Congo suspends cobalt exports for four months amid glut

The Democratic Republic of Congo says it’s suspending cobalt exports for four months to rein in oversupply of the battery metal on the international market.

Cobalt production in Congo – which produces about three-quarters of the material used in electric-vehicle batteries – has soared in recent years, as China’s CMOC Group Ltd. ramped up output at two large mines in the country causing supply to race ahead of demand and prices to tumble.

“Exports must be aligned with world demand,” Patrick Luabeya, president of the Authority for the Regulation and Control of Strategic Mineral Substances’ Markets, known as ARECOMS, told Bloomberg News in written responses to questions.

The measure came into force on Feb. 22, according to Luabeya. A day earlier, the prime minister and mines minister signed a decree, seen by Bloomberg, allowing the regulator to take temporary action, including barring exports, “in case of circumstances affecting the stability of the market.”

Benchmark metal prices have dropped below $10 a pound, a level not breached for 21 years apart from a brief dip in late 2015, according to Fastmarkets data. Cobalt hydroxide, the main form of the metal produced in Congo, has slid below $6 a pound.

“The DRC has played its trump card,” BMO Capital Markets analyst George Heppel said in an emailed note. The move “will likely send cobalt prices skyrocketing in the coming days and weeks.”

Glencore Plc, which operates a pair of mines in Congo, was the biggest miner of the metal for years until it was overtaken by CMOC in 2023. The Chinese company’s output tripled that of the Swiss commodities giant last year, accounting for more than 40% of total global supply. It’s targeting similar volumes in 2025.

While overall demand for cobalt continues to rise, it’s been outpaced by fresh supply and EV batteries that don’t contain the metal have been gaining market share. The surplus is expected until the end of the decade, according to Benchmark Mineral Intelligence analysis completed before the suspension was announced.

The government of Congo, which is also the world’s second-biggest producer of copper, “has been carefully reviewing market dynamics” for a year, Luabeya said.

The situation required “immediate action” as years of illegal mining and uncontrolled exports from both industrial and semi-industrial producers led to excessive supply, “posing a serious threat to the country and its domestic and international investors,” he said.

Cobalt is extracted as a byproduct of copper mining in Congo. While the block on cobalt shipments applies to all producers “unilaterally and without exception,” there are no curbs on production and there should be no impact on copper exports, Luabeya said. “Since copper and cobalt are marketed separately, exports of copper can continue.” CMOC is also Congo’s top copper producer.

The largest cobalt miner after CMOC and Glencore is Kazakhstan-backed Eurasian Resources Group Sarl. Glencore declined to comment, while CMOC and ERG didn’t respond to questions seeking comment on the export suspension.

About two-thirds of global mine supply is owned by companies from China, which accounted for an equivalent share of cobalt demand last year, according to specialist trading house Darton Commodities.

Congo will review the export curbs in three months, Luabeya said. Meanwhile, ARECOMS is preparing additional measures to balance the cobalt market, encourage the processing of strategic minerals in the country and achieve “a transparent and fair pricing mechanism,” he said.

The suspension comes a year after President Felix Tshisekedi tasked his government with designing policies to improve cobalt prices. Export quotas – one of the options suggested by Tshisekedi – are being considered “but no decision has been made yet,” Luabeya said.

(By William Clowes)

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