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The price of cobalt jumped on Monday after the world’s biggest producer extended a ban on exports of the battery metal, in an effort to support the market following a sharp sell-off in recent years.
The cobalt price, which has dropped by about 60 per cent in just over three years, rose almost 10 per cent on the Wuxi Stainless Steel Exchange after an announcement at the weekend by the Democratic Republic of Congo’s Strategic Mineral Substances Market Regulation and Control Authority. It said the four-month cobalt export ban imposed in February would continue until September.
DR Congo produced 72 per cent of global cobalt mine supply in 2024, according to market intelligence group Project Blue. The metal is a key ingredient in some batteries used in electric vehicles.
The government is trying to address a persistent supply glut in the market that has weighed down on prices since 2022. It hopes that cutting off a crucial source of global supply will drive up prices, which would support its domestic industry and increase its tax or royalties revenue from miners over the long term.
The country is also working to boost the broader domestic mining sector, including through a possible minerals deal with the US.
Commodities trader Glencore, one of the major cobalt producers in the DR Congo, declared force majeure this year on some of its cobalt contracts following the imposition of the ban. Such a legal mechanism signals exceptional circumstances that may make it impossible to fulfil its contractual obligations.
However, the company has so far been able to fulfil all its customer contracts, as it and other producers have stocks of cobalt outside the central African country.
Stockpiles of cobalt outside the DR Congo will reach “very low levels by the September 21 deadline if nothing else changes”, said Jack Bedder, founder of market intelligence group Project Blue.
Rob Searle, an analyst at pricing company Fastmarkets, said he expected “the supply of cobalt hydroxide to remain tight heading into [the third quarter of the year] with the need to continue to draw down inventories to meet refinery demand”, which would drive up prices.
Cobalt is among the critical minerals industries dominated by Chinese companies, which control most of the world’s production and processing of the metal.
Complicating the supply and demand dynamics is the fact that cobalt is a byproduct of copper, which is in high demand for a broad range of applications including in the energy and technology sectors.
The benchmark London price of copper has risen sharply since April and was trading at about $9,600 on Monday.
“As long as the copper price is reasonable . . . [cobalt] production won’t reduce,” said one executive working in the sector.
The cobalt mining sector is expecting the DR Congo government to consult industry in the coming weeks about a possible quota system for resuming exports, said the executive.
Given that transportation from the DR Congo to China for processing takes about 90 days, cobalt exports “will need to resume promptly else refined production will be impacted”, said Bedder.
