1 DRC Export Quotas: The Supply Ceiling

The single most important development in cobalt markets is the DRC’s transition from an outright export ban, imposed in February 2025, to a formal quota system administered by ARECOMS since October 2025. The quota caps total cobalt exports at 96,600 tonnes per year through at least 2027 — comprising an 87,000-tonne base allocation distributed pro rata to miners and a 9,600-tonne government strategic reserve².

That ceiling is roughly half of the DRC’s 2024 production volume. The maths is stark: the country produced an estimated 230,000 tonnes of cobalt in 2024³, meaning over 130,000 tonnes of annual output now has nowhere to go. Material produced in excess of quotas must be stockpiled in-country, creating a growing inventory overhang within the DRC while tightening supply everywhere else.

The impact has been immediate. Following the initial export ban in February 2025, European cobalt metal prices surged roughly 70%, peaking in mid-March at $17.50/lb before stabilising¹. The transition to quotas in Q4 2025 was slower to take effect — delays and administrative bottlenecks meant several major producers, including Glencore’s KCC and Mutanda operations, exported zero cobalt in Q4, with their allocations rolled forward to March 2026⁵.

The OPEC parallel is frequently drawn, but only partly apt. Saudi Arabia needed a cartel because no single producer controlled enough oil to move prices unilaterally. The DRC controls 76% of global cobalt mine production³ — it can restrict supply alone. The risk is the same as with any supply management regime: sustained high prices accelerate substitution and alternative supply development.

2 LFP vs. NMC: The Battery Chemistry Shift

Lithium iron phosphate (LFP) batteries surpassed nickel-based chemistries in global EV battery deployments for the first time in 2025, accounting for more than half of all EV batteries installed worldwide. Since LFP contains zero cobalt, this is the dominant long-term demand-side headwind for the cobalt market.

But the global headline obscures a critical regional split. In China, where more than 80% of EVs sold in 2025 used LFP batteries, the shift is effectively complete for most vehicle segments. In Europe and North America, the picture is fundamentally different: high-nickel NMC and NCA chemistries still power 80-90% of EVs sold in these markets, with all of the top 10 best-selling battery electric vehicles in both regions relying on cobalt-containing cathodes⁶.

The nuance that matters for investors: even as LFP gains share, absolute cobalt demand from batteries can still grow. The global EV battery market is projected to triple from roughly 1 TWh in 2024 to over 3 TWh by 2030⁷. If NMC’s market share drops from 60% to 40% but the total market triples, cobalt demand from batteries still roughly doubles. The rate of LFP adoption outside China — and whether cell-to-pack innovations close the energy density gap further — will determine whether this arithmetic holds.

3 Cobalt Recycling: The Coming Secondary Supply Wave

Battery recycling is set to become a meaningful source of cobalt supply by the late 2020s as the first generation of mass-market EV batteries reaches end-of-life. The lithium-ion battery recycling market was valued at $7.2 billion in 2024 and is projected to grow at a CAGR of over 20% through 2034⁸. Cobalt, as one of the highest-value metals in a spent NMC battery, is a key economic driver of the recycling business case.

The economics are compelling at current prices. Hydrometallurgical processes can recover over 95% of the cobalt in spent batteries, and recycled cobalt salts already trade at 15-20% premiums when certified as low-carbon⁹. The EU’s Battery Regulation mandates at least 95% cobalt recovery from recycled batteries by the end of 2031⁹, creating a regulatory floor under recycling investment.

Three companies are positioning to lead this market. Redwood Materials, which currently handles over 70% of North America’s lithium-ion battery recycling, began material recovery at its South Carolina facility in late 2025 and targets 100 GWh of cathode-active material output annually by 2026¹⁰. Glencore acquired Li-Cycle in August 2025 in what the company described as a “game-changing acquisition” that integrates recycled feedstock into its existing refining and trading network¹¹. And Umicore, which earned the highest gross margins in the recycling sector at 38% in 2025, signed a long-term supply agreement with Stellantis for recycled cathode-active materials¹².

