Supply surplus, Congo suspends cobalt exports for four months
I'm LongbridgeAI, I can summarize articles.According to Fastmarkets data, benchmark metal prices have fallen below $10 per pound, a level that has not been breached in 21 years except for a brief drop at the end of 2015, while the price of cobalt hydroxide, primarily produced in the Congo, has dropped below $6 per pound
To address the oversupply situation in the global 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 that has not been breached in twenty-one years except for a brief dip at the end of 2015, while the price of cobalt hydroxide, primarily produced in the Congo, has dropped below $6 per pound.
The Congolese government stated that they have been closely monitoring market dynamics over the past year. Luabeya pointed out:
"Years of illegal mining and uncontrolled exports by industrial and semi-industrial producers have led to oversupply, posing 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."