Congo's Cobalt Reallocation Policy and Its Implications for the EV Supply Chain

The Democratic Republic of the Congo (DRC) has reshaped the global cobalt landscape with its quota-based export policy, effective October 16, 2025. This shift from a blanket export ban to a structured allocation system reflects the DRC's intent to stabilize prices, secure domestic processing capacity, and assert control over its mineral wealth. For investors, this policy recalibration presents both risks and opportunities, particularly for electric vehicle (EV) and battery manufacturers reliant on cobalt.

Strategic Market Dynamics and Policy Framework

The DRC's new quota system allows for 18,125 metric tons of cobalt exports in 2025, with annual caps of 96,600 tons for 2026 and 2027. Quotas are allocated based on historical production data, favoring established players like Glencore and China Molybdenum (CMOC) while disadvantaging smaller or newer entrants, according to an African Security Analysis report. This approach aims to reward compliance and incentivize long-term partnerships with downstream processors. However, it also introduces volatility, as companies must navigate tighter supply constraints and potential allocation disputes, notes Discovery Alert.

The DRC's dominance in cobalt production-accounting for over 70% of global output-means its policies directly influence EV battery costs and supply chain resilience. A Discovery Alert report notes that the quota system has already driven cobalt prices up by 50% since February 2025, exacerbating production costs for manufacturers. Meanwhile, the DRC's Digital Minerals Registry, which enhances traceability, aligns with ethical sourcing demands in Europe and the U.S., potentially strengthening its position as a preferred supplier, according to BW Africa.

Investment Opportunities in Cobalt-Dependent Manufacturers

The policy shift has prompted EV and battery manufacturers to adapt their strategies. Key players like Contemporary Amperex Technology Co., Limited (CATL), BYD, and LG Energy Solution are leveraging partnerships, technological innovation, and supply chain diversification to mitigate risks.

1. CATL and BYD: Dominance Through Diversification
   CATL, the world's largest battery manufacturer with a 37.9% global market share in H1 2025, has prioritized lithium iron phosphate (LFP) technology to reduce cobalt dependency, according to CNEVPost. Its strategic partnerships with Tesla, BMW, and Volkswagen position it to capitalize on stable, low-cost battery production. BYD, with a 17.2% market share, has further solidified its edge through vertical integration and the Blade Battery, which enhances safety and efficiency while minimizing cobalt use, per Rise With China.

2. LG Energy Solution and SK On: Western Partnerships and Innovation
   LG Energy Solution, a top non-Chinese supplier, has strengthened ties with Western automakers like GM and Ford. Its focus on nickel-cobalt-manganese (NCM) and next-generation solid-state batteries aligns with the DRC's push for domestic processing, according to a GlobeNewswire report. SK On, meanwhile, is expanding U.S. production and collaborating on fast-charging solutions, reducing exposure to DRC supply fluctuations, as noted by EV Magazine.

3. Mining Companies: Divergent Stances and Market Exposure
   Glencore has publicly supported the DRC's quota system, viewing it as a tool for market stability, while CMOC has opposed export restrictions, citing operational disruptions, according to Nexa Reports. Glencore's alignment with DRC policy may enhance its access to quotas, whereas CMOC's resistance could strain its supply chain.

Geopolitical and Supply Chain Risks

The DRC's policy underscores its strategic leverage in the energy transition. China's dominance in cobalt refining-coupled with its ability to secure favorable quotas-poses challenges for the U.S. and EU, which are scrambling to diversify supply chains. A McKinsey analysis warns that cobalt demand will grow by 7.5% annually until 2030, intensifying competition for DRC resources. Investors must weigh these geopolitical risks against companies' resilience strategies, such as recycling investments and material substitution.

Conclusion: Navigating the New Cobalt Era

The DRC's quota system has created a more predictable but competitive cobalt market. For investors, the key lies in identifying manufacturers that balance cobalt dependency with innovation and strategic partnerships. CATL and BYD's dominance in LFP technology, LG Energy Solution's Western collaborations, and Glencore's alignment with DRC policy exemplify adaptive strategies. However, volatility remains, particularly for companies reliant on traditional NCM chemistries. As the DRC refines its regulatory framework, the EV industry's ability to navigate these dynamics will define its long-term success.