The Democratic Republic of Congo (DRC) has temporarily suspended cobalt exports in an attempt to control falling prices. However, experts warn the move could disrupt the global market and impact foreign investments.
The government announced a four-month export freeze, citing an oversupply of cobalt. In 2024, the DRC produced 76/percent of the world’s cobalt, according to the U.S. Geological Survey. However, prices have dropped by 75/percent over the past three years, reaching an eight-year low.
Market Reactions and Risks
Industry analyst Robert Searle from Fastmarkets warns that the decision carries risks. Chinese companies, which have invested heavily in the DRC’s mining sector, were caught off guard. The ban could slow further investment and push battery manufacturers toward cobalt-free alternatives, such as lithium-iron-phosphate batteries.
Despite concerns, the suspension has already caused prices to rise, especially in China. However, existing stockpiles may not last four months. Without an alternative supplier, prices could surge by the second quarter of 2024.
Cobalt’s Role in the DRC Economy
Mining is crucial to the DRC’s economy. In 2023, the sector accounted for over 70/percent of the country’s economic growth. Yet, despite its mineral wealth, nearly three-quarters of the population lives on less than $2.15 per day, according to the World Bank.
The increase in cobalt production is largely driven by Chinese mining giant CMOC, formerly China Molybdenum. Since cobalt is a by-product of copper mining, rising copper extraction has also contributed to oversupply.
Challenges in the Mining Sector
Cobalt mining mainly takes place in Katanga province, far from conflict zones in the east. However, the industry faces smuggling, corruption, and organized crime. Researcher Oluwole Ojewale from Enact, an organization tracking organized crime in Africa, highlights illegal mining and collusion between criminal networks and state-linked actors.
Regulatory efforts have faced setbacks. In 2019, the DRC created ARECOMS to oversee artisanal mining and enforce labor laws, including a ban on child labor. The same year, the government granted state-owned EGC a monopoly on selling cobalt from artisanal and semi-industrial mines. However, enforcement has been weak, allowing illegal operations to continue.
While artisanal mining now accounts for just 3 to 5/percent of the country’s total cobalt production, regulation remains a challenge. As the market reacts to the DRC’s export freeze, industry players are watching to see if it stabilizes prices or further disrupts global supply chains.