After years of chronic oversupply that drove prices to record lows, the cobalt market has undergone its most dramatic reversal in a decade. The catalyst: export controls imposed by the Democratic Republic of Congo in February 2025, followed by a strict quota system that has effectively halved the volume of cobalt leaving the country.
From Record Lows to Price Surge
Cobalt entered 2025 at record lows, trading around $10.70 per pound ($23,590 per tonne) in January as chronic oversupply weighed on the market. Supply had grown at a compound annual rate of roughly 15 percent between 2021 and 2024, far outpacing demand growth of around 8 percent over the same period. Warehouse inventories swelled, and high-cost producers outside the DRC faced existential pressure.
Then the DRC intervened. In February 2025, Kinshasa imposed an export ban on cobalt, later replaced in October by a formal quota system capping annual exports at 96,600 tonnes for 2026 and 2027, roughly half of 2024 export levels of approximately 192,000 tonnes. The effect was immediate: by December 2025, cobalt prices had more than doubled, reaching approximately $53,000 to $56,000 per tonne. Chinese domestic prices surged even higher, with some assessments hitting 452,800 RMB per tonne, representing a 167 percent increase from January lows.
Fastmarkets now projects a market deficit of approximately 10,700 tonnes for 2026, a stark reversal from the surpluses that defined the preceding three years.
The DRC Quota Mechanism
The DRC's export quota system is structured around quarterly allocations managed through ARECOMS, the national agency for strategic mineral reserves. For Q4 2025, permits covered 18,125 tonnes. The 2026 annual cap of 96,600 tonnes is split between a pro-rata allocation of 87,000 tonnes distributed among registered producers and a 9,600-tonne discretionary 'strategic quota' controlled by ARECOMS.
The government has reserved the right to adjust quotas quarterly if it deems the market imbalanced, introducing a degree of managed pricing that echoes OPEC's approach to oil. Unused Q4 2025 quotas were extended to March 31, 2026, partially easing an administrative bottleneck that delayed shipments through the turn of the year.
The practical effect has been significant. Administrative processing delays mean that much of the material approved for export in late 2025 will not physically reach Chinese refiners until Q1 or Q2 of 2026, keeping spot markets tight and prices elevated. Traders report that securing export permits now requires weeks of bureaucratic navigation, adding friction and cost to every transaction.
Production: Still Growing, but Constrained at the Border
DRC cobalt production itself has not declined. The country produced approximately 237 kilotonnes of cobalt in 2025 (roughly 72 percent of global supply), up from 220 kilotonnes in 2024. Output is forecast to rise further to approximately 248 kilotonnes in 2026, driven by higher-grade ore feed at Glencore's Mutanda mine, the ramp-up of Musonoi underground operations (a Jinchuan/Gecamines joint venture), and stable output from CMOC's Tenke Fungurume and Kisanfu operations.
The critical distinction is between production and export. The DRC is producing more cobalt than ever, but allowing less of it to leave the country. The resulting domestic stockpile could give Kinshasa significant market leverage if it chooses to release material strategically, or could depress local prices if storage capacity becomes constrained.
Indonesia: The Rising Competitor
While the DRC dominates mined cobalt supply, Indonesia has emerged as the fastest-growing alternative source. Indonesian cobalt production reached approximately 49 kilotonnes in 2025, representing nearly 15 percent of global supply, up from around 30 kilotonnes in 2024. Output is forecast to climb to 60 kilotonnes in 2026, a further 21 percent increase.
The growth is driven by high-pressure acid leach (HPAL) projects in Pomalaa and Morowali, along with ramp-ups at Zhejiang Huayou's Huafei project and Ningbo Lygend's Halmahera expansion. Indonesian cobalt is produced primarily as mixed hydroxide precipitate (MHP), a battery precursor material. MHP output from Indonesian operations is expected to reach 67,500 tonnes in 2026, up 145 percent from 46,300 tonnes in 2025.
For battery manufacturers seeking to reduce exposure to DRC supply risk, Indonesian cobalt offers a genuine alternative, though it comes with its own ESG considerations around nickel laterite processing and the energy-intensive HPAL chemistry.
Price Outlook and Market Risks
The consensus view among analysts is that cobalt prices will remain elevated through at least the first half of 2026, supported by tight supply from the DRC quota system and continued demand growth from the battery sector. Average prices are forecast around $55,000 per tonne for the year, though the range of possible outcomes is unusually wide.
The primary downside risk is a reversal of DRC export policy. Kinshasa has explicitly tied its quota system to market conditions, and a sustained price surge could prompt larger allocations to capture revenue. There is also a domestic political dimension: mining companies in the DRC generate employment and tax revenue, and prolonged export restrictions could create economic pressure to loosen controls.
On the upside, any further tightening of quotas or administrative delays in processing export permits could push prices higher still. The Q1 2026 period is particularly vulnerable to a supply squeeze as inventories at Chinese refineries draw down and delayed DRC shipments have not yet arrived.
Battery chemistry trends add a longer-term consideration. Lithium iron phosphate (LFP) cathodes, which contain no cobalt, have gained substantial market share in China and are making inroads in Western markets. If LFP adoption accelerates, it could structurally reduce cobalt demand growth, softening the impact of supply restrictions over time. However, for high-energy-density applications, including long-range EVs and aerospace batteries, cobalt-containing chemistries remain preferred, and substitution is not straightforward.
Strategic Implications
The DRC's export quota system represents the most significant attempt by a mineral-producing nation to actively manage a critical battery metal market since Indonesia's nickel ore export ban in 2020. Its success or failure will be closely watched by other resource-rich nations considering similar strategies.
For battery manufacturers and automakers, the message is clear: cobalt supply security can no longer be taken for granted. Companies that relied on spot market purchasing during the years of oversupply are now facing significantly higher procurement costs and longer lead times. Those that secured long-term offtake agreements before the DRC's intervention are in a much stronger position.
The broader lesson extends beyond cobalt. As producing nations become more sophisticated in leveraging their resource endowments, the era of cheap, abundant critical mineral supply may be ending. Whether the commodity in question is cobalt from the DRC, nickel from Indonesia, or rare earths from China, the direction of travel is the same: producing countries want a larger share of downstream value, and they are increasingly willing to restrict raw material exports to get it.
