 |
| Cobalt Battery |
Introduction to Cobalt’s Future: Challenges and Opportunities
Cobalt, a critical element in modern battery technologies, is facing a period of uncertainty. Speaking at Bloomberg’s event on October 14, Kenny Ives, the CEO of IXM and vice president of CMOC Group, highlighted key challenges and opportunities for cobalt markets, particularly as the Democratic Republic of Congo (DRC) imposes a new export quota system. Ives emphasized the need for renewed demand from downstream consumers to stabilize cobalt's market outlook. His statements underscored the ongoing shift in battery chemistries and the implications for cobalt’s future role.
Cobalt Demand Risks: Shift in Battery Chemistries
One of the biggest challenges facing cobalt's long-term growth is the shift in battery chemistries. Original equipment manufacturers (OEMs) have increasingly favored lithium-iron-phosphate (LFP) battery chemistries, which reduce the reliance on cobalt. Ives highlighted that the past four years have seen underwhelming growth in cobalt demand, exacerbated by the move away from cobalt-dependent batteries. However, with the reopening of DRC cobalt exports, Ives stressed that it's critical for key consumers to witness a steady cobalt flow to rekindle demand. The cobalt market is now at a pivotal crossroads as the DRC's supply constraints add pressure to this dynamic.
Impact of the DRC Quota on Cobalt Supply and Prices
The DRC’s export quota system, which limits exports to 7,250 tonnes per month until 2026, is a major factor affecting cobalt prices and supply stability. This system was implemented to manage the country’s cobalt reserves and ensure higher prices for the metal, though it has created a significant shortage in the market. At the beginning of LME Week 2025, cobalt prices surged, reflecting the tighter supply conditions. Prices for cobalt hydroxide reached $19.50-20.20 per lb, a significant rise from earlier in the year. Ives and other market participants have warned that while higher cobalt prices are necessary to support the sector, prices that exceed a certain threshold could drive downstream users to seek alternatives, putting further pressure on the market.
The DRC Quota: Will It Adjust to Market Conditions?
As the quota system locks in cobalt supply volumes until 2026, there’s speculation in the market about whether the DRC will adjust the quotas if cobalt prices continue to rise. Market players are closely monitoring these developments, but there is consensus that no changes will occur in the immediate term. Ives expressed doubt that the quotas would be increased in the near future, noting that only extreme price surges might prompt such an adjustment. The DRC has also reserved the right to adjust the quota volumes if market conditions change, adding another layer of uncertainty to an already volatile market.
ScrapInsight Commentary
The introduction of the DRC’s cobalt export quota system is a significant turning point for the global cobalt market. While it ensures a tighter supply, the long-term sustainability of cobalt demand will depend on the adoption of cobalt-free battery technologies by OEMs and the price sensitivity of downstream consumers. In the short term, higher cobalt prices are likely, but the market’s ability to absorb these prices without triggering demand shifts remains uncertain. The next few years will be crucial for both cobalt producers and consumers as they navigate this new supply landscape.
