UNCTAD press conference 24 June 2020

Good afternoon, everybody.

Welcome to this LANTA virtual press conference.

Today we are launching a report which is entitled Commodities at a Glance, a special issue on strategic battery raw materials.

This report is written in response to the growing importance of electric mobility and the batteries that are designed to power it.

Our speakers today are Miss Pamela Coke Hamilton, who's the Director of the Division on International Trade and Commodities at ACTED and Mr Jean Vierne Koranziza, who's the Chief of the Commodity Research and Analysis section in that division.

So we will have the presentation and then we will open it up for questions.

So I'll hand it over to you, Director.

[Other language spoken]

Thank you so much for this press conference and thanks for allowing us to do this in in virtual format.

I wanted to first of all, place things in context because I think it's important to understand why this particular commodities at a glance is important now in the context of COVID-19.

First of all, there's a falling demand and rising investment taking place in in fossil fuels.

And the risk is going to be a slash value of fossil fuel reserves by 2/3.

In addition to which, according to the International Energy Agency, the fossil fuel is entering what we call a terminal decline.

And so if that's the case, it's due to the competition from clean technologies.

COVID-19 has accelerated this trend and so the demand for oil has actually decreased by 9% already in 2020.

And many countries are already moving towards green, green technologies.

So the clear power stocks, clean power stocks actually weathered COVID better.

According to studies done, there's been a 2.2% increase in clean power stocks as opposed to a 40.5% decrease in fossil fuel stocks in the first four months of 2020.

So in a sense, the writing is on the wall.

Investment is shifting to clean technologies.

Renewables are already the cheapest form of bulk energy production, with 85% of the world using or trying to focus on clean energy production.

Electric vehicle batteries are comparable already with conventional car engines, and therefore there's no argument that conventional car engines are going to be cheaper.

And electric electricity companies are already investing and moving to renewables.

Car makers are shifting to electric vehicles and significantly Electricity consumes 1/3 of the global fossil fuel consumption and the greatest demand for oil is from automate automotive sector.

The implications of this are clear and an important caveat as well is that fuel importing countries have transferred over 2.3 million a year in profit to petrol states.

So the the incentive to shift to clean technologies is, is therefore obvious.

The demand for raw materials used in a manufacture overcharge of a batteries therefore is going to be critical.

It's going to continue growing and it's going to grow rapidly, particularly in light of what has occurred during COVID-19.

So the Commodities at a Glance special issue on strategic battery raw materials is particularly German and critical in this point.

I'd like to congratulate my team for putting out such a timely study and something that actually addresses a critical area in in this discussion.

So normally now there's a 600 billion per year investment in green energy and there's been a 400 billion fall in fossil fuel investment in just 2020 alone.

So therefore the rise in the demand for lithium ion batteries which is one of the most critical and and most important mainly because of its storage capacity and also its generation power.

It's already projected that from $7 billion in in 2018, it will rise to 58.8 billion by 2024 and 800% increase in a six year.

Which I think speaks for itself.

One of the clear issues that we have, however, is that when you look at what has occurred with respect to the actual production of of the inputs.

Democratic Republic of Congo produces 65% of cobalt production in the world.

And the bulk of the value added, unfortunately, is added outside of the the Democratic Republic of Congo.

Therefore, the the impact on the economy of the Democratic Republic of Congo is actually very limited and unfortunately has not contributed to downstream economic development.

So what are the opportunities here?

First of all, it can boost economic benefits for countries who are the producers of cobalt, lithium, which is mostly Australia and other countries than graphite and also magadies.

Why are they being demanded now?

Of course, the electric car revolution, greenhouse gas mitigation, economic instruments that have been used as incentives and also technology advances in in green green technology.

The importance of having value addition, however, is is critical to countries particularly developing more like the Democratic Republic of Congo one because it didn't it involves investment in the economy, it increases job creation, it allows development of new technologies for rechargeable batteries, and it also allows hopefully a policies that would encourage forward and backward linkages.

The difficulty, however, is that the lack of infrastructure, the lack of adequate technology, the lack of financing can be a significant challenge to how countries, particularly in the developing world, who are the host countries for such technology, for such lithium battery inputs, are actually going to be difficult for them to manage.

