DRC's Extended Cobalt Export Ban: Navigating Volatility and Positioning for Market Shifts

The Democratic Republic of Congo's (DRC) decision to extend its cobalt export ban until at least September 2025 has intensified the volatility of a market already grappling with oversupply and pricing pressures. With cobalt prices hovering near nine-year lows, this regulatory intervention underscores the fragility of the battery metals supply chain—and presents a critical juncture for investors to reassess their exposure to cobalt and pivot toward diversification strategies.

### A Market in Flux: Oversupply, Policy, and Price Pressures
The DRC's ban, first implemented in February 2025, aimed to stabilize prices after cobalt fell to $10 per pound earlier this year. While prices have rebounded to $30,200 per ton (up 45% since February), they remain below levels that could meaningfully alleviate the structural oversupply crisis.

The extension reflects the DRC's dual challenge: balancing short-term revenue losses (estimated at $300 million per month in lost export revenue) against long-term market stability.

The ban's impact is uneven across the supply chain. Midstream segments—such as cobalt salt and cobalt tetroxide—face acute supply constraints, while upstream ore and downstream end-use products remain oversupplied. This imbalance has created a ticking clock for inventory depletion: Chinese smelters are projected to exhaust midstream stocks by August-September 2025, potentially driving prices up by 15-20% as procurement intensifies.

### Stakeholders Under Pressure: CMOC's Diversification Play
The DRC's policy has deepened divisions among industry players. Glencore, the world's second-largest cobalt producer, has publicly endorsed the ban and its potential evolution into a quota system. In contrast, CMOC, the DRC's leading producer, opposes the extension, arguing it risks long-term market share loss. Notably, CMOC's stance reflects its diversification strategy into other minerals like copper and cobalt alternatives, positioning it to weather regulatory headwinds.


This divergence highlights a key lesson: companies with exposure to cobalt alone are increasingly vulnerable, while those with diversified portfolios or alternative supply chains—such as nickel or recycling technologies—are better insulated.

### Global Shifts: Cobalt-Free Batteries and Cost Implications
The ban has accelerated a seismic shift in battery technology. Cobalt-heavy NCM batteries are ceding ground to cobalt-free lithium-iron-phosphate (LFP) batteries, which now dominate 63% of China's EV market. This transition is reshaping demand dynamics: EV battery costs are projected to rise by $15-25/kWh, with higher cobalt prices amplifying pressure on automakers like Tesla and BYD to adopt cheaper alternatives.


Investors should note that while LFP growth bodes well for companies like CATL (which produces LFP batteries), it also raises risks for cobalt-dependent firms. The DRC's September policy decision will further clarify the pace of this transition.

### Investment Strategies: Diversification and Defensiveness
With the September policy review looming, investors must prioritize strategic diversification to mitigate cobalt's risks:

1. Shift to Nickel Plays: Nickel, a key component in NCM batteries, is increasingly favored as a cobalt substitute. Companies like Indonesia's PT Vale (which holds significant nickel reserves) or battery producers such as POSCO Chemical may benefit from rising nickel demand.

2. Recycling Technologies: Firms like Redwood Materials and Li-Cycle, which specialize in battery recycling, offer a dual advantage: reducing reliance on raw cobalt and capitalizing on the growing circular economy.

3. Geographically Diversified Supply Chains: Investors should favor companies with cobalt sourcing from non-DRC regions (e.g., Australia's First Quantum Minerals) or those with vertically integrated operations (e.g., Tesla's direct lithium sourcing).

4. Monitor Policy Signals: Track inventory levels and procurement activity in China's midstream sector. A sharp price spike ahead of September could signal ARECOMS' intent to ease restrictions, while stagnant prices may prompt further extension.

### Conclusion: Positioning for the Post-Ban Era
The DRC's cobalt ban is not just a temporary fix—it's a catalyst for structural shifts in the battery metals market. Investors ignoring the call to diversify risk falling prey to cobalt's volatility. By allocating capital to nickel substitutes, recycling, and geographically resilient supply chains, investors can capitalize on emerging opportunities while shielding portfolios from regulatory and market uncertainty.

As the September decision approaches, the DRC's actions will define the next chapter of battery metal dynamics. Stay agile, stay diversified, and stay informed.