Cobalt Market Navigates DRC Export Quotas Amidst Supply Chain Reconfiguration
DRC Implements Cobalt Export Quotas
The Democratic Republic of Congo (DRC) implemented a new cobalt export quota system, effective October 16, 2025, marking a significant shift in global mineral resource management. This policy followed an eight-month export ban initiated in February 2025, both measures aimed at stabilizing prices and asserting strategic control over the nation's critical cobalt resources. The immediate market reaction has been pronounced, with cobalt prices doubling from their 2025 lows, impacting the broader EV Metals Supply Chain.
The Event in Detail: Policy Shift and Market Repercussions
The DRC's transition from an outright export ban to a structured quota system reflects a strategic evolution in its approach to resource governance. The initial ban was triggered by a collapse in cobalt prices, which had fallen below $10 per pound ($22,000 per tonne) in early 2025, reaching their lowest valuations since 2015. Since the quota proposal emerged in September 2025, cobalt hydroxide and refined metal prices have experienced substantial increases, with prices rebounding approximately 90% to $19 per pound ($41,890 per tonne) by October 2025.
The new quota framework permits the export of 18,125 metric tons for the remainder of 2025, with annual limits set at 96,600 metric tons for both 2026 and 2027. These annual quotas represent a significant reduction, being less than half of the DRC's 2024 production volumes, which contributed to an estimated global production of 220,000 metric tons. Quotas are allocated on a pro-rata basis, largely derived from producers' export volumes between 2022 and 2024. Companies are also mandated to prepay mining royalties according to monthly quotas and prevailing cobalt prices prior to shipment.
ARECOMS, the Authority for the Regulation and Control of Strategic Mineral Substances' Markets, manages the system. While CMOC Group, a major producer, received the largest allocation for 2025, its 2026 allocation of 31,200 tonnes represents approximately 27% of its 2024 Congolese output of 114,165 tonnes. This led to a 7.2% fall in CMOC shares in Shanghai trading following the announcement. Despite these export limitations, CMOC plans to continue expanding production, influenced by record copper prices, as cobalt is a byproduct of copper mining, suggesting potential stockpiling within the DRC. In contrast, Glencore, another significant producer, has expressed support for the new system, anticipating that it will stabilize the market by balancing supply with demand. Glencore had previously warned of a significant portion of its 2025 cobalt output remaining unsold due to the export restrictions.
Analysis of Market Reaction: Supply-Demand Dynamics and Sectoral Impact
The drastic reduction in export volumes from the DRC, which accounts for 70-77% of global cobalt production, has directly fueled the surge in cobalt prices. This supply constriction is expected to fundamentally alter the global supply-demand balance, shifting the market from a surplus of 50,000-105,000 tonnes in 2024 to a projected deficit by 2026-2027. S&P Global analysis suggests adherence to the quota framework could lead to a market deficit, potentially supporting further price increases.
This altered market landscape has created distinct opportunities and challenges for various market participants:
Non-DRC Producers to Benefit: Companies with cobalt operations outside the DRC are positioned to benefit significantly from elevated prices and renewed investor interest. Vale (NYSE: VALE), Sherritt International (TSX: S), and Nickel 28 (TSXV: NKL) are notable examples. Vale's Canadian units have attracted direct interest from the US Defense Department seeking to procure alloy-grade cobalt, highlighting strategic efforts to diversify supply chains. Sherritt International, with its Moa Joint Venture in Cuba, reported a 24% increase in cobalt revenue for Q2 2025 year-over-year, driven by a 27% higher average-realized price of $18.19/lb, despite a slight decrease in sales volume. Nickel 28, through its joint venture in Papua New Guinea, produced 787 tonnes of cobalt in Q2 2025.
DRC Producers Adjusting: While DRC-based producers like CMOC Group and Glencore face lower export volumes, the substantial increase in cobalt prices is expected to offset some revenue losses. However, the requirement to prepay mining royalties and the potential for significant stockpiling present operational and financial complexities.
Broader Context and Implications: Resource Nationalism and Supply Chain Evolution
The DRC's policy represents a broader trend of resource nationalism, where mineral-rich nations seek to maximize domestic benefits, including value addition, employment creation, and industrial development, from their natural resources. This approach may serve as a template for other countries, with potential implications for global commodity markets.
The constrained cobalt supply is expected to create severe shortages across battery material supply chains before mid-2026, placing urgent pressure on electric vehicle manufacturers, battery producers, and electronics companies to accelerate supply diversification efforts. This situation underscores the growing importance of integrated supply chains and technology investments in cobalt-efficient battery chemistries.
Key implications include:
Technological Diversification: Higher cobalt prices are accelerating the shift towards cobalt-free chemistries, such as lithium iron phosphate (LFP) batteries, particularly among Chinese EV manufacturers. Tesla (TSLA) and BYD have already adopted or plan to adopt LFP batteries for certain models. Research and development are also increasing for lower-cobalt formulations like high-nickel Nickel-Manganese-Cobalt (NMC) and alternative materials like sodium-ion batteries.
Supply Chain Restructuring: Companies are pursuing vertical integration, direct investment in mining assets, and long-term agreements with multiple suppliers to secure critical mineral supplies. The economic viability of previously marginal cobalt projects in politically stable jurisdictions, such as Australia and Canada, has improved, encouraging their development.
Geopolitical Shifts: The U.S. Inflation Reduction Act (IRA) incentivizes domestic EV and battery production, aiming to reduce reliance on foreign supply chains. By January 1, 2025, U.S. automakers are prohibited from using critical minerals, including cobalt, sourced from "foreign entities of concern." China's own export control regulations on high-performance lithium-ion batteries further emphasize a global push for self-sufficiency in battery material production.
Expert Commentary and Looking Ahead
Market analysts and industry leaders are closely monitoring these developments. Kenny Ives, Chief Commercial Officer at CMOC Group, warned that current prices are "at the upper end of what people will tolerate without being forced to switch" to alternative technologies. Conversely, William Talbot, head of research at Benchmark Mineral Intelligence, noted that despite the rise of LFP batteries, NCM chemistries will remain important, especially in Western markets, suggesting "there is room in the market for both chemistries."
Macquarie Group Ltd. has cautioned that strict adherence to the quotas could lead to a material shortage before mid-2026, potentially driving prices higher than the 2022 peak. CICC anticipates a persistently tight supply-demand balance from 2025 to 2027, likely leading to a systematic increase in the average cobalt price and exacerbated price volatility.
Looking ahead, the global Cobalt Sector will continue to be influenced by the strictness of the DRC's quota enforcement, global economic conditions, and the pace of technological advancements in battery chemistries. The Cobalt Institute** forecasts global demand to rise by 4% in 2025 and 6% in 2026. Investment in new, ethically sourced, and stable projects outside the DRC, along with the continued development of battery recycling technologies, will be crucial factors in shaping the long-term supply landscape and ensuring the resilience of critical mineral supply chains.
Edgen Stock·Oct 20 2025, 10:50