The additional issue is looking at ethical investment.

I don't know if that's really a word, but I'm probably making it up.

But the fact is what I call ethical investment.

[Other language spoken]

Because 20% of the artisanal mines that produce cobalt in the Democratic Republic of Congo have been highlighted as using child labour.

There are 40,000 children in involved in child labour in the mines according to UNICEF.

And this is a significant problem, in addition to which the water depletion utilising many of these mines, for example in Chile is reducing the the availability of water and creating drought situations for farmers.

And in addition, the environmental degradation across the world.

So the lack of, of, of the social, economic and environmental impact need to be addressed, as well as the lack of local value retention.

So just in concluding my remarks, I wanted to say that this is a a critical opportunity for us to what I've always been arguing for the last year and a half is that we need to grasp the opportunity to reshape the commodity dynamic.

It is critical at this stage that we could use this as a pilot test on how to translate the, the the the standard commodity developing country from being just a commodity country that exports barely improved intermediate goods to being one of those that actually can help to do, if not the final product, at least somewhere further up the value chain.

That increases their value retention, that allows economic development, that addresses the issues of child labour and that allows ethical investing.

These can include ensuring that there's transfer of technology to these countries.

It can also look at ensuring that green technologies for recycling are also included so that they're sustainable production financing at concessionary rates from development banks.

That's also a critical area and of course ensuring A logistical capacity.

But I think what is critical in all of this is to how can we use this as an opportunity given the the 65% increase in electric vehicles that is supposed to occur between now and 2030.

What is what is it that can be done by the international community and organisations to ensure that this this surge in demand for a commodity that is going to be central to the translation into global greenhouse gas mitigation and also lowering carbon emissions?

How can we utilise this as an opportunity to change the status quo with respect to commodity dependent developing countries?

I'll stop there.

[Other language spoken]

Thank you very much for the presentation.

We will now open it up for questions.

I'd like to remind all the participants to identify themselves on the system with their names and the organisations.

We have a few who have only indicated numbers to ask a question.

Please raise your hand on the system.

[Other language spoken]

I still don't see a request for the flow.

Still no requests for the floor.

[Other language spoken]

Emma Fudge, Reuters You have the floor.

Good afternoon everyone.

Thank you for organising this press conference.

I'm wondering if there is anything that UN can actually do to make sure that the the metal needed to cut carbon emissions will be available as and when needed.

I mean, is there anything that you can do to make sure that the supplies are there?

And can you talk a little bit about engaging governments, for example?

[Other language spoken]

I'm sorry, when you can you repeat the question because I wasn't sure what specifically you were asking.

Making sure that the supplies are available, that the UN can do that or making sure that.

Yeah, yeah, exactly on the supply side and engaging with governments to make sure that they and and the auto firms can actually have those supplies and meet their emissions targets.

[Other language spoken]

Well, you know, if I had my way, which I don't always have, I think definitely the UN can play a role.

And I think OMTAD was set up specifically to begin to address the issues of commodity dependence and also availability of of commodities in a sustainable way.

One of the proposals that we've had on the table for a while and one that we wish to actually pursue and which we wanted to pursue before of course, COVID-19 to COVID 2020 was to look at bringing together some of the key stakeholders, not just governments, but also private sector and and international investors to look at a more strategic engagement with respect to supply of these kind of commodities.

And also looking at ensure that we have a kind of dynamic monitoring system that that can follow and ensure that there's stability in the supply chain.

Those are some of the things that I believe that as an international organisation, we can actually convene a meeting or, or a conference to discuss.

But also to look at, you know, some of the the intractable areas like the child labour, like the environmental degradation and funnelling funds to to countries like the Democratic Republic of Congo that have challenges, economic and otherwise in addressing the supply side issues.

So yes, I think we can play a role.

Yes, I believe it, it, it is an important role to play and I think it, it's time that we can try to do that and use this as a test case to do so.

[Other language spoken]

And just a follow up if I may.

You know on the responsible sourcing issue, I guess I'm thinking mostly about DRC.

