DR Congo cobalt export quotas risk spurring buyer shift to alternatives

The Democratic Republic of Congo made a high-stakes bet when it introduced cobalt export quotas: It could increase prices and takegreater control over mineral supply chains,orit could force buyers to seek alternatives and squeeze cobalt out of their products, industry participants told Platts.

The Congolese government on Sep. 21 said it would replace an outright export ban on cobalt hydroxide, which had been in place since Feb. 22, with a system of export quotas. The new system limits shipments to 96,600 metric tons annually for 2026 and 2027. The volumes account for 52% of the country's total cobalt production in 2024, according to S&P Market Intelligence data.

Congo is the dominant purveyor of the blue metal, producing 185,739 mt of global supply in 2024, according to Energy. Cobalt is a critical ingredient in high-performance rechargeable batteries used in electric vehicles, and it is used in defense applications like the high-temperature steel used in jet engines.

Industry participants said that quotas came in well below market expectations and could quickly tip the cobalt market into a structural deficit, unleashing sustained higher prices and risking demand destruction in the battery sector.

"We see that there is a risk that higher prices sustained by the quota could lead to demand destruction," said Jomar Camposano, an analyst at S&P Global Energy.

The market impact has been immediate and substantial.

Platts, part of Energy, assessed cobalt hydroxide CIF China prices up 6.8% from $14.6/lb on Sept. 19 — a day before Congo announced new export controls — to $15.6/lb on Sept. 26. Cobalt prices have seen a historic rally this year, up 170% from a Jan. 23 low of $5.6/lb.

Energy analysts upgraded forecasts for European cobalt metal prices to $15.96/lb for 2026 and $16.12/lb for 2027, provided that "the quota system is strictly enforced."

Inflection point

Insufficient allocations could overtighten the market, leading to sustained high prices and chaos at the consumer level.

"If quotas are strictly enforced, refiners will be competing for less than half of normal availability. This would push the global cobalt balance from surplus to deficit in 2026, with the potential for a sharp price response," Joel Crane, an investor relations and commercial manager at Cobalt Blue Holdings, an Australia-based cobalt miner and refiner, wrote in a Sept. 23 note emailed to Platts.

After more than seven months of export restrictions, refinery inventories have reached critical levels, according to Cobalt Blue Holdings' analysis. Even with exports resuming in October, the earliest shipments can reach China in January, maintaining market tightness for the next four to six months.

"On the demand side, extending these export restrictions could drive automakers to switch to battery chemistries that rely less on cobalt as supply dries up. This shortage could drive cobalt prices up, as well as the cost of the NMC battery chemistry," Kwasi Ampofo, head of Metals and Mining at BloombergNEF, told Platts.

Energy estimates demand for cobalt from battery makers, including those producing electric vehicles, will be 142,803 mt in 2025, rising to 154,891 mt in 2026.

"Pegging the export quota at 96,000 mt leaves a big gap for automakers and battery manufacturers," Ampofo added.

Sustained higher cobalt prices could incentivize new production from alternative sources, including cobalt-nickel mines in Indonesia and deep-sea resources. Indonesia is expected to produce 38,324 mt of cobalt in 2025, the second largest producer after Congo, according to Energy.

The Clarion-Clipperton Zone in the Pacific Ocean is estimated to contain more cobalt than all known land deposits combined, along with large quantities of nickel and copper, according to the US Geological Survey.

Winners and losers

Exporters now face a complex regulatory landscape to secure quota allocations.

ARECOM, Congo's regulatory authority for strategic minerals, will determine quotas based on historic export volumes, but specific reference years remain undefined. This ambiguity gives the Congolese government flexibility with quota allocation while creating risks for producers, particularly those with fluctuating outputs.

Chinese producers, in particular, could face disproportionate impacts if quotas are based on earlier reference years when their production shares were relatively lower.

"Within the DRC, there will be clear winners and losers. I suspect CMOC may get a disproportionate quota based on 2024 production, as the company produced almost double its announced capacity. Most of the other major operators have produced in line with nameplate capacity, so are likely to see more favorable allocation," Crane told Platts. "On the other hand, operators outside of the DRC will see unprecedented demand as a result of the tightening market."

CMOC produced 85,975 mt in 2024, up 480% from its 2021 production, according to Energy data.

Potential for further adjustments

Export quotascould beadjusted higher to meet market requirements.

"[The] DRC government is intervening into the market to achieve national goals, like revenue through royalties. We think that the quotas will be adjusted in response to market pricing," Andrew Tong, CEO at Cobalt Blue Holdings, told Platts.

The system may include incentives for local investment. According to Bloomberg news, cobalt producers may request higher export quotas by agreeing to invest in local processing facilities, Mines Minister Louis Watum indicated on Sept. 25. The minister expressed commitment to including miners, civil society, and other stakeholders in quota discussions following negative responses to February's export ban.

The strategy's success depends on the DRC's ability to balance market control with demand preservation.

"If properly maintained by the DRC, the quotas could be good for their country (but they will have to be able to react quickly and adjust the quotas appropriately to changing market conditions)," Gil Michel-Garcia, executive vice president and general counsel at EVelution Energy, said in an email to Platts. EVelution is constructing the first US solar-powered cobalt refinery in Yuma, Arizona. "I guess we will just have to wait and see."