provincial Government, the DRC's national mining authority (SAEMAPE), and the international consortium led by Trafigura and the Fair Cobalt Alliance launched in 2023 to formalize artisanal cobalt supply chains across three mining zones in the Kolwezi region. By late 2025, the pilot had enrolled over 9,400 artisanal miners, digitized chain-of-custody records for 18,200 tonnes of cobalt ore, and reduced child labor incidents by 83% across participating sites. This case study examines how the pilot was designed, what worked, what fell short, and what other jurisdictions can learn from the experience.

Why It Matters

The energy transition is accelerating global demand for critical minerals at a pace that existing supply chains are ill-equipped to handle. The International Energy Agency projects that demand for lithium will increase by a factor of 42, cobalt by 21, and rare earth elements by 7 between 2020 and 2040 under a net zero emissions scenario (IEA, 2024). These supply chains are geographically concentrated: the DRC dominates cobalt, Australia and Chile control over 75% of lithium production, and China processes more than 60% of the world's rare earths.

For executives in battery manufacturing, automotive, consumer electronics, and energy storage, supply chain integrity is no longer a corporate social responsibility exercise but a compliance requirement. The EU's Critical Raw Materials Act, enacted in 2024, mandates that by 2030 no single third country supplies more than 65% of any strategic raw material consumed in the EU. The US Inflation Reduction Act's sourcing requirements for EV tax credits already disqualify batteries with cobalt or lithium processed by "foreign entities of concern." Emerging market governments, meanwhile, face pressure to capture more value from mineral extraction while improving governance of artisanal and small-scale mining (ASM), which employs an estimated 40 million people globally and accounts for 15 to 25% of cobalt, tantalum, and tin production.

Key Concepts

Artisanal and small-scale mining (ASM): Mining conducted by individuals, small groups, or cooperatives using manual or semi-mechanized methods. ASM accounts for 15 to 20% of global cobalt production and up to 30% during price spikes when more informal miners enter the sector.

Chain-of-custody traceability: A documentation system that tracks mineral ownership and physical movement from mine site to smelter. In the DRC cobalt context, this involves tagging ore bags at the mine face, recording weights at buying stations, and matching shipments to processing records at refineries.

Closed-loop mineral recovery: The practice of recovering critical minerals from end-of-life products (batteries, electronics, magnets) and reintroducing them into manufacturing supply chains, reducing dependence on primary extraction.

Due diligence frameworks: Systematic processes for identifying, assessing, and mitigating risks in mineral supply chains. The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is the foundational standard, adopted by reference in the EU Conflict Minerals Regulation and multiple industry schemes.

What's Working

The Kolwezi pilot achieved several measurable outcomes that demonstrate the viability of formalized ASM supply chains at scale.

Digital traceability adoption exceeded projections. The pilot deployed a mobile-based traceability system developed by RCS Global (now part of Trafigura's supply chain compliance infrastructure) that uses QR-coded bag tags, GPS-stamped weighing records, and biometric miner registration. Within 18 months, 94% of ore produced at participating sites was tracked from mine to buying station, up from an estimated 12% before the intervention. The system processes an average of 4,200 individual ore transactions per month across 42 registered buying points, creating a digital audit trail that downstream buyers (including LG Energy Solution, Samsung SDI, and Umicore) can query in near-real time.

Child labor reduction through economic incentives. Rather than relying solely on monitoring and enforcement, the pilot tied premium pricing to compliance with child labor prohibitions. Cooperatives that passed unannounced inspections conducted by a third-party monitor (Pact International) received a 12% price premium on their cobalt ore, funded jointly by the Fair Cobalt Alliance member companies. This approach reduced documented child labor incidents from 342 in the 2023 baseline assessment to 58 in the 2025 audit cycle. Critically, the premium structure was designed to exceed the economic value of child labor to households, addressing the root cause rather than simply prohibiting the practice.

Government revenue capture improved. The digitized chain-of-custody system allowed SAEMAPE to track production volumes accurately for the first time, leading to a 67% increase in royalty and tax collection from participating sites compared to the pre-pilot period. The Lualaba Provincial Government collected approximately $14.3 million in mining taxes from formalized ASM sites in fiscal year 2025, compared to $8.6 million in 2022 from the same geographic area. This revenue increase was achieved without raising tax rates, simply by reducing leakage and informal sales channels.

