Can the Congo control the wild cobalt markets? Andy Home

The Democratic Republic of Congo (DRC)'s February ban on cobalt exports has pushed the price of battery metal to a new low.

The world's biggest producer wants to take it a step further by leveraging its unique geology to control a market that is notoriously volatile.

Export quotas were set for this year, 2026, and 2027. The volume is less than half that of last year and the intention is to reduce global stocks which have accumulated after consecutive years of surplus.

The Congo's state mineral regulator ARECOMS is entitled to adjust these quotas quarterly and to purchase any surplus production to export allowances. This will set the stage for a cobalt buffer store backed by the government.

It is clear that this will be a long term project to control the market, but similar projects have not always had a positive history.

The Flood: Stemming the FLOOD

Congo exported to China 220,000 tons of cobalt in the form cobalt hydrxide last year.

Over the past five years, output has doubled and outpaced global demand growth. The cobalt price fell to its lowest level in 10 years at the beginning of 2025 as a result of the surplus. This is the latest decline in a long history of rising and falling prices.

According to Benchmark Mineral Intelligence, the February export ban increased the price of cobalt by nearly 50% and the price for hydroxide had more than doubled.

Imposition of export quotas, effective next week, has given it a new boost. London Metal Exchange Cobalt now trades at $38,960 a ton, its highest level since February 20,23.

The new market structure is a result of the quotas that are capped at 96.600 tons annually in 2026 and 2027.

BMI estimates that if the Congo export restrictions are not changed, they will result in a market deficit in 2025-2027, which would lead to a reduction of supply chain inventory.

Small operators and processing facilities without captive mines are exempted from the DRC government's exemption, which could provide some flexibility in supply.

Not much. After three years of falling prices, the informal cobalt mines in the country are much smaller.

BUFFER STOCKS

Export quotas are split into two levels: a base of 87,000 tonnes, which is allocated to producers based upon historical exports; and a 9,600-ton strategic quota reserved for the Congo's minerals regulator ARECOMS.

ARECOMS has the authority to purchase any excess cobalt that is produced by operators over their export allowance.

Since exports were stopped in February, stocks within the country have been building. China's CMOC is the world's biggest producer, thanks to its massive Congolese copper and cobalt operations. It reported a cobalt stock of 57,000 tonnes at the end the second quarter.

The decision will be made by the cobalt producer and any other producers whether to reduce production to match individual export permits, which have not yet been announced, or to continue production.

The current high price of copper will not stop anyone from mining it, but does it make sense to run the cobalt-by-product through an hydroxide line when it cannot be exported?

It is difficult to predict how much material the government can purchase because each company has its own set of economic calculations.

The underlying intent is to use ARECOMS for market equilibrium, purchasing surplus material at low prices and releasing them when the prices rise.

TOTAL CONTROL:

It is not a new thing for commodity producers to try and control the market price. OPEC still has a strong influence on oil prices, but the state-backed structures that managed the coffee and tin market collapsed in 1980s.

In the history of market failures, the bankruptcy of the manager of the tin-buffer stock still has a prominent place. The 1985 London Metal Exchange almost collapsed due to the tin shortage. This led to years of legal disputes.

The scheme was not flexible enough to adapt to the changing dynamics of the market and collapsed under its own weight.

The DRC enjoys a significant advantage due to its ability to control the global supply chain. The DRC accounts for over 70% of the global output, and it has by far most reserves.

The market dynamics are also on its side. The cobalt market is growing despite the threat of alternative battery chemistries. The tin buffer manager was plagued by a waning demand as plastics and aluminium eroded the use of tin in the packaging industry.

The governments are also rushing to stockpile strategic quantities of a metal that is deemed critical both for military and civil reasons.

China has been an important strategic cobalt purchaser over the past couple of years, and the United States Defense Logistics Agency is currently tendering up to 7,500 tonnes of alloy-graded metal over the next 5 years.

In such a market context, the Congo has the muscle to not only engineer a price floor but also to force the much-needed destocking along the entire process chain.

The real challenge will be to manage the price increase that results.

Any Congolese buffer-stock manager who sees cobalt prices increase too quickly and too far, as they did twice in the past ten years will be faced with the problem of simultaneously destroying demand and causing supply to grow in other parts of the world.

Even with the backing of the state, it can be difficult to control a market, especially if the market has a long history of volatility.

These are the opinions of the columnist, an author for.

(source: Reuters)