After news broke of the Democratic Republic of Congo (DRC) imposing a four-month-long suspension of cobalt exports, the market is realigning. Market participants have begun to discuss the wider effects of the suspension and whether Indonesia can capitalize on the situation.
The DRC accounted for 78% of global cobalt production in 2024, according to Fastmarkets’ research. With considerable price increases across the cobalt complex since the suspension, it is evident that the market is struggling over how to navigate the four months without fresh supply of these units.
Impact of the DRC cobalt export ban on global cobalt prices
- Cobalt prices surged following the DRC export suspension, sparking market volatility
- Concerns grow over OEMs reducing cobalt use in batteries to lessen dependence on the region
- Predictions are split between potential oversupply and sustained high prices after the suspension
- The DRC faces risks to royalties and future investments due to abrupt policy changes
Fastmarkets’ daily price assessment for cobalt, standard grade, in-whs Rotterdam, was $14.25-16.00 per lb on Wednesday March 12. This was up from $13.00-15.50 per lb the day before and from $9.50-10.40 per lb on February 21, the day before the DRC export suspension.
Prices have rallied in the period since the export suspension was imposed, with buyers and sellers scrambling to secure additional volumes to ensure that long-term contract deliveries can still be made.
Fastmarkets’ daily price assessment for cobalt hydroxide, 30% Co min, cif China, was $10.00-11.00 per lb on Wednesday, unchanged from the previous day but up by 84% at the midpoint from $5.65-5.75 per lb on February 21.
Some market participants have spoken about the wider ramifications of the export suspension, and how the active steps taken by the DRC government for market price purposes could affect future investment decisions.
“It looks like an ‘own-goal’ from the DRC,” one trader said. “Yes, cobalt prices are now higher as a result, but [original equipment manufacturers] will now look to their labs to engineer cobalt out of batteries.”
Others disagreed. “Production is still permitted,” one said. “At some point, that volume will be released to the market, and the oversupply will continue, with prices coming back down. I don’t think that battery chemistries will fundamentally change because of this.”
Before the export suspension, there had been a great deal of discussion about cobalt’s role in the future of electric vehicle (EV) battery chemistries. The world’s largest cobalt producer, CMOC Group, said in 2024 that “cobalt is far less important than imagined” and that “EV batteries will never return to the era that relies on cobalt.”
Historically, EV batteries mainly used a nickel-manganese-cobalt (NMC) chemistry with equal parts of each. Battery cell makers then sought to redefine the cell chemistry to be less reliant on cobalt and manganese, amid global shortage risks and ESG sourcing concerns.
In 2024, the volume of cobalt deployed per vehicle declined by 25% year on year, according to Fastmarkets’ estimates. But in a year of headwinds for electric vehicles, total demand for battery electric vehicles (BEVs), plug-in hybrid EVs (PHEVs) and mild hybrid EVs (MHEVs) in the passenger sector increased by 9% year on year.
In recent years, the lithium-iron-phosphate chemistry (LFP) has been improved and honed to be the main EV battery chemistry in China, driven by better lithium availability and cheaper costs. Outside of China, NMC was preferred due to its better range capacity, but recent innovations in lithium-ion technology have attempted to challenge this.
“While the four months [of the DRC export suspension] is a short amount of time overall, the fact that the government has intervened to stop low prices, by suspending exports, reduces the appetite for cobalt chemistries and the reliance on the region for battery [feedstock materials] as a whole,” one European OEM told Fastmarkets.
“The fact that the export suspension wasn’t even discussed with miners beforehand, and was just enacted, has effectively destroyed the investment case for someone looking to put up billions of dollars to invest in a supply chain in the DRC,” a second trader said.
“It is a first-of-its-kind ban policy issued by the DRC,” a market participant said. “I never imagined the effort would be so large. I don’t think that, after the four months, the DRC government will let exports resume as usual. Maybe they’ll issue another policy, such as an export quota.”
A DRC government review is planned in less than three months’ time. This will seek to reassess the export suspension and could mean that export quotas are introduced, or the export suspension could be extended, or it could be removed.
“Don’t forget, the government isn’t receiving any royalties in this period, because nothing is leaving the country,” a third trader said.
“The talk of engineering cobalt out of batteries has been going on for years,” Fastmarkets’ analyst Robert Searle said. “But the fact of the matter is that NCM chemistries are still expected to play a significant role in Western EV markets, and the DRC remains the major source of mined cobalt extracted by Western, non-Chinese companies.
“The DRC government doesn’t want to push consumers away from cobalt,” he added, “but there will need to be a ‘happy medium’ in terms of pricing that is acceptable to downstream refiners and to the DRC government in terms of royalty payments.
“Should an export quota be put in place from June this year, we would expect prices to be supported at higher levels than if the oversupplied conditions were allowed to continue into the midterm, as was previously forecast,” Searle said.
Indonesia’s emerging role amid the DRC cobalt export ban
Indonesia accounted for 31,000 tonnes of global cobalt production in 2024, around 10% of the market share, according to Fastmarkets’ research.
Some market participants have pointed to the four months now becoming an opportunity for Indonesia to increase production and to capitalize on a market desperate for material. But that may not be as straightforward as some suggest.
Indonesia has become the second-biggest cobalt producer after the DRC, helped by its booming high-pressure acid leaching (HPAL) projects. The country intends to produce 500,000 tonnes per year of mixed hydroxide precipitate (MHP) from those projects, which would yield 50,000 tpy of cobalt, according to industry sources.
MHP typically contains 35-45% nickel and 3-6% cobalt, and is derived from laterite nickel ore. It plays a key role in Indonesian cobalt production, and is generally more cost-effective than conventional cobalt hydroxide feed. Some have described MHP as ready-made NCM feed.
Some cobalt refiners in China are looking to source intermediate material from Indonesia as a replacement for cobalt hydroxide from the DRC.
“If the DRC continues to ban exports, it may be a big opportunity for Indonesia, but currently the capacity for cobalt metal or cobalt in other forms is very limited,” one market participant said.
“It is quite difficult to increase capacity in such a short time, and I believe nobody has any plans for such increases,” he added. “Maybe it is an opportunity for Indonesia, but I don’t think much more cobalt can come from the country in a short period of time. Any new projects still need time to go into operation.”
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