What could the temporary DRC cobalt export ban mean for the market?
Exports of cobalt from theDemocratic Republic of the Congo (DRC)are to be halted for four months in a bid to counter persistent oversupply in the cobalt market according to a statement by Arecoms, a government body responsible for regulation of the mining industry in the country.
The DRC is by far the largest miner of cobalt, accounting for over three-quarters of supply in 2024, as assessed byBenchmark’s Cobalt Forecast.
The cobalt market has been significantly oversupplied for several years, with Benchmark forecasting supply to be 110% of demand this year.
“The DRC export ban has been put in place to try to align supply with demand amid the current low price environment,” said Will Talbot, a research manager at Benchmark. “Low prices clearly do not work in the DRC’s favour as it receives royalties from cobalt sales.”
The export ban came into effect on 22 February 2025 and will be reviewed after three months with the potential to lengthen the ban a further if deemed necessary.
What impact could the export halt have on the market?
Benchmark expects that smaller producers with less access to financing and high cobalt-to-copper ratios will be the hardest hit by the export ban.
“We would not expect this ban to materially impact the supply-demand balance unless larger producers such as ERG and Glencore shut down production,” Talbot said, noting that thelargest producer in the country, CMOC, “can likely ride out the storm as it did in 2023 when its TFM asset faced an export ban.”
The DRC halting exports of cobalt for four months could shrink the forecast oversupply for this year, though the extent of this will depend on whether producers curtail production or increase stocks.
“As this is an export ban rather than a production quota, this may simply increase the stock level and delay somewhat the supply overhang,” Talbot said. “Conversely, it may encourage more producers to curtail cobalt production, in which case there could be a material decline in supply which would eat into stocks.”
The oversupply seen in the cobalt market since 2022 has allowed for significant inventory levels to build up.
How has oversupply impacted cobalt prices?
The continued oversupply has pushed down on cobalt hydroxide prices (CIF Asia) which hit highs of $34.50 per pound ($76,000/tonne) in April 2022.
“The low price environment poses significant challenges to producers as well as the government, which relies on the income from royalties on cobalt exports,” said Roman Aubry, a cobalt pricing analyst at Benchmark. “With a temporary export ban in place it is clear the DRC is hoping to maximise the value of the minerals crossing its borders.”
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