Highlights

• Democratic Republic of the Congo implements a 4-month ban on cobalt exports starting February 22, 2025.
• The country produces 75% of the global cobalt supply.
• The market is facing a 110% oversupply of cobalt.
• Cobalt hydroxide prices have dropped from $34.50 to $5.70 per pound.
• The price drop has prompted government intervention.

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In a bid to address persistent oversupply and low cobalt prices, the Democratic Republic of the Congo (DRC), the world’s largest cobalt producer, has implemented a four-month ban on exports, effective from February 22, 2025.  The DRC produces about 75% of the world’s supply.

According to the British Geological Survey (opens in a new tab), cobalt is a critical raw material that plays a vital role in the production of rechargeable batteries used in electric vehicles, smartphones and laptops. It is also used in aerospace and defense applications, as well as in the manufacture of hard metals and cutting tools. Note that cobalt is not a rare earth element but rather classified as one of the critical minerals a much bigger mineralogical category.

Reuters (opens in a new tab) covered the recent move by the DRC regulator.

Why the DRC Move?

According to Benchmark Source (opens in a new tab), this move aims to align cobalt supply with demand, as the market has been forecasted to have an oversupply of 110% of demand in 2024. While the ban is not expected to drastically alter the supply-demand balance, it could reduce the projected inventory surplus depending on whether producers cut production or increase stocks.

Smaller producers may face financial difficulties, but major producers like CMOC are likely to weather the downturn. Due to the ongoing oversupply, cobalt prices have dropped significantly, with cobalt hydroxide prices now trading at $5.70 per pound, nearly 47% below the five-year average. The DRC's temporary export halt seeks to improve the mineral value and address the economic challenges posed by the low-price environment.

Summary

According to Arecoms, the government mining regulator, exports of cobalt from the DRC have been halted for four months to address a persistent oversupply in the global cobalt market. The DRC, which produced over 75% of the world's cobalt supply in 2024, is facing a market where supply exceeds demand by 110%, driving prices down dramatically.

Will Talbot (opens in a new tab), a research manager at Benchmark, explained that the ban is intended to help align supply with demand and boost revenues from cobalt royalties. Although larger producers like CMOC may weather the ban, smaller firms with high cobalt-to-copper ratios could be severely impacted. The export halt may either lead to a buildup of stocks or encourage producers to cut production, potentially shrinking the supply overhang.

Meanwhile, cobalt hydroxide prices have plummeted from $34.50 per pound in 2022 to just $5.70 per pound, underscoring the dire pricing environment and the government's urgent need to maximize mineral value.