Cobalt's Crossroads: North America's Strategic Edge in a Restructured Supply Chain

The Democratic Republic of Congo (DRC), which produces over 70% of the world's cobalt, has spent the past two years tightening its grip on exports. A 2024 ban on cobalt hydroxide exports and subsequent quota discussions have sent global prices soaring—reaching $11.80/lb by May 2025—but also exposed vulnerabilities in the DRC's strategy. Reduced government revenues, logistical bottlenecks, and ethical concerns over artisanal mining have created a critical opening for North American investors to build resilient supply chains.

Amid this shift, North America is positioning itself as a cobalt powerhouse through strategic investments in refining and recycling infrastructure. With U.S. and Canadian governments backing projects to reduce reliance on Chinese dominance and ethically questionable sourcing, the region is primed to capture a growing share of the EV battery market. Here's why investors should pay attention—and where to place bets.

The DRC Dilemma: Price Volatility and Ethical Risks

The DRC's export restrictions were initially a win for cobalt prices, but the policy's flaws are now evident. While prices surged over 100%, the DRC's revenue from cobalt exports halved between 2023 and 2024 due to pre-ban stockpiling and depressed prices. The transition to a quota system, set to conclude by June 22, 2025, faces enforcement challenges: cheating is rampant in commodity markets, and the DRC's regulatory capacity remains weak. Meanwhile, ethical pressures persist. Over 20% of DRC cobalt comes from artisanal mines, where child labor and unsafe conditions tarnish corporate reputations.

The DRC's collaboration with Indonesia—a top nickel producer—to stabilize prices further complicates the landscape. This partnership could deepen reliance on Southeast Asia, but it also underscores a broader shift: global buyers are demanding traceable, conflict-free cobalt. North America, with its regulatory transparency and nascent refining ecosystem, is uniquely positioned to meet this demand.

North America's Refining Revolution: From Hydroxide to Sulfate

The U.S. and Canadian governments are pouring billions into cobalt refining to counter China's 80% dominance in processing. Key projects include:

1. Electra Battery Materials (TSXV: EBAT): Its $23.6 million Ontario refinery—funded by U.S. and Canadian grants—will produce battery-grade cobalt sulfate. With a 5-year supply agreement for 80% of output from LG Energy Solution, Electra's facility could become the backbone of North America's EV supply chain.

1. Fortune Minerals' NICO Project: Backed by a $12 million U.S.-Canadian grant, this venture aims to produce cobalt sulfate and bismuth metal in Canada's Northwest Territories. Its feasibility study, nearing completion, could unlock a vertically integrated supply chain free of DRC risks.

2. TMC's Nodule Refining: The Metals Company (NASDAQ: TMC) is leveraging a $9 million U.S. grant to refine cobalt from seafloor nodules. Successful trials in Ontario and Japan (2024) demonstrate technical viability. With the U.S. DoD's FY25 mandate to evaluate nodule-derived refining by year-end, TMC's project could secure a strategic edge in critical minerals.

Recycling: The $40 Billion Opportunity

While refining focuses on primary cobalt, recycling is the sleeper play. The global battery recycling market is projected to hit $41.66 billion by 2030 (), driven by EV adoption and regulations like the EU's Battery Regulation, which mandates recycled content in batteries. North American firms are leading the charge:

• Redwood Materials: Partnered with Ford and Tesla to recycle cobalt and lithium from EV batteries, reducing reliance on mined materials.
• Li-Cycle (NYSE: LICY): Uses hydrometallurgical processes to recover 95% of cobalt from spent batteries. Its expansion in Ontario and the U.S. aligns with corporate ESG goals.
• Ace Green Recycling: Post its $250 million merger, plans a Texas plant to process 50,000 tons of batteries annually, targeting cobalt-rich cathodes.

Costs remain a hurdle: setting up a lithium-ion recycling plant can cost $90,000–$370,000 (India's benchmark), but North America's scale and policy support—such as the U.S. Inflation Reduction Act's tax credits—are lowering barriers.

Investment Thesis: Go Long on Traceability and Technology

The cobalt market is at a crossroads. DRC's policies and ethical concerns are pushing buyers toward alternatives, and North America's projects are the clearest path to supply chain resilience. Investors should focus on three pillars:

1. Refining Plays: Electra and Fortune Minerals offer direct exposure to DRC-free cobalt sulfate production. Both have government backing and offtake agreements that reduce execution risk.

2. Recycling Leaders: Li-Cycle and Redwood Materials are scaling hydrometallurgical tech to recycle cobalt efficiently. Their partnerships with automakers (e.g., VW's Ecobat collaboration) ensure demand.

3. Nodule Innovators: TMC's seafloor nodules provide a conflict-free cobalt source, though regulatory risks remain. The DoD's 2025 feasibility study could validate its commercial viability.

Risks and Realities

• Price Volatility: Cobalt's oversupply could persist, pressuring margins. Investors should prioritize companies with fixed-price contracts (like Electra's deal with LG).
• Regulatory Hurdles: TMC's nodule project faces environmental scrutiny, while U.S. tariffs on Canadian cobalt could disrupt cross-border flows.
• Technological Uncertainty: Recycling efficiencies must improve to compete with mined cobalt. Firms like Li-Cycle are proving this, but scalability is key.

Conclusion: The New Cobalt Order

North America's cobalt story is one of necessity and innovation. With geopolitical tensions, ethical scrutiny, and EV demand as tailwinds, the region's refining and recycling projects are not just investments—they're insurance against supply chain chaos. For investors, the choice is clear: back the players building a traceable, resilient cobalt future. The DRC's experiment in control may have raised prices, but it also opened the door to a better way forward.

The race to secure cobalt's future is on. North America is leading the charge.