Due to oversupply, Congo suspends cobalt exports for four months
The Democratic Republic of the Congo has announced a four-month suspension of cobalt exports to address the global oversupply in the cobalt market. This measure takes effect on February 22 and aims to curb the declining trend in cobalt prices. The Congo is the source of about three-quarters of the world's cobalt supply, and in recent years, a surge in production has led to an oversupply of cobalt, causing prices to plummet. Although the export ban applies to all producers, it does not restrict production and does not affect copper exports. The government also plans to take other measures to balance the cobalt market
To address the global oversupply situation in the cobalt market, the Democratic Republic of the Congo has announced a four-month suspension of cobalt exports. Patrick Luabeya, chairman of the Congolese Strategic Mining Regulation and Control Agency (ARECOMS), stated, "Exports must align with global demand."
Luabeya also mentioned that this measure will take effect on February 22 and aims to curb the ongoing decline in cobalt prices. Recently, the Congolese Prime Minister and Minister of Mines signed a decree allowing regulatory agencies to take temporary measures, including export bans, "to prevent situations that could affect market stability."
Cobalt is one of the key raw materials for electric vehicle batteries, and the Congo is the source of about three-quarters of the world's cobalt supply. In recent years, cobalt supply has exceeded demand due to a surge in production from two large mines, leading to a price collapse. According to Fastmarkets, the benchmark metal price has fallen below $10 per pound, a level it has not breached in twenty-one years except for a brief drop at the end of 2015, while the price of cobalt hydroxide, primarily produced in the Congo, has fallen below $6 per pound.
The Congolese government stated that they have been closely monitoring market dynamics over the past year. Luabeya pointed out:
"The oversupply caused by years of illegal mining and uncontrolled exports by industrial and semi-industrial producers poses a serious threat to the country and its domestic and foreign investors, thus immediate action is required."
It is noteworthy that while the export ban applies "unilaterally and without exception" to all producers, it does not restrict production and will not affect copper exports. Luabeya explained, "Since copper and cobalt are sold separately, copper exports can continue." The Congo is also the world's second-largest copper producer, with cobalt mined as a byproduct of copper.
Meanwhile, ARECOMS is preparing other measures to balance the cobalt market, encourage more strategic mineral processing in the Congo, and achieve "transparent and fair pricing mechanisms."
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