DRC Suspends Cobalt Exports to Control Market Price: Risks and Opportunities
On February 22, 2025, the Authority for the Regulation and Control of Strategic Mineral Substances Markets (ARECOMS) announced a four-month suspension of cobalt exports from the Democratic Republic of Congo (DRC).
This decision aims to address the global oversupply of cobalt, a key metal used in electric vehicle batteries and other technologies, and to give the Congolese government and its mining partners the ability to regulate cobalt prices.
However, while the measure could help stabilize prices, it also presents several risks and challenges, according to various experts.
The Reason Behind the Suspension
The DRC government’s decision to suspend cobalt exports is driven by the oversupply on the global market, which has led to significant losses for both the government and mining companies. Artisanal miners, in particular, have been hit hard by this price decline, with many struggling for the past two years.
Several factors have contributed to this drop in cobalt prices, including:
- Supply and Demand: With prices falling, buyers have stockpiled cobalt, leading to an excess supply and forcing producing countries to sell at lower prices.
- Cheap Artisanal Production: Artisanal miners, often exploited by buyers, sell cobalt at much lower prices, further depressing market prices.
- Substitute Metals: Other metals are increasingly being used in battery production, reducing the demand for cobalt.
While civil society groups have welcomed the suspension, arguing that it will help raise cobalt prices and allow producers to manage their stock, some experts have raised concerns about the feasibility and effectiveness of the measure.
Civil Society’s Support and Questions
Alphonsine Tshilefe, a civil society leader in the mining and hydrocarbons sector, believes the suspension is a positive step but questions whether four months will be enough to control the market. She also asks how the government plans to manage overproduction.
On the other hand, Franck Fwamba, founder of the NGO Natural Resources for Development, argues that the suspension could help the DRC regain control over cobalt pricing.
He also points out that CMOC, a Chinese mining company, has been increasing its production despite low demand, benefiting China more than the DRC.
Fwamba highlights that global cobalt demand is forecast to reach 116,000 tons by 2030, primarily driven by the electric vehicle industry. He believes that by controlling exports, the DRC can reassert its position as a key player in the global cobalt market.
Risks and Concerns from Experts
However, several experts have raised concerns about the suspension’s impact on the DRC’s economy. Professor Godé Mpoyi, a senator, warns that the suspension could lead to significant revenue losses for the state, which may struggle to recover them.
He also suggests that such a measure could only work if the DRC acted as part of a global cartel. Without global coordination, the suspension could harm the country’s economy in the long run.
Willy Kitobo Samsoni, former Minister of Mines, also criticizes the lack of consultation with mining partners, arguing that the decision could disrupt the Congolese economy.
He stresses that the DRC’s dependence on its mining partners makes unilateral decisions risky. Kitobo warns that without a clear strategy to manage overproduction, the suspension could lead to a surplus of cobalt by the end of the year.
Mining Companies’ Concerns
Mining companies operating in the DRC have expressed strong opposition to the export suspension. They argue that the four-month hiatus will result in significant financial losses.
With many companies relying on cobalt sales to cover operating costs, the suspension poses a serious challenge to their operations.
CASMIA-G, a platform advocating for mining governance, has raised alarms about some mining companies seeking to bypass the suspension by securing exemptions.
This could undermine the government’s efforts to stabilize the market and control cobalt prices. CASMIA-G urges political leaders to ensure that the DRC maintains control over its cobalt resources and calls on mining companies to support the government’s efforts for mutual benefit.
Global Implications of DRC’s Decision
The DRC is the world’s largest producer of cobalt, responsible for nearly three-quarters of global production. Despite this, the country currently produces little refined cobalt, with most of the ore being exported for processing abroad.
As the DRC moves to control exports, it has the potential to influence global cobalt pricing. Cobalt’s role in reducing battery overheating and its importance to electric vehicles makes it a crucial commodity for future technologies.
While the suspension of cobalt exports presents an opportunity for the DRC to revalue its key resource, careful management will be needed to ensure that the measure benefits both the country and its mining partners.
Balancing market forces, overproduction, and international competition will be key to the DRC’s success in navigating this new policy.
