The resumption of cobalt exports from the Democratic Republic of Congo (DRC) under a quota system appears almost inevitable, market participants said ahead of the Cobalt Institute's annual conference in Singapore this week.
With cobalt prices rising and stocks tightening globally, market participants increasingly expect that the DRC's blanket cobalt export ban — implemented in late February — will transition into a more sustainable quota system. The current freeze has pushed up global cobalt prices, but also blocked the flow of royalties to the Congolese treasury, creating what several traders described as a politically deliberate but ultimately transitional phase.
"This is not [Congolese trading and mining firm] Gecamines — it's Kinshasa, it's the ministry of mines, and ultimately it's the presidency," one trader said, emphasising the centralised nature of the decision-making this time around.
The government's key grievance is financial, multiple sources agreed. Cobalt royalty revenues have collapsed in recent years, according to several market participants. "They've lost billions," said one source with direct links to the ministry of mines. "This only makes sense if they replace the ban with something dynamic that keeps prices up and restarts the royalty flow."
Prices up, revenues frozen
Prices for cobalt hydroxide have nearly doubled since February, from $6/lb cif China to close to $12/lb — a sharper jump than during than any previous bans on DRC exports, including the ban on Chinese producer CMOC's Tenke Fungerume mine in 2022, now the largest cobalt mine in the world (see graph). But with exports halted, the Congolese government has reaped none of the upside.
"They got the prices up, sure — but right now, there's nothing coming in. No exports mean no royalties," one trader noted, "A quota is the only real way forward."
Market participants expect any such quota regime to be modelled loosely on Opec, with the DRC restricting supplies in a co-ordinated way to support pricing. "The officials running this are oil and gas guys," one source who has met with the DRC delegation said. "They want Opec on steroids. They've said that outright."
Others draw comparisons with Indonesia, which already operates a quota system for its nickel ore mining permits and mixed-hydroxide-precipitate (MHP), which contains cobalt. "Indonesian quotas are real, but they're built into nickel flows. It's not exactly apples to apples," a trader said. "So for Indonesia to reduce cobalt output, they'd have to reduce nickel output, which they don't want to do."
Stockpiles thinning, squeeze ahead
Record-high first-quarter cobalt hydroxide production by CMOC and global trafing and mining firm Glencore — at 30,000t and 9,500t, respectively — suggests a healthier supply picture than is really the case. "Production hasn't stopped, but that's the point — if exports don't resume, stocks will just build up inside the DRC or dry up abroad," a trader said.
Some estimates place global cobalt hydroxide inventories at 50,000–70,000t, but availability depends heavily on who holds what. "20,000t with a larger producer is not the same as 20,000t with a small recycler," one trader said. "Some are more inclined to sit on it and wait for prices to jump."
Multiple participants expect a squeeze to emerge in the international market by August, as final pre-ban shipments are consumed and no new material enters the pipeline. "One producer told people there'd be no more shipments after May/June," one source with direct knowledge of trading flows said. "That means by July, China is chewing through remaining stocks — and by August, you're in crunch territory."
Some traders are already stockpiling, with exporters deliberately delaying cargoes to benefit from rising prices, market participants said.
Strong enforcement
The DRC's export restrictions are being heavily enforced. A customs brigade with military backing was deployed recently to Kasumbalesa on the DRC-Zambia border — the country's only significant cobalt export route — to prevent smuggling and enforce the ban. "People writing about illegal smuggling clearly haven't been to Katanga. There's one road. One crossing. It's tightly controlled," a trader told Argus.
The new level of sophistication, some argue, is why a transition to quotas feels inevitable. "Extending the ban helps no one in the long term — not the DRC, not Chinese refiners, not the market," an industry consultant said. "A quota system is the only option that gives them both price and payment."
Market sentiment remained mixed ahead of next week's conference, with cobalt spot trading thin, ranging from $15-16/lb in-warehouse Rotterdam for Chinese material, $17-18/lb for western standard grade and $19-20/lb for alloy grade.
Whether the announcement comes in Singapore or in the weeks that follow, few now doubt the final outcome. "This [export ban] isn't a one-off," one participant said. "It's the start of a new model. The days of Congo flooding the market and watching others profit are over."
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