From Shortage to Stability: How DRC's Cobalt Export Quota Is Reshaping Global Battery Markets

The cobalt market just witnessed a dramatic turning point. After months of artificial supply constraints, the Democratic Republic of Congo officially rolled out an export quota system that’s rewriting the playbook for battery metal traders worldwide. The move, announced by ARECOMS in September, caps cobalt exports at 18,125 metric tons through the end of 2025, with an annual ceiling of 96,600 tons set for 2026-2027. This policy shift has already sent cobalt prices per pound surging 240 percent since February—a stunning reversal from the oversupply crisis that plagued the sector just months ago.

The Supply Crisis That Triggered Everything

The real story starts with oversupply spiraling out of control. Global cobalt mine production exploded from 140,000 metric tons in 2020 to 290,000 metric tons in 2024, with the DRC—which produces roughly three-quarters of global supply—alone ramping output from 175,000 to 220,000 metric tons over that same period. Much of this surge came from China’s CMOC Group, which aggressively expanded operations across two major DRC mining complexes. The result? A flooded market where cobalt prices per pound collapsed below $10 in early 2025, reaching levels unseen in over two decades.

Faced with this crisis, Kinshasa made a bold call: implement an eight-month export suspension starting in February to drain inventory and stabilize prices. The gamble paid off. By June, cobalt hydroxide imports into China had plummeted 62 percent, signaling that the supply-demand equation was finally tightening. When authorities hinted at permanent quotas in September, prices exploded. What had been trading in the US$33,300 to US$37,000 range per metric ton range suddenly jumped to US$47,110 by late October—levels not seen since January 2023.

Why the Quota System Changes Everything

The export quota isn’t just another trade policy—it’s a structural shift. By capping supply at levels below what analysts estimate is needed for equilibrium, the DRC is creating an artificial constraint that could push cobalt prices per pound significantly higher. Project Blue calculates that at least 100,000 metric tons of exports are required annually to balance global demand. With only 96,600 tons permitted under the new framework, and accounting for shipping delays and processing losses, just 85,000 to 90,000 tons will actually reach end users in 2026. That’s a structural deficit by design.

The implications ripple across the battery supply chain. Producers—especially copper-cobalt miners operating in the DRC—now face bureaucratic delays and potential export bottlenecks. Many are already locking volumes into long-term contracts, leaving the spot market increasingly tight. Financial hedging and production adjustments are becoming survival strategies rather than optional tactics. Refining capacity may also shift domestic as exporters find it increasingly costly to store cobalt hydroxide while waiting for quota allocations.

Demand Remains Surprisingly Robust Despite Headwinds

While supply tightens, demand continues climbing. The electric vehicle market drove cobalt consumption to record highs exceeding 200,000 metric tons in 2024, with year-to-date 2025 EV unit sales up more than 30 percent compared to 2024. Even as some regions report EV demand softening, battery chemistries containing cobalt—particularly nickel-cobalt-manganese (NCM)—remain the preference for mainstream automakers, especially as China phases out lithium iron phosphate (LFP) technology in premium segments.

Beyond EVs, portable electronics and alloy applications continue absorbing cobalt, creating a diversified demand base that’s proved resilient. The sustainability narrative also supports pricing. Roughly 80 percent of refined cobalt now meets Responsible Minerals Initiative standards, a critical compliance requirement for automakers under tightening ESG frameworks. This legitimacy factor means cobalt-intensive supply chains are becoming preferred over alternatives, at least in the near term.

Geographic Rebalancing and Geopolitical Recalculation

The cobalt market is entering a pivotal transition. Indonesia is projected to overtake the DRC as the primary source of new supply by the late 2020s as projects like Kalimantan Ferro Nickel ramp production while few new developments emerge in Congo. This geographic shift carries geopolitical weight. Western buyers—spooked by Congo’s political volatility and supply manipulation—are increasingly investing in strategically positioned cobalt projects aligned with US and European interests. China, meanwhile, is tightening control over its refining capacity, effectively amplifying its leverage over global battery supply chains.

These cross-currents are reshaping buyer behavior. Major automakers and equipment manufacturers are reconsidering cobalt’s role in their long-term battery roadmaps, even as near-term constraints support prices.

The Price Outlook: How High Can It Go?

Fastmarkets assessed cobalt hydroxide at US$19.50 to US$20.20 per pound in mid-October, up from just US$5.65 in February—a stunning 245 percent recovery. Project Blue suggests prices could push toward historical real levels exceeding US$20 per pound in 2026-2027 if the quota holds. Such levels would represent a complete inversion from the oversupply despair of early 2025.

However, elevated prices carry a risk. Battery makers accelerating the shift toward cobalt-free chemistries like LFP could dampen demand faster than expected, potentially creating a new cycle of oversupply once quota constraints ease. The long-term equilibrium depends on whether EV demand recovery maintains momentum and how quickly alternative battery architectures mature.

For now, the cobalt market faces continued volatility—shaped by quarterly quota releases, copper price dynamics, China’s battery strategy shifts, and EV adoption rates across key markets. The next 18 months will reveal whether the DRC’s quota system achieves durable market balance or simply delays the inevitable supply rebalancing.