Congo's Cobalt Quota System: A Strategic Shift with Immediate Implications for Global EV Supply Chains and Mining Stocks

The Democratic Republic of the Congo (DRC) has reshaped the global cobalt market with its October 2025 quota system, a move aimed at stabilizing prices, boosting state revenues, and tightening regulatory control over its critical mineral resources. By capping cobalt exports at 18,125 metric tons for Q4 2025 and 96,600 tons annually for 2026 and 2027, the DRC has introduced a framework that is both a boon and a burden for stakeholders. While the system has driven cobalt prices to multi-year highs-quadrupling since February 2025- it has also created operational bottlenecks, regulatory ambiguities, and strategic risks for mining giants like China Molybdenum (CMOC) and Glencore. For investors, the quota system represents a pivotal inflection point, offering opportunities for those who can navigate its complexities while exposing vulnerabilities in a market increasingly defined by geopolitical and technological shifts.

Regulatory Complexity and Operational Delays: A Double-Edged Sword

The DRC's quota system, enforced by the Authority for the Regulation and Control of Strategic Mineral Substances' Markets (ARECOMS), mandates prepayment of a 10% mining royalty, joint sampling, and the issuance of a Quota Verification Certificate (AVQ) for all exports. These measures, while designed to enhance transparency and fiscal control, have led to significant delays. As of December 2025, no major shipments had resumed due to lingering ambiguities in compliance procedures, including unclear criteria for strategic quota distribution and disputes over whether pre-paid royalties apply retroactively to pre-ban exports.

For CMOC and Glencore, the stakes are high. CMOC, the world's largest cobalt producer, received 6,650 tonnes of Q4 2025 quotas, while Glencore secured 3,925 tonnes. These allocations represent 37% and 22% of the Q4 2025 national quota, respectively, reinforcing their dominance. However, the DRC's strategic reserve-10% of annual quotas-has created uncertainty, as the government lacks domestic refining capacity to utilize its share. This has led to partnerships like the DRC's collaboration with Swiss trader Mercuria to market cobalt, raising concerns about potential rent-seeking behavior and market distortions.

Financial Performance and Stock Volatility: A Tale of Two Giants

The quota system's impact on CMOC and Glencore's financials is stark. CMOC's Q4 2025 performance has been bolstered by its robust production guidance (100,000–120,000 tonnes of cobalt for 2025) and confirmed quota allocations. Its stock price surged 2.8% on the Shanghai Stock Exchange in December 2025, reflecting investor confidence in its ability to meet targets. For the first nine months of 2025, CMOC reported a 72.61% year-on-year increase in net profit, driven by strong copper and cobalt output.

Glencore, meanwhile, has faced more mixed outcomes. While it became the first miner to ship cobalt under the new system in December 2025, its Q4 2025 financial results were constrained by operational challenges in its copper business. H1 2025 Industrial Adjusted EBITDA fell to $3.8 billion, a 17% decline from H1 2024, due to weaker coal prices and lower copper volumes. However, its stock price rose 1.2% in early December 2025, buoyed by the quota system's potential to stabilize supply and prices.

EV Industry Adjustments: Pricing Pressures and Technological Shifts

The DRC's quota system has forced the EV industry to recalibrate its supply chains. Cobalt prices, which had plummeted to nine-year lows in early 2025, now hover near $52,900 per tonne-a 140% increase since February 2025. This surge has accelerated the shift toward cobalt-free battery chemistries like lithium-iron-phosphate (LFP), which now account for 30% of global EV battery production, up from 15% in 2024. For manufacturers reliant on nickel-cobalt-manganese (NCM) batteries, the cost of raw materials has risen sharply, squeezing profit margins and prompting a reevaluation of sourcing strategies.

At the same time, the quota system has spurred interest in recycling and alternative mineral sources. Indonesian mixed hydroxide precipitate (MHP) and recycled cobalt are gaining traction as diversification tools, though their scalability remains limited. For investors, this shift highlights a critical risk: while the DRC's quotas may support cobalt prices in the short term, long-term demand could be eroded by technological innovation and supply diversification.

Strategic Opportunities and Risks for Investors

The DRC's quota system presents a paradox for investors. On one hand, it offers a clear tailwind for companies with large allocations, such as CMOC and Glencore, which are well-positioned to capitalize on higher prices and structured supply. CMOC's 57% share of DRC cobalt supply in 2024, combined with its single-site operations at Tenke Fungurume Mining, provides a competitive edge in navigating the new regulatory landscape. Glencore's early shipment under the quota system also demonstrates its operational agility, a trait that could mitigate risks associated with compliance delays.

On the other hand, the system's complexity and the DRC's lack of domestic refining capacity pose significant risks. The government's strategic quotas-intended for national projects-remain unutilized, creating a potential bottleneck in 2026–2027 when annual quotas are set to increase. Additionally, the quota system's emphasis on prepayment and traceability could incentivize smuggling or informal market activity, further destabilizing the supply chain.

For the EV industry, the quota system underscores the need for resilience. While higher cobalt prices may accelerate the adoption of LFP batteries, this transition is not uniform across markets. Chinese automakers, for instance, have already embraced LFP, while European and North American manufacturers remain heavily reliant on NCM. This divergence creates both opportunities for LFP-focused firms and risks for cobalt-dependent producers.

Conclusion: Navigating a Volatile New Era

The DRC's cobalt quota system is a masterstroke of resource nationalism, but its success hinges on the government's ability to balance regulatory rigor with operational efficiency. For mining stocks like CMOC and Glencore, the system offers a near-term boost to margins and market share, provided they can navigate the compliance hurdles. However, the long-term outlook remains clouded by the EV industry's pivot toward cobalt-free technologies and the DRC's own limitations in refining and value addition.

Investors must weigh these factors carefully. The quota system's immediate impact-higher prices and tighter supply-favors those with strong allocations and operational flexibility. Yet, the broader trend toward supply chain diversification and technological substitution suggests that cobalt's dominance in the EV sector may be waning. In this evolving landscape, the key to success lies not in betting on cobalt's price alone, but in understanding the interplay between regulatory shifts, market dynamics, and technological innovation.