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The Democratic Republic of Congo (DRC), the largest producer of cobalt globally, has halted all exports of the key battery metal for four months in an effort to curb oversupply and stop prices from falling further.
The DRC, which produces about three-quarters of the world's cobalt, implemented the suspension on February 22, as per Patrick Luabeya, president of the Authority for the Regulation and Control of Strategic Mineral Substances' Markets.
The decision follows a government decree allowing regulators to take emergency action in response to market instability.
"Exports must be aligned with world demand," Luabeya said in a written response to Bloomberg.
Cobalt production in the DRC has soared in recent years, largely driven by China’s CMOC Group (OTC Pink:CMCLF,SHA:603993), which has ramped up operations at two large mines.
This surge in supply has led to a significant drop in prices, with cobalt benchmark metal prices falling below US$10 per pound, the lowest level in over two decades except for a brief dip in late 2015.
Cobalt hydroxide, the primary form produced in the DRC, has dropped below US$6 per pound.
The decision to halt exports is part of an effort to prevent further declines.
"The situation required immediate action," Luabeya said, pointing to years of illegal mining and uncontrolled exports from both industrial and semi-industrial producers that have exacerbated the market glut.
He added that excess supply poses a "serious threat" to the country, as well as domestic and international investors.
While the suspension applies to all cobalt producers in the DRC, copper exports will remain unaffected. Cobalt is primarily mined as a by-product of copper in the DRC, but the two metals are marketed separately.
CMOC, now the world’s largest cobalt miner, significantly expanded its output in 2024, producing 114,165 metric tons and surpassing its full-year target within the first nine months of the year.
The company's projected output is set at 100,000 to 120,000 metric tons in 2025.
As mentioned, CMOC’s cobalt expansion has been a key factor in the ongoing market imbalance. It now accounts for more than 40 percent of global cobalt production, a level of dominance that has disrupted traditional market dynamics. The surge in supply from CMOC’s mines has left competitors scrambling.
Glencore (LSE:GLEN,OTC Pink:GLCNF), previously the world’s top cobalt producer, has taken a different approach.
The company cut its 2025 production target for its Mutanda mine in the DRC by as much as 42 percent, citing weak market conditions and difficulty selling accumulated stockpiles.
In 2023, Glencore’s cobalt output fell 6 percent to 41,300 metric tons, while its copper production also declined.
To stabilize its operations, Glencore has reduced production rates at Mutanda, a move that will also impact its copper output and contrasts sharply with CMOC’s aggressive expansion. The DRC's cobalt export suspension is set for an initial four month period, but the government will review its decision in three months.