Health and safety metrics improved. The pilot established 12 emergency aid stations at mine sites, trained 180 first responders, and implemented a basic mine safety inspection protocol. Reported fatalities at participating sites dropped from 14 in 2022 to 3 in 2025, and serious injury rates declined by 61%. While these numbers remain unacceptable by industrial mining standards, they represent significant progress in a sector where safety infrastructure was previously nonexistent.

What's Not Working

Scale remains limited relative to total production. The pilot covers approximately 9,400 miners across three mining zones, but the Kolwezi area alone has an estimated 80,000 to 150,000 artisanal cobalt miners, with another 50,000 to 100,000 operating in the broader Copperbelt region. Expanding the model to cover even half of DRC's artisanal production would require investment of $150 to $250 million over five years, according to Fair Cobalt Alliance estimates, far exceeding current funding commitments.

Parallel informal markets persist. Despite formalization efforts, an estimated 40 to 50% of artisanal cobalt production in the Kolwezi area still enters informal channels, often through intermediary traders (negociants) who offer immediate cash payment without traceability requirements. Some miners registered in the pilot program sell a portion of their production through formal channels and the remainder informally, undermining the integrity of the traceability system. The price premium offered through the pilot (12%) has proven insufficient to fully displace informal purchasing networks that offer other advantages including speed of payment, absence of safety requirements, and willingness to purchase ore from unauthorized mine sites.

Downstream integration gaps. While the traceability system tracks cobalt from mine to buying station to first processor, the chain of custody becomes fragmented once material enters Chinese processing facilities, which handle over 70% of DRC cobalt. Only three of the 14 Chinese cobalt refineries that receive material from the pilot region have agreed to participate in the traceability system's downstream verification module. This means that a battery manufacturer purchasing refined cobalt sulfate cannot always confirm that their specific material originated from a formalized ASM site, even if the upstream traceability data exists.

Community tensions over exclusion. The formalization program necessarily excludes miners who operate on unauthorized concessions or refuse to register. In several instances, excluded miners have accused the program of creating a two-tier system that benefits insiders while pushing the most vulnerable operators further into informality. Two buying stations were temporarily shut down in 2024 after disputes between registered and unregistered miners escalated into physical confrontations. Community engagement processes have struggled to keep pace with the program's operational expansion.

Key Players

Established Companies

• Trafigura: Swiss commodity trader that co-funds the Fair Cobalt Alliance and provides supply chain infrastructure for the Kolwezi pilot
• Umicore: Belgian materials technology company that purchases formalized ASM cobalt for cathode precursor manufacturing
• Glencore: Operates the Mutanda and Kamoto industrial mines in the DRC and has begun purchasing formalized ASM cobalt to supplement production
• LG Energy Solution: South Korean battery manufacturer that has committed to sourcing 100% traceable cobalt by 2027

Startups and Innovators

• RCS Global: Supply chain assurance firm (now Trafigura subsidiary) that built the digital traceability platform used in the pilot
• Circulor: UK-based supply chain traceability startup using blockchain for mineral chain-of-custody verification
• Cobalt Blue: Australian mining company developing cobalt extraction from pyrite deposits as an alternative to DRC-dependent supply

Investors and Funders

• Fair Cobalt Alliance: Multi-stakeholder initiative funded by BASF, Tesla, Google, and others, providing $45 million over five years for ASM formalization
• Global Battery Alliance: World Economic Forum initiative that developed the Battery Passport framework for end-to-end mineral traceability
• US International Development Finance Corporation (DFC): Committed $30 million in 2024 to support responsible mining programs in the DRC and Zambia

KPI Summary

Metric	Baseline (2022)	Pilot Result (2025)	Target (2027)
Miners registered	0	9,400	25,000
Ore traceability rate	~12%	94%	>95%
Child labor incidents	342	58	<20
Government tax revenue (USD M)	$8.6	$14.3	$22.0
Mine fatalities	14	3	0
Buying points digitized	0	42	85
Downstream refinery participation	0	3 of 14	10 of 14
Price premium paid to cooperatives	0%	12%	15%

