DR Congo bets on cobalt export freeze to halt price tumble

The government said the surprise four-month ban on exports of cobalt -- a key component in electric car batteries -- aims to stabilise the market "in the face of an overabundance of supply" internationally.

In 2024, the DRC produced 76 percent of the world's cobalt, according to the US Geological Survey, but over the last three years cobalt prices have fallen by 75 percent -- their lowest level in eight years.

Robert Searle, analyst at Fastmarkets, a raw material price reporting agency, warned the DRC's ban may carry "significant risks".

"Chinese companies have invested billions of dollars into the DRC's mining industry, this uncertainty and ban caught them off guard and could slow further investment into the country," he told AFP.

Searle also said "higher cobalt prices and (supply) disruptions could see a greater deployment" of cobalt-free batteries or ones using less of the mineral "in the coming years".

- 'Significant increases' -

Electric vehicle battery manufacturers, particularly Chinese companies, are already showing a growing interest in cobalt-free lithium-iron-phosphate batteries.

These are less efficient but cheaper.

The export suspension has started to pay off, already pushing up cobalt prices, particularly in the Chinese market.

Although the country has cobalt stocks, companies estimate there is not enough to cover a four-month period.

Without an alternative supplier prices could skyrocket as early as the second quarter, according to Searle.

He said over the last two years there has been a "ramp-up" in DRC-supplied cobalt, with "significant increases" from Chinese company CMOC, formerly China Molybdenum.

The company, a leading global cobalt producer, operates out of two of the world's largest mines located in the DRC.

"The oversupply in the cobalt market has predominantly been driven by the growth in mined supply in the DRC," said Searle.

Because it is a copper by-product, an increase in copper extraction, driven by the mineral being sold at high prices, has also fuelled a cobalt excess, according to analysts.

- 'Organised crime' -

The DRC has vast mineral wealth despite nearly three-quarters of its population living on less than $2.15 a day in 2024, according to the World Bank.

In 2023, the mining sector was responsible for more than 70 percent of the DRC's overall economic growth.

But the sector is plagued by smuggling, criminal networks and corruption.

That situation was made worse in 2021 with the resurgence of conflict in the eastern gold and coltan mining regions in North and South Kivu provinces.

Cobalt is mainly extracted from mines in the southeastern Katanga province, some 1,000 kilometres (620 miles) from the conflict, and has largely been spared from the war.

But its supply chain, like that of many minerals in the DRC, is tainted by "complex levels of organised crime", Oluwole Ojewale, a researcher at Enact which looks at organised crime in Africa, said in 2024.

This includes "illegal mining, smuggling and collusion between illegal miners, organised criminal gangs and state-embedded actors involved in its extraction and trade", he added.

In 2019, the Congolese government created ARECOMS, a body to regulate artisanal mining, notably by banning child labour and carrying out environmental studies into the practice.

But rights groups continue to denounce corruption and dangerous working conditions of children in artisanal mines -- particularly of cobalt.

The government in 2019 also gave public company EGC a monopoly on sales of cobalt mined on both an artisanal and semi-industrial scale.

A government decree extended this monopoly in February, although it has never really been applied.

"The state lacks the capacity to monitor and enforce compliance, so mining licensees (both local and foreign) have the latitude to operate outside the rules of engagement," said Ojewale.

It is also "very difficult to accurately assess", the share of cobalt produced from artisanal mining, according to Searle.

He estimated that it has fallen sharply in recent years and it was between three percent and five percent of total Congolese production in 2024.

"At that level, we can confidently say it is not responsible for the oversupply," he added.