Cobalt price surges after Congo extends ban

[Ben Graham]

Cobalt futures prices in China surged to levels last seen mid-March on Monday after the Democratic Republic of Congo extended its concentrate export ban first instituted in February.

In a surprise move Congo, responsible for more than 80% of global output, stretched the export restrictions for the electric vehicle battery material by another three months taking more than 100,000 tonnes off the market over the seven month period by some estimates.

The most active cobalt futures on China’s Wuxi Stainless Steel Exchange surged over 9% to 254 yuan or $35.34 per kilogram, the highest since March 14.

A surge in supply from the Congo, where cobalt is a byproduct of copper mining, coupled with tepid demand from the EV market which overtook aviation and aerospace as the number one source of demand several years ago, saw cobalt prices fall to record lows in January this year on an inflation adjusted basis.

CMOC Group (SHA: 603993), the top cobalt miner, told Reuters the ban won’t significantly affect operations at its Tenke Fungurume and Kisanfu mines in Congo.

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Earlier in June, Cobalt Holdings dropped plans for an initial public offering on the London Stock Exchange, dashing investor hopes of what would’ve been the exchange’s biggest mining IPO since 2022.

The company previously aimed to raise as much as $230 million through the offering and use most of the funds to buy 6,000 tonnes of physical cobalt from Glencore (LON: GLEN) at a discount. Glencore, the world’s second largest cobalt producer, declared force majeure on some cobalt deliveries days after the export suspension.

Cobalt sulphate entering the EV battery supply chain in China fall to an average of just $3,556 per tonne in January, but shot up by 80% after the ban to average $6,394 in May. When Monday’s gap higher filters through to the physical sulphate market cobalt would still be trading nowhere near its peak of $19,000 a tonne in 2022.

Cobalt byproduct output is also increasing in Indonesia as its nickel shipments ballooned and the DRC was said to be in talks with the Asian nation to collaborate on managing supply of cobalt including the use of quotas.