So for the responsible sourcing of things like cobalt and and tin, is there anything particular that the UN can do to get involved with on the sourcing side And, and how might you envisage that working?

When you say the sourcing side, you mean that sourcing from the Democratic Republic of Congo or do you mean engaging with the international firms that are invested in the Democratic Republic of Congo?

I, I guess either I'm just wondering if there's any role that the, the UN might be able to play as a kind of intermediary there on, on the responsible sourcing side to, to make it easier or to set up a standard system.

Or, you know, how could you put yourself in the middle of that supply chain to make sure that it's responsibly sourced?

It's kind of hard for the UN itself to put itself in the middle of this.

However, there are mechanisms that we can seek to develop that will allow us to engage, as I said, in a, in a way that will kind of like what's been done with the Paris Agreement and with other agreements that we could seek to establish something that allows for sustainable sourcing and responsible sourcing, which would include the stakeholders on both sides of the the governments and the international investors.

I don't know Jean Vier has anything to add to that in terms of of thoughts on on how we could intervene.

But I think that there is that opportunity and that we can do that.

I don't think it's something that's beyond us.

[Other language spoken]

Let me recognise Rashid, who is also a colleague who worked on this report about what the UN can do in these countries.

I don't think I have anything really additional to say other than really trying to repeat what my director has said.

It's not just the country, it's also the stakeholders who are involved in the extraction of of these mines.

So if the UN could get these different stakeholders together to adopt a certain code of conduct and the way they they do their business, yes, I mean we have a convening power, the UN has a convening power.

But the problem comes when things are not followed, when one of the stakeholders doesn't follow the what they have agreed to.

I mean, the UN doesn't have any enforcement kind of capacity to make them behave in a certain way.

So we have a limited role, but we have a role that we could play.

And I think it's really needed because we see a very big asymmetry in the way the way the revenues are distributed, the way some of the stakeholders operate.

Yeah, maybe someone in between would be really needed to try and help the two.

I mean, the country and the stakeholders maybe get together and agree on something.

So that's all I can say, which is a very general answer.

[Other language spoken]

We have a question that has been sent by e-mail by Daniel Johnson of UNTV Radio.

He would like a clarification on the child labourers, where are they working and in which sectors, and what has been done to stop this.

This is specific.

They're in the Democratic Republic of Congo.

They it's specific to a particular area in a particular area that they are.

Jean May do you have that information readily available?

I have it one second.

It's in I I read where it was.

[Other language spoken]

There you go 40,000 and it was a study done by UNICEF that that drew attention to this most of these are artisanal lines and that comes from 20% of of the the export of of cobalt from from the Democratic Republic of Congo.

Now the UNICEF, which is the UN as well has been working on that on our side.

We, you know, UN is, it's just not on that.

But it is something that we should include in any discussion in addressing the issue of, of cobalt production and looking at standards and looking at sustainability and ensuring that it's not destructive not only to the environmental framework but also to the social framework of the country.

So yes, UNICEF is attempting to stop it, but I think from an economic standpoint as well, we need to to put some pressure on with respect to what I call ethical investing.

If, if, if companies that are investing know this is happening, they need to be held to account.

They need to be subject to some kind of sanctions and they need to be exposed.

Because the truth is the Democratic Republic of Congo is not the one that that owns the investment in many of these these areas.

[Other language spoken]

So I think it's important to to hold them accountable and to establish standards that prevent us from happening.

Thank you very much.

We have another question.

[Other language spoken]

Yes, good afternoon.

I write for Southern African Media.

I'm just interested to see that in your press release about the demand for electric car batteries and you mentioned that Zambia in particular has a cobalt refinery and you're talking also about the manganese reserves in other countries such as Australia, Brazil and South Africa.

Could could you speak more about how you see all these Southern African countries in in, in in your quest for adding value to commodities?

One second.

Sorry, I always want to be clear on what you're asking so that I answered correctly.

[Other language spoken]

I'm sorry, are you asking if we should encourage Southern African kind of engagement and blocks so that, that you know, Well, no, it's, it's just that the, you know, the report is, is focused on DRC.

