Cobalt Credits: Incentivising and Enabling Responsible Artisanal Cobalt Production

Cobalt Credits are issued based on actual cobalt production volumes monitored at specific FCA partner mine sites, such as the Kamilombe mine site, which is operated by the local cooperative CMDS.

Downstream companies in the cobalt supply chain can determine their cobalt footprint – the amount of cobalt used in their products – and subsequently decide how many Cobalt Credits they wish to acquire. Based on this, they are allowed to make certain claims around how their cobalt use contributes to improving conditions in artisanal and small-scale mining production.

Companies purchase Cobalt Credits, each representing one tonne of cobalt produced by a responsible local partner cooperative, like CMDS.

The Fair Cobalt Alliance, through The Impact Facility, collaborates with a local Fund Allocation Committee, comprising representatives of different groups of workers active at the mine site, to invest the funds generated from Cobalt Credit purchases. These funds are directed towards projects addressing critical improvement areas, including Health and Safety, Child Rights Protection, Cooperative Governance, and Environmental Protection.

Participating companies receive detailed reports showcasing the tangible social, environmental, and economic improvements taking place within the supported mining cooperative and its community. This transparency ensures that companies can witness the impact of their investments firsthand.

Cobalt Credits allow companies to proactively address the issues of hazardous working conditions, child labour, and environmental degradation within the cobalt supply chain. By supporting responsible production, companies can contribute to meaningful social change and improve the livelihoods of those involved in artisanal and small-scale mining.

Investing in RCCs aligns seamlessly with a company’s Environmental, Social, and Governance (ESG) strategy. It enables companies to create a positive social and environmental impact right at the outset of their supply chain – commensurate with their cobalt footprint. Detailed reports on fund utilisation provide insights into how their investments are contributing to improved ESG performance.

Supporting responsible cobalt production does not necessitate altering existing supply chain structures or changing suppliers. Companies can encourage informal, artisanal mines to professionalise their practices while maintaining their current operations.

When purchasing Cobalt Credits, companies do not incur additional traceability or logistical costs. Every investment made goes directly towards transforming the artisanal and small-scale mining cobalt sector and fostering positive change.

Companies that invest in Cobalt Credits benefit from periodic reports that highlight the social, environmental, and economic improvements achieved by artisanal mining organisations and their communities. The Impact Facility, as the legal entity operating the Cobalt Credit scheme, manages the RMC fund and participates in the Fund Allocation Committee through its local staff, and is responsible for reporting to all parties involved on both finances and the impact achieved through the approved mine improvement projects. An annual third-party audit provides additional assurance that the funds have been spent accountably.