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UPDATE 2-Congo launches state artisanal cobalt buyer to meet booming demand

* Congo produces around 70% of the world’s cobalt

* State buyer aims to quash illegal mining, trading

* Formalisation could help stabilise cobalt prices

* Tunnels banned, pits limited to 10 metres (Adds Yuma quote)

KINSHASA, March 31 (Reuters) - Congo’s state cobalt buyer announced a responsible sourcing standard for artisanal cobalt on Wednesday as it launched its ambitious move to bring all informal cobalt mining in the country under state control.

Artisanal cobalt miners extract the battery metal using rudimentary means, often on unregulated sites and sometimes within industrial mine sites. Unsafe working practices and child labour have been widely reported on such sites.

The Entreprise Generale du Cobalt (EGC), officially launched on Wednesday, will be the sole legal purchaser of artisanal cobalt produced in the sprawling central African country.

It aims to formalise the sector to meet increasing demand for cobalt as the world transitions towards electric vehicles, and bring a stop to illegal exports which deprive the state of tax revenue.

“From now on all Congolese artisanal cobalt will be bought by EGC, processed by EGC, and marketed by EGC,” said Albert Yuma, chairman of the EGC and of state miner Gecamines.

“Perhaps not today, but tomorrow, the Congo will be the equivalent of OPEC [for cobalt].”

EGC’s activities will begin in earnest at the end of April and a six-month transitional period has been mandated by the government to allow for miners to adjust.

Yuma said the EGC purchases would likely operate in tandem with the informal market at first.

The shift to a state monopoly will impact an estimated 150,000-200,000 subsistence cobalt miners in Congo’s southern copperbelt, and could fundamentally change the world cobalt market.

Congo produced 99,000 tonnes of cobalt in 2020 - around 70% of the world total - with 9,000 tonnes coming from artisanal miners, research house CRU estimates.

EGC’s regulations could create “a large source of traceable, flexible cobalt supply which would lend a large amount of stability to the cobalt price in the long run”, said George Heppel, head of battery metals at CRU.

But a heavy-handed premature enforcement of rules would curtail a lot of current production, leading to prices spiking, although that scenario is less likely given EGC’s weak enforcement capacity, Heppel said.

Trafigura, which signed a supply deal with the EGC last November under which it will partly finance EGC’s cobalt purchases, said the new standard will improve oversight and worker safety, but there would be challenges implementing it.

Under the new regulations, tunneling is banned on EGC-approved sites, and pits are not to exceed 10 metres (33 feet) in depth. Miners are required to wear personal protective equipment and carry a site registration identity card.

The standard also commits the EGC to a “consistent and transparent” methodology for calculating prices paid to miners. (Reporting by Helen Reid and Hereward Holland; editing by Jason Neely, Louise Heavens and Mark Heinrich)

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