Democratic Republic of Congo likely to replace cobalt export ban with quotas

The Democratic Republic of Congo will likely replace a cobalt export ban with export quotas, but the timing and effectiveness of a new system will depend on the government's regulatory capacities and willingness to enforce them, experts told Platts, part of S&P Global Commodity Insights.

Congo, which produced 71.4% of the world's cobalt in 2024, according to S&P Global Market Intelligence data, imposed a four-month ban on shipments of cobalt hydroxide on Feb. 22 to curb market oversupply and stabilize falling prices. The policy succeeded at raising global cobalt prices but led to stockpiling within Congo and pinched government coffers. Combined cobalt and copper exports account for around 40% of Congo's gross domestic product, according to a May 20 Bloomberg report that cited International Monetary Fund data.

The Congolese government on May 23 initiated a review process involving major stakeholders in the country's cobalt industry to assess the ban's effectiveness, with a decision due June 22.

"We expect the DRC government to terminate their export ban before the end of the year, and to replace the export ban with a system of export quotas," said Gil Michel-Garcia, executive vice president and general counsel of EVelution Energy, a US cobalt processor.

The Platts-assessed cobalt hydroxide price traded at $5.60/lb CIF China as of Feb. 21, the lowest price in the four-year life of the assessment. But after the export ban announcement, the price surged more than 100% to a two-year high, reaching $11.80/lb as of May 27.

"There is a strong incentive for the DRC government to transition from the current export ban to a quota system. This would allow them to manage supply and support cobalt prices while also allowing cobalt producers to reach profits," Jomar Camposano, a metals analyst at Commodity Insights, told Platts.

Congo's cobalt production is a byproduct of copper, another critical metal in high demand for various applications including transmission lines and power generation. While exports of copper continued unabated, cobalt producers were left with little choice but to store the metal in warehouses.

"Putting an export ban is really painful for the country," Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told Platts. "Because they are not making any revenue from the cobalt. The decision to impose export restrictions is ultimately undercutting their revenues. They are doing this as a long-term strategy to restore the market."

Enforceability is key

Export quotas would allow Congo to try to manage global cobalt prices while still funding its government. Export quotas have been used in commodity markets before, but their success depends on effective enforcement and a transparent regulatory system. Cheating the quota system is not uncommon in commodities.

"The difficulty with quotas is that they are very useful from the market perspective, but they are difficult to enforce. You must have a very good enforceability mechanism when it comes to your ports and your transit corridors to make sure that the quoted amount is leaving. That would require long-term investments," Baskaran said.

"Whether the DRC is ready for that system, ready for the nuts and bolts of its implementation, could be a determining factor in whether it comes sooner, and we will see another extension," Baskaran added.

Export quotas could trigger lawsuits from the mining companies operating in the country.

"The question is whether Congo can get a working structure in place that is also legally watertight and does not open it up for litigation by unhappy mining companies," a Europe-based trader told Platts. "It means they are under time pressure and if they can't get a workable mechanism in place in time, a further one- or two-month extension may be needed."

Congo's leading cobalt miners — China-based CMOC Group Ltd. and Switzerland-based Glencore PLC — are at odds over the export quotas, Reuters reported. CMOC and Glencore did not immediately respond to Platts' request for comment or confirmation.

CMOC, whose mines produced 40.6% of Congo's cobalt in 2024 according to Market Intelligence data, has called on Kinshasa authorities to immediately lift the ban come June 22.

"If the DRC can expedite the necessary preparations and engage in constructive dialogue with local producers, it may be possible to implement an export quota system by June 22," Camposano said. "However, if these logistical and administrative challenges are not addressed in time, the government may need to extend the current ban or delay the transition to a quota system until it is adequately prepared."

Cobalt market needs long-term supply strategy

Refined cobalt supply has grown almost twice as quickly as demand, according to Commodity Insight's May CBS Lithium and Cobalt report. The International Energy Agency has attributed much of the production increases to assets operated by China's CMOC Group.

"Perhaps a system of export quotas could make it more difficult and/or expensive for one country, such as China, to control the global price of cobalt by overproducing cobalt from their mines in the DRC and shipping their cobalt hydroxide production for processing to China (thereby depressing the price of cobalt)," said Michel-Garcia.

Some experts said that the quota system could be a useful tool for cobalt because its fundamentals are driven by the copper market.

"For a market like cobalt, which is 99% mined as a byproduct and its supply is not entirely driven by its own market dynamics, export controls are a potentially useful tool in supporting the market price and controlling periods of prolonged oversupply," said Robert Searle, a senior battery materials analyst at Fastmarkets.

Despite the challenging market today, demand for refined cobalt is forecast to jump by 45% between 2024 and 2030, according to the May report from Commodity Insights.

"Raising the price of cobalt through quotas increases the revenue that the DRC government derives from its cobalt mines, and the quotas could also provide market incentives for the US to increase imports of cobalt hydroxide for storage and processing in the United States," Michel-Garcia said.

Cobalt, like other critical minerals and metals, was exempted from the "reciprocal" tariffs recently outlined by the US.

Stringent export controls can backfire

Overly stringent export controls, however, can backfire by accelerating transition towards low-cobalt or cobalt-free batteries, weakening demand outlook for the metal.

"The market is going to react to higher prices. With higher cobalt values, it is highly likely that we see a greater proportion of high-nickel [nickel-cobalt-manganese batteries] in 2025 and 2026," Searle told Platts. "At cobalt prices pre-export ban, lithium-iron-phosphate (LFP) already held a cost advantage — overly stringent controls and higher cobalt sulfate prices further emphasize the cost benefit of moving to LFP."

So far, consumers have had to absorb the additional cost pressures caused by the ban, and some European consumers told Platts that they are no longer buying any cobalt metal in addition to their long-term contractual obligations.