However, scale constraints are real. The first wave of mass-market EV batteries (2017-2020 vintage) is only beginning to reach end-of-life, and the volume of battery material available for recycling today comes largely from manufacturing scrap rather than retired vehicles. Recycled cobalt is likely to contribute a meaningful single-digit percentage of global supply by 2028-2030, rising more significantly into the 2030s as the EV fleet ages. It is a structural trend, not a near-term solution to supply concentration.

4 The Western Supply Chain Push: Reducing Chinese Refining Dependence

China refines approximately 70% of the world’s cobalt¹³. Combined with Chinese-controlled companies dominating DRC mine production (CMOC is now the world’s largest cobalt miner), this creates a supply chain where Western manufacturers depend on Chinese capital and processing infrastructure for the cobalt in their batteries — a dependency that policymakers on both sides of the Atlantic are actively trying to unwind.

United States — IRA and FEOC rules: Under the Inflation Reduction Act, EVs are ineligible for the full $7,500 tax credit if their batteries contain critical minerals extracted, processed, or recycled by a Foreign Entity of Concern (FEOC) — a designation that includes China¹⁴. The critical minerals sourcing threshold rises from 60% in 2025 to 80% by 2027, creating escalating pressure on automakers to find non-Chinese cobalt refining capacity. The Pentagon has committed $7.5 billion to critical mineral supply chain resilience, including $500 million earmarked specifically for cobalt stockpile purchases through 2030.

European Union — Critical Raw Materials Act: The EU has set 2030 targets of at least 40% of critical raw material processing occurring domestically and no more than 65% of any strategic material sourced from a single third country¹⁵. For cobalt — where China processes 70% and the DRC mines 76% — both thresholds are currently breached by wide margins. The Commission’s December 2025 RESourceEU action plan is intended to accelerate investment, but Europe’s non-Chinese cobalt refining capacity remains minimal.

The realistic timeline for building meaningful non-Chinese cobalt refining capacity is measured in years, not quarters. Defence Department officials have told lawmakers that sustained multi-year investment is required before domestic industry can reduce its reliance on China’s processing dominance. For investors, this means the policy ambition is clear but the execution timeline creates a multi-year gap during which Western manufacturers remain structurally exposed to Chinese refining infrastructure.

5 The CMOC Problem: How One Company Broke the Market

To understand why the DRC imposed export restrictions in the first place, you need to understand what CMOC did to the cobalt market between 2023 and 2024.

CMOC Group, the Chinese-controlled miner that operates the Tenke Fungurume (TFM) and Kisanfu (KFM) complexes in the DRC, increased its cobalt output by 174% in 2023 — jumping from approximately 20,000 tonnes to over 55,000 tonnes and surpassing Glencore as the world’s largest cobalt producer. Then it doubled again. In 2024, CMOC produced 114,165 tonnes of cobalt, smashing through its own 70,000-tonne guidance with three months still to go in the year¹⁶.

To put that in context: CMOC’s stated combined cobalt capacity at TFM and KFM is 87,000 tonnes per year. It produced 114,000 tonnes — 31% above stated capacity. The company’s global market share leapt from 24% in 2023 to 41% in 2024¹⁶. One company, at two mine complexes, in one country, accounted for more than four of every ten tonnes of cobalt mined globally.

The flood of supply was devastating for prices. Cobalt had already been weakening on the LFP demand shift, but CMOC’s ramp turned a soft market into a rout. Prices fell from $39.53/lb in May 2022 to $10.25/lb by February 2025 — a 74% decline¹. That price was below the cost of production for most non-DRC miners and marginal DRC operations, threatening to hollow out the supply base outside of CMOC and Glencore’s low-cost mega-mines.

The irony is that CMOC’s overproduction triggered the very policy response — the DRC export ban and subsequent quotas — that now caps its own exports at a fraction of its production capacity. CMOC’s 2026 annual allocation is capped at 31,200 tonnes², just 27% of its 2024 DRC output. The company that single-handedly flooded the market is now the single biggest loser from the supply restrictions that flooding provoked.

CMOC guided for 100,000-120,000 tonnes of cobalt production in 2025¹⁶, but with exports capped and in-country stockpiling required, the commercial value of that output is constrained. For investors, CMOC’s trajectory illustrates a broader principle: in a market this concentrated, the actions of a single producer can trigger policy responses that reshape the entire supply-demand balance.