Congo's Cobalt Quota System and Its Impact on Global EV Supply Chains

The Democratic Republic of Congo (DRC) has emerged as a pivotal player in the global transition to clean energy, not through innovation or technology, but through its control of a critical raw material: cobalt. In October 2025, the DRC implemented a cobalt export quota system, a bold move to reshape global supply chains and assert national sovereignty over its mineral wealth. This policy, managed by the DRC's Authority for the Regulation and Control of Strategic Mineral Substances' Markets (ARECOMS), has triggered a seismic shift in commodity pricing dynamics and geopolitical risk profiles for electric vehicle (EV) manufacturers and investors alike.

A Strategic Quota System: Structure and Objectives

The DRC's quota system replaced a seven-month export ban that began in February 2025, a period during which cobalt prices surged by 245% due to oversupply concerns and market speculation. The new framework allocates monthly export quotas of 7,250 tonnes from November 2025 through December 2026, with a "strategic quota" of 9,600 tonnes reserved for national projects in 2026. Quotas are distributed based on historical export data from 2022 to 2024, favoring established producers while creating barriers for new entrants. This system aims to stabilize prices, combat illicit mining, and maximize state revenues-a clear signal of the DRC's intent to leverage resource nationalism in the green energy era.

Commodity Price Volatility and Market Reactions

The quota system has already triggered a sharp tightening in cobalt supply. By October 2025, cobalt hydroxide prices had skyrocketed to $19.50–20.20 per pound, up from $5.65–5.75 per pound in February 2025. This surge reflects market anticipation of prolonged supply constraints, compounded by procedural delays in implementing the quota system and depleted refinery inventories. Shipments to major markets like China, which accounts for over 60% of global cobalt processing, are now expected to be delayed until January 2026.

For EV manufacturers, the cost implications are dire. Companies reliant on nickel-cobalt-manganese (NCM) batteries, such as Volkswagen, face a 110% increase in cobalt costs, reaching $150.5 million. In contrast, firms using cobalt-free or low-cobalt technologies, like BYD's lithium-iron-phosphate (LFP) batteries, gain a significant cost advantage. This divergence underscores a broader industry shift toward cobalt alternatives, accelerated by the DRC's policy.

Geopolitical Risks and Global Supply Chain Diversification

The DRC's quota system is not merely an economic tool but a geopolitical weapon. By controlling cobalt-a mineral essential for EV batteries-the DRC mirrors historical strategies of resource-rich nations, such as OPEC's oil pricing power or China's rare earth element exports. This move has prompted urgent diversification efforts, with countries like Australia, Canada, and Indonesia accelerating cobalt exploration. China, a major investor in DRC mining infrastructure, is also pivoting to secure alternative partnerships, signaling a potential fragmentation of the global cobalt supply chain.

For investors, the risks are twofold: short-term price volatility and long-term geopolitical instability. The DRC's actions have exposed the fragility of concentrated supply chains, prompting calls for greater transparency and ethical sourcing in response to ESG (Environmental, Social, and Governance) demands from European and North American markets.

Strategic Implications for Investors

The DRC's quota system will likely drive three key trends:
1. Price Stabilization with Intermittent Spikes: While the quota system aims to stabilize prices, procedural bottlenecks and geopolitical tensions may cause periodic surges.
2. Rise of Cobalt Recycling and Alternatives: Investment in cobalt recycling technologies and LFP battery production is expected to accelerate, with companies like Tesla and CATL leading the charge.
3. DRC's Shift to Value Addition: The DRC may transition from a raw material exporter to a refining hub, capturing more value from its mineral wealth-a move that could further disrupt global supply chains.

In conclusion, the DRC's cobalt quota system is a masterstroke of resource nationalism, with far-reaching implications for commodity pricing and geopolitical risk. For investors, the key lies in hedging against supply chain vulnerabilities while capitalizing on the green energy transition's structural opportunities.