25 February 2025

Cobalt Exports from the DRC suspended for four months

 

In a significant move to address the oversupply in the cobalt market, the DRC's Authority for the Regulation and Control of Strategic Mineral Substances Markets (ARECOMS) announced a four-month suspension of cobalt exports, which may be extended. This decision aims to stabilise prices and manage the surplus that has been impacting the market.

We previously argued that the DRC’s GDP relies too heavily on mining and that their current account deficit is too unhealthy to impose export bans; the export ban has however transpired and all stakeholders need to understand the implications.

Let's examine the potential impacts of the DRC supply stoppage over the next five years. Rather than speculating, let's use numbers based on SFA's latest Cobalt 2040 research.

Initially, a four-month stoppage suggests a maximum supply reduction of one-third of the current projected 2025 Democratic Republic of Congo (DRC) cobalt production. This assumes that all miners cease cobalt production for the duration of the ban and resume normal production afterward. This is of course unlikely, as copper output must still be maintained. Instead, cobalt will likely be stockpiled in the DRC and sold subsequently, a topic we will address shortly. We will refer to this maximum impact situation as Scenario 1a. In Scenario 1a, we assume a 33% drop in 2025 output, and no impact in 2026 as baseline.

 

 

Next, if we assume close to normal cobalt production and stockpiling in the DRC, with the aim to export once the ban is lifted, and that some logistical constraints will hinder export to 2026, we have Scenario 1b.

Up next, we know that many smaller producers are currently marginal, and they may opt to close their cobalt production circuits indefinitely. Because cobalt circuits operate downstream of the copper circuits, closure of the cobalt circuit won’t negatively impact copper production and allow savings on expensive reagents such as MgO. We saw several smaller producers not exporting the volumes of cobalt that would be expected from their installed capacities in 2024. Let’s assume all players not belonging to a conglomerate, and producing less than 1.5 ktpa of cobalt in hydroxide per annum, closes their cobalt plants and keep it closed for the next five years. In 2025 that would be 8 small producers and equivalent to 5% of DRC production! Let’s call this scenario: Scenario 2b (based on top of 1b’s assumptions).

We then get a supply and demand picture that looks like this:

 

Source: SFA (Oxford)

Based on Scenario 2b, we argue that the export ban hurts DRC’s bottom line as producers would likely be forced to shut and that there would not be enough incentive to restart the cobalt plants by 2030.

Price pressure will return in 2026 on the backdrop of everything else being equal.

DRC banning cobalt exports do not incentivise the progression of any other new projects as a price spike would be too short-lived to rely on. Indonesian projects are less sensitive to the cobalt price regardless and would simply carry on with their expansions and projects, which could create further S-D pressure not shown above.

What impact would all this have on the cobalt price? A modest short-term uplift and a return back to our baseline price forecast. Our 2026 price view would receive further downward pressure and may cause further closures not modelled above.

 

Key takeaways

• A temporary export ban does little to address the underlying problem of overproduction.

• It is unlikely that cobalt production in the DRC will be much impacted as copper output will still be maintained. Instead, the cobalt hydroxide will likely be stockpiled in the DRC and sold later.

• Potentially, 10 kt could be at risk if marginal smaller producers opt to make savings by shutting down their cobalt production. This is not enough to balance the market.

• Outside the DRC, Indonesia has become the second largest cobalt producer after significant investment has been made in HPAL plants that produce nickel with cobalt as a by-product in a mixed hydroxide.

• If an export ban were to morph into a quota that could simply help to further incentivise Indonesian HPAL projects.