The World's Largest Producer Of Cobalt, The Democratic Republic Of The Congo, Is Using Price Control As A Leverage To Attempt To Reverse The Situation in The Cobalt Industry Where Raw Materials Are Exported At Low Prices While High-end Processing Is Outsourced Abroad.

African mining industry news on July 29: According to Bloomberg, the world's largest cobalt producer, the Democratic Republic of Congo (DRC), is using "price control" as a leverage to try to reverse the situation in the cobalt industry where "low-priced raw materials are exported while high-end processing is outsourced". According to the latest statement by Guy-Robert Lukama, the chairman of the state-owned mining company Gecamines in DRC, the government plans to establish a "coordinated cobalt price formation mechanism" to encourage local processing after the cobalt export ban expires, in order to end the passive situation of "low-priced raw materials being sold and refined processing being controlled by others". As the "core valve" of the global cobalt supply chain, DRC (the Democratic Republic of Congo) contributes approximately 75% of the world's cobalt ore supply. On February 22 this year, due to the international cobalt price plummeting to a historical low of less than $10 per pound (halving from the 2018 peak of $40 per pound), the DRC (the Democratic Republic of Congo) announced the suspension of cobalt exports for the first time; in June, as the price still did not recover, the government extended the ban for another three months until the end of September. "No one is willing to invest in a refinery when the price is not sustainable." Lukama said in a recent conversation with the Center for Strategic and International Studies (CSIS) in the United States, "Over the past few years, the cobalt price has been persistently low, causing the local refining capacity in the DRC (the Democratic Republic of Congo) to almost come to a standstill - although the country has the world's richest cobalt resources, the refining process is highly dependent on overseas enterprises such as China, with over 90% of the cobalt ore being exported in the form of intermediate products (such as hydroxide cobalt) to China, South Korea, and other places for processing. The cobalt price control in DRC (the Democratic Republic of Congo) is essentially a response to the imbalance in global cobalt market supply and demand. Data shows that in 2024, due to the expansion of production at the DRC (the Democratic Republic of Congo) cobalt mine owned by China's CMOC Group (the world's largest cobalt producer, accounting for over 40% of global production)), combined with the temporary slowdown in the demand for new energy vehicle batteries, the cobalt price dropped from $40 per pound in 2022 to $9.5 per pound at the end of 2024, reaching a 15-year low. To alleviate inventory pressure, mining companies such as CMOC are accelerating the export of hydroxide cobalt (a key intermediate product in cobalt smelting) to China and other countries.
However, this further depressed the international cobalt price, forming a vicious cycle of "low-priced export → low profit → inability to upgrade processing → continued reliance on raw material exports". It is worth noting that with the announcement of the suspension of exports by the DRC (the Democratic Republic of Congo) in June, the international cobalt price has rebounded by nearly 60% (to $15.2 per pound), and the price of hydroxide cobalt has doubled to $28,000 per ton (Fastmarkets data). But Lukama emphasized that the government does not want the price to return to the "crazy highs" of 2018 or 2022, but hopes to stabilize market expectations through a "reasonable range" and attract local refining investment. The export ban by the DRC (the Democratic Republic of Congo) has had a chain reaction on the global cobalt supply chain.
China's customs data shows that in June, the import volume of cobalt intermediate products in China dropped by more than 60% on a month-on-month basis, marking the first significant decline since the ban was implemented in February. As the world's largest cobalt consumer (accounting for over 80% of global demand), Chinese battery enterprises are facing "raw material supply disruption" and "cost escalation" as dual challenges. "We now have to turn to cobalt mines in Australia, Canada, and other places for supplementation, but the ore grade and mining cost advantages of the DRC (the Democratic Republic of Congo) cannot be replaced. " A purchasing manager of a leading domestic battery enterprise told the reporter, "If the ban continues for a long time, the battery cost may increase by 10%-15%, which will affect the terminal price of electric vehicles." More importantly, the government of the DRC (the Democratic Republic of Congo) has signaled that after the expiration of the export ban, it may not immediately resume "unrestricted supply", but will consider setting export quotas or minimum price thresholds to "ensure that cobalt resources are shared globally rather than monopolized by a single country" (as Lukama stated). This statement has intensified market concerns over the "de-Chinaization of the cobalt supply chain" - the US Trump administration has recently been pushing for the signing of a "strategic resource partnership" with the Democratic Republic of the Congo, aiming to weaken China's dominant position in the processing of cobalt mines. Although the Democratic Republic of the Congo has not yet announced specific regulatory plans, Lukamwa has clearly set the direction: "We hope to balance the market, avoiding both a price crash that harms the interests of mining enterprises and a price that is too high and suppresses the development of the battery industry. A quota system might be a feasible option, and we need practical goals." Industry analysts point out that the "cobalt price regulation" in the Democratic Republic of the Congo is essentially a "upgrading industry game" - attracting local refining capacity to be established through price leverage, reducing reliance on raw material exports. However, this process faces multiple challenges: long investment cycle: a modern cobalt refining plant requires an investment of over 500 million US dollars and a construction period of 3-5 years; high technical barriers: the production of battery-grade hydroxide cobalt requires advanced chemical technology, and local enterprises in the Democratic Republic of the Congo do not yet have it; intense external competition: China, Indonesia, and other countries have already formed mature industrial chains in cobalt recycling and wet smelting. What is more noteworthy is that if the Democratic Republic of the Congo excessively raises the cobalt price, it may accelerate battery enterprises' shift to non-cobalt technologies (such as lithium iron phosphate, sodium-ion batteries).