But yeah, I'm, I'm sure this factor of value added to commodities applies to the other countries that are have different stages of production of of the commodities.

And in particular, you mentioned in Zambia, which has a, a, a cobalt refinery, right, right.

The truth is that if we, if we are to look at the issue of value addition, yes, it's at different stages in different countries, but truthfully it is also not at the level even in Zambia and South Africa that we would think would be germane for them to be able to, to have the kind of economic development.

So I think in a way this is an opportunity also for the AFCFTA to look at this issue.

Why not, you now have a, a free trade area across the, the 55 countries of, of Africa.

Why not include this as a, as a mechanism to examine, you know, the commodity dependent variable and, and, and begin to, to jointly as a joint force engage this issue?

I think it would be, it would be a powerful example and a powerful message to the rest of the world that the dynamic needs to change and that African countries agree that the dynamic needs to change at whatever level they are.

[Other language spoken]

I, I think it's interesting that this question comes because when we were writing this report, we're struggling to understand how Zambia would be having a cobalt could be refining cobalt, right.

So I think we go back to the issue that the director made again, I mean it's probably there geographically, but the capital is not owned by Zambians or I mean those people.

No, it's just that the fact that I mean the the Cobra, the refinery is being made in Zambia, but the capital comes from from outside.

So it's the point it doesn't change much.

It's probably creates some some jobs, but it's not really that Zambia now is creating linkages with this economy when it's a refining this copper.

No, it's still an enclave, this kind of enclave activity which is just happening in Zambia.

So, so the the issue here is that if we invoke African integration as the director said, it again is how Zambians, Congolese S Africans could pool their resources and have a genuinely Southern African industry or manufacturing or refining capacity to, to refine, to refine COBOL.

That is really the question.

Otherwise we could even have it refined in Congo.

But if the capital, the technology, everything doesn't belong to to Congo, it's just a geographical location, which it doesn't mean much in terms of economic, economic opportunities.

And I think that's the point that we are trying to highlight here.

How do you make these activities genuinely African or something African?

That is really that is the point.

Otherwise, the a factory can be located anywhere, but it doesn't mean that it belongs to the place where it is located.

That's the I think Russia also would like to add something.

[Other language spoken]

Sorry.

[Other language spoken]

Thanks, Jean, you if I, if I may just add also Zambia's, Zambia's situation is a bit, a bit unique as well.

Cobalt is a byproduct.

It doesn't come naturally as cobalt.

It's only, there's only one mine that actually mines cobalt that is in Morocco, but it's a byproduct of copper and cobalt or nickel and cobalt.

So there's a kind of natural fit also there for Zambia doing undertaking its refining process in in copper to be also be have the infrastructure already in place to be refining cobalt.

If I'd like to go back to the artist now, mining that was mentioned earlier in the Democratic Republic of Congo that the, the child labour is as the director highlighted, it's literally in the in behind your behind homes, behind your doorstep, you, you find children mining, mining for these metals just literally behind their doorstep.

You don't have to go far.

So a lot of child labour that is actually coming in coming.

It doesn't necessarily have to go deeper into mines, but just around them.

Also the Congolese government, they, they are aware, they know that there's a lot of child labour.

There's a lot of pressure these days.

You cannot sell things on the global market when these kind of issues are taking place.

So they've adopted policies, they've adopted policies that introduced free, free school education to to kids of to kids who are actually involved in this sort of can divert their attention from from mining into into into education.

These are just two minor points that my colleagues have already highlighted.

I'll just once we emphasise on.

Thank you very much, Mr Muy, for the audition.

I do not see other requests for the flow.

Give it a moment to see if another question comes up.

[Other language spoken]

All right.

So I'd like to thank everybody for your participation at this virtual press conference.

We will stop there just to remind everybody after the experts are available, should there be further questions after the press conference.

Please feel free.

To send them through to us and we'd be happy to respond.

[Other language spoken]

The press release has been sent out and it's on our website.

Please you're welcome to follow up in case of any further questions.

[Other language spoken]

Have a good afternoon everybody.

Thank you very much.

[Other language spoken]