Kinshasa: The Democratic Republic of Congo (DRC) is weighing the introduction of cobalt export quotas in an effort to curb oversupply and boost prices, as the world’s largest supplier of the battery metal faces historically low price levels. Three sources familiar with the matter told Reuters that the proposal has been discussed within the Congolese government, though no final decision has been made.
Cobalt prices have slumped due to weakening demand from automakers and increased production of copper, from which cobalt is extracted as a by-product. As mining companies ramp up copper output to capitalize on high prices, the cobalt market has faced a growing surplus.
Temporary Export Ban and Future Quotas
In an initial move to manage the supply glut, Congo imposed a four-month ban on cobalt exports on Monday. The decision, announced by the Authority for the Regulation and Control of Strategic Mineral Substances’ Markets (ARECOMS), is set to be reviewed in three months and could be adjusted or lifted based on its effectiveness.
However, analysts and industry sources suggest the temporary ban alone will not significantly impact prices, which may continue to decline as companies release stockpiled cobalt onto the market. The government is expected to use this period to negotiate and finalize an export quota system to better regulate supply in the long term.
Congo’s Mines Minister Kizito Pakabomba and ARECOMS did not immediately respond to requests for comment. Communication Minister Patrick Muyaya was also unavailable for comment.
Challenges in Market Regulation
Previous efforts by the government to convince mining companies to voluntarily reduce cobalt exports have not yielded results. Two sources indicated that state-owned miner Gecamines attempted but failed to reach an agreement with China’s CMOC Group to manage cobalt supply and mitigate price volatility through their joint venture.
CMOC’s Cobalt Production Surge
Despite the downturn in cobalt prices, CMOC, the world’s largest cobalt miner, more than doubled its output last year to approximately 114,000 metric tons, following increased copper production at its Tenke Fungurume and Kisanfu mines in Congo. The company’s Congolese operations also produced around 650,000 tons of copper.
CMOC stated that the temporary export ban has not impacted production at its mines, with spokesperson Vincent Zhou telling Reuters that the company does not expect a significant effect on business performance.
Other major cobalt producers in Congo, including Eurasian Resources Group and Glencore, declined to comment.
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Market Impact and Future Outlook
Cobalt prices on the London Metal Exchange (LME) have plunged from a record high of $82,000 per metric ton in April 2022 to just $21,000 per ton—the lowest level since the contract was introduced in 2010.
The export ban could remove approximately 65,000 tons of cobalt from the global market, potentially leading to a temporary price increase. However, BMO Capital Markets analysts caution that mining companies are likely to continue stockpiling the metal, limiting any sustained price recovery.
“We fully expect that this will lead to further supply controls in the future, with the most likely next step being production or export quotas,” analysts noted.
