The Democratic Republic of Congo (DRC), the undisputed heavyweight champion of cobalt production, has just thrown another punch in its bid to control global prices.
They’ve extended their three-month cobalt export ban, trying to flex their supply muscle and get more bang for their buck. But the market’s reaction is a bit of a shrug.
Here’s what’s going on in this high-stakes game of supply and demand.
Congo’s government is frustrated. Cobalt prices have been in the doldrums for years, even hitting a nine-year low of around $10/lb earlier this year. Despite producing a staggering 72% of the world’s cobalt mine supply in 2024, their revenue from the metal halved between 2023 and 2024. Ouch!
Their strategy is a simple one: cut off exports, create scarcity, and force prices up. They tried it in February with an initial four-month ban, and it did cause an initial spike. Now, with the extension until at least September, they’re hoping for round two.
Indeed, we’ve seen some recent price surges in China’s Wuxi exchange and for refined cobalt/cobalt sulphate after the extension news, with some offers even exceeding $12/lb.
The market is not panicking, yet.
Here’s where Congo’s dilemma gets thorny:
The world’s cupboard is full of cobalt. Consultancy Benchmark Mineral Intelligence estimates that stocks of cobalt outside Congo amounted to a massive 8-10 months of global consumption in Q2 this year.
Even with the extended ban, they reckon Chinese cobalt hydroxide stocks won’t get “physically low” until late next year. It takes about 90 days for Congolese cobalt to reach Chinese refiners, so the full impact of the February ban is still working its way through the system. Buyers simply aren’t feeling the pinch yet.
Cobalt is mostly mined as a by-product of copper. And guess what? Copper is still on fire. London Metal Exchange copper prices are soaring near $9,900 per ton. Chinese operators in Congo, like CMOC Group, have every incentive to keep digging up as much copper as possible. The cobalt just comes along for the ride, essentially “free.” This means Congo can’t easily tell miners to cut cobalt production without also slashing copper output, which they desperately need for revenue.
Remember those electric vehicles we all love? While cobalt is vital for lithium-ion batteries, especially for high-performance applications, Chinese EV manufacturers are increasingly shifting towards Lithium Iron Phosphate (LFP) chemistries, which use less or even no cobalt. This shift is compounding the oversupply issue and capping demand.
The ban has stopped exports, not production. But intermediate cobalt products are piling up in Congo. This creates a “renewed flood” risk if the policy changes, further weighing on prices.
Nevertheless, Congo is learning a tough lesson that Indonesia already mastered with nickel. Indonesia successfully used export bans to force foreign companies to build downstream processing capacity within Indonesia. This didn’t just restrict supply; it moved Indonesia up the value chain, turning raw ore into higher-value products like battery materials. Their nickel export earnings soared from $2 billion in 2019 to $30 billion in 2022 after domestic processing became mandatory.
Congo is reportedly considering an export quota system, but that’s operationally tricky and still doesn’t solve the problem of in-country inventory or leverage their dominant position for value-added processing.
