On the evening of February 24, news spread over the market that the Democratic Republic of Congo has decided that it will suspend cobalt exports for four months in response the market situation of cobalt oversupply. The increase in cobalt production in the Democratic Republic of Congo is closely related to the rise in copper prices. As an associated ore, the increase in copper demand has boosted the cobalt production. This trend is particularly evident in the production growth of TFM and KFM mines in CMOC Group.
According to statistics from the Central Bank of the Democratic Republic of the Congo, the country's cobalt shipments from January to November 2024 reached 184,000 tonnes in metal content, a year-on-year increase of 55%. It is expected that the annual shipment volume in 2024 has had reached 200,000 tonnes in metal content, an increase of 44% YoY.
According to Mysteel estimation, the global cobalt raw material production was 260,000 tonnes in 2024, an increase of 16.3% YoY, indicating sustained oversupply.
The Democratic Republic of Congo is the world's largest cobalt supplier, and its cobalt production has continued to grow in recent years, mainly due to the expansion of copper mines, including the rapid growth in the production of TFM and KFM mines under CMOC Group. As the demand for copper increases, the production of cobalt, a byproduct of these copper mines, also goes up, thereby driving an increase in the supply of cobalt on the market.
The major application fields of cobalt include batteries used in electric vehicles (EVs) and electronic devices. In recent years, the rapid development of the EV market has fueled the cobalt demand. However, the stubborn oversupply, driven by sustained production in countries like DRC and slowing demand, has pulled back the cobalt prices to historical low in both overseas and domestic market.
Therefore, the DRC's proposed four-month suspension of cobalt exports in response to the oversupply is regarded as an attempt to stabilize the cobalt prices, but the impact might be short lived.
If cobalt exports from DRC are suspended, it is projected to lead to a decrease in cobalt supply in the short term, thereby providing some support for cobalt prices, especially in markets that rely on cobalt supply from DRC. However, a four month export suspension is not enough to fundamentally change the long-term price trend due to the complexity in global supply and demand pattern.
In the long term, the prices of cobalt are still subject to the EV demand, the development of alternative materials, and technological advancements (such as solid-state batteries). If the demand for EVs continues to grow, the demand for cobalt will rise accordingly. In addition, with the advancement of cobalt recovery technology is likely to bring additional cobalt supply. Therefore, even if DRC suspends the cobalt exports, the supply-demand balance in the long-run is the core to influence cobalt price trend.
To sum up, if DRC suspends cobalt exports for four months, it will likely have a short-term support on cobalt prices, as DRC is the world's largest cobalt supplier. However, the long-term cobalt prices are still subject to multiple factors such as global supply and demand balance, technological changes, and the development of the EV industry.