Cobalt Supply Expected to Fall Short, Driving Prices Sharply Higher

Cobalt prices experienced a significant rise this week, climbing to 309,300 Chinese yuan per tonne by 27 September. This represents a sharp increase of 12.47% from the price of 275,000 yuan per tonne recorded just days earlier, on 21 September.

The price surge is widely attributed to market expectations of tighter global supplies, driven by a major policy shift in the Democratic Republic of Congo (DRC), the world's dominant cobalt producer.

DRC Implements Export Quotas

The DRC's Strategic Minerals Market Regulation and Control Agency announced on 21 September that the country will lift its cobalt export ban, which has been in place since February. The ban will be formally ended on 15 October.

However, from 16 October, the DRC will implement an export quota system until further notice. Under this new framework, Congolese mining enterprises will be permitted to export just over 18,000 tonnes of cobalt for the remainder of this year. Furthermore, annual export ceilings for 2026 and 2027 have been set at 96,600 tonnes.

This move is expected to result in a substantial reduction in cobalt supply from the country.

Projected Global Supply Shortfall

Analysts point to a significant anticipated shortfall in the global cobalt market as a direct consequence of the DRC's quotas. The announced annual quota of 96,600 tonnes for 2026 represents less than 40% of the nearly 250,000 tonnes the DRC exported in 2024.

Given that the DRC accounts for more than 70% of global cobalt supply, the quota system is projected to trigger a widespread supply shortage. While production projects in countries like Indonesia and Australia are expected to partially offset this deficit, their incremental capacity is reported to fall far short of compensating for the reduction from the DRC.

Market projections suggest the global cobalt supply could face an annual shortfall of approximately 50,000 tonnes during the 2026-2027 period.

Market Outlook

The confirmation of the DRC's export quota system is set against a backdrop of rising production from other nations. While these developments will help mitigate overall supply shortages, analysts project that the market will remain tight over the next three years, maintaining upward pressure on cobalt prices.

Concurrently, the higher prices are expected to spur increased market efforts to find substitutes for cobalt. Vigorous promotion of cobalt recycling initiatives is also anticipated to help alleviate market shortages. In the longer term, the introduction of new battery technologies is forecast to capture a share of the demand currently held by cobalt.