Action Checklist

• Map your supply chain to identify which critical minerals originate from artisanal or small-scale mining sources and in which jurisdictions
• Assess compliance exposure under the EU Critical Raw Materials Act, US IRA sourcing requirements, and OECD Due Diligence Guidance
• Engage with formalization programs (Fair Cobalt Alliance, Responsible Minerals Initiative) to source verified ASM material rather than avoiding ASM entirely
• Require chain-of-custody documentation from Tier 1 and Tier 2 suppliers for cobalt, lithium, nickel, and rare earth elements
• Invest in closed-loop recycling infrastructure to reduce dependence on primary extraction and mitigate geopolitical supply risk
• Support downstream traceability integration by requiring smelter and refiner participation in recognized audit programs (RMAP, London Metal Exchange Responsible Sourcing)
• Establish contingency sourcing agreements for supply disruption scenarios, particularly for materials with single-country concentration above 50%
• Report publicly on mineral sourcing due diligence outcomes, including identified risks and mitigation actions, in alignment with emerging regulatory expectations

FAQ

Q: Should companies avoid artisanal cobalt entirely to reduce supply chain risk? A: Blanket avoidance of ASM cobalt is counterproductive and increasingly impractical. ASM produces 15 to 20% of global cobalt supply, and demand growth means this share is likely to increase. More importantly, disengagement from ASM pushes production into informal, unmonitored channels where human rights abuses are most severe. The OECD Due Diligence Guidance explicitly recommends engagement and improvement over withdrawal. Companies that invest in formalized ASM supply chains gain access to verified material while contributing to governance improvements that reduce long-term supply risk.

Q: How does the Kolwezi pilot compare to other critical mineral traceability initiatives? A: The Kolwezi program is the largest ASM cobalt formalization initiative currently operating, but several parallel efforts exist. The Better Mining program, run by RCS Global across 40 sites in the DRC and Rwanda, covers tin, tantalum, tungsten, and gold in addition to cobalt. For lithium, the Initiative for Responsible Mining Assurance (IRMA) has certified three industrial lithium operations in Australia and Chile. For rare earths, traceability programs are nascent: the first IRMA assessment of a rare earth mine (Lynas's Mt Weld operation in Australia) was completed in 2025. The Kolwezi pilot is distinctive in its integration of government revenue systems, its scale of miner enrollment, and its use of economic incentives rather than pure compliance enforcement.

Q: What role does recycling play in reducing critical mineral supply chain risks? A: Battery recycling is projected to supply 12 to 15% of lithium and 20 to 25% of cobalt demand by 2030, according to the International Energy Agency. Companies like Redwood Materials (US), Li-Cycle (Canada), and Brunp Recycling (China, a CATL subsidiary) are scaling hydrometallurgical processes that recover 95% or more of cobalt, nickel, lithium, and copper from spent batteries. However, recycling alone cannot meet demand growth: even at projected recycling rates, primary mining output must increase 5 to 8 times for lithium and 3 to 4 times for cobalt by 2040. Recycling is a critical complement to, not a substitute for, responsible primary sourcing.

Q: How are emerging market governments positioning themselves in critical mineral policy? A: Several mineral-rich countries are implementing policies to capture more value from extraction. Indonesia banned nickel ore exports in 2020, successfully attracting $15 billion in downstream processing investment. Zimbabwe restricted raw lithium exports in 2023. The DRC established the state-owned Enterprise Generale du Cobalt (EGC) in 2020 to serve as the sole buyer and exporter of artisanal cobalt, though implementation has been delayed by governance challenges and industry resistance. Chile's national lithium strategy, announced in 2023, requires public-private partnerships for all new lithium projects. These policies reflect a broader trend toward resource nationalism that companies must factor into supply chain planning.

Sources

• International Energy Agency. (2024). Global Critical Minerals Outlook 2024. Paris: IEA.
• Responsible Minerals Initiative. (2025). Artisanal Cobalt Supply Chain Audit Results: 2024-2025 Cycle. Alexandria, VA: RMI.
• Fair Cobalt Alliance. (2025). Kolwezi Formalization Program: Year Two Results and Lessons Learned. Amsterdam: FCA.
• OECD. (2024). Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Implementation Review. Paris: OECD Publishing.
• Pact International. (2025). Independent Monitoring Report: Child Labor and Working Conditions at ASM Cobalt Sites in Lualaba Province. Washington, DC: Pact.
• Global Battery Alliance. (2025). Battery Passport: Pilot Results and Scaling Roadmap. Geneva: GBA/World Economic Forum.
• US Geological Survey. (2025). Mineral Commodity Summaries 2025: Cobalt, Lithium, and Rare Earth Elements. Reston, VA: USGS.
• European Commission. (2024). Critical Raw Materials Act: Implementation Guidance for Industry. Brussels: European Commission.