DR Congo’s curbs on cobalt spark squeeze in vital battery element

{"text":[[{"start":9.35,"text":"Smelters are scrambling to find alternatives to one of the main raw materials used to make rechargeable batteries, as an export clampdown by dominant producer the Democratic Republic of Congo sends prices soaring."}],[{"start":22.45,"text":"Curbs on the export of mined cobalt hydroxide imposed last year by the DR Congo, the source of about three quarters of global supply, have underlined the risks of relying on a single producer. "}],[{"start":35.5,"text":"Smelters in China, where most of the material is shipped, have been left racing to find replacements including shredded batteries, known as “black mass”, and recycled cobalt metal that they can dissolve and reprocess. "}],[{"start":49.15,"text":"“All the stockpiles around the world, everything seems to be being run down,” said Tony Southgate, a trader at Stratton Metals, adding that the prices smelters were paying for material to feed their facilities “have gone to levels that don’t really make financial sense . . . They just need the units.”"}],[{"start":64.8,"text":"Cobalt oxides have been valued for centuries as a source of the rich blue colour seen, for example, in Tang and Ming dynasty Chinese porcelain. The hydroxide is refined today to produce the pure metal and battery-grade chemicals, which go into many rechargeable batteries including those used in electric vehicles."}],[{"start":85.44999999999999,"text":"One substitute for cobalt hydroxide is mixed hydroxide precipitate, containing nickel and cobalt. But production of MHP is expected to fall this year because of the Iran war, which has triggered a global shortage of the sulphuric acid used in its production."}],[{"start":101.85,"text":"In an unprecedented sign of tightness, the price smelters pay for cobalt hydroxide has risen to match the price of the cobalt metal they produce, a dynamic that has persisted since March and has never previously been recorded in data going back to 2019, according to price-reporting agency Fastmarkets. "}],[{"start":null,"text":"

"}],[{"start":121.94999999999999,"text":"The record prices and market uncertainty have highlighted the risks for producers of being dependent on the policies of a single nation and raised the prospect of battery makers trying to design out cobalt to reduce their exposure. "}],[{"start":134.64999999999998,"text":"“We are seeing a decline in this year’s market share [of nickel manganese cobalt batteries] mostly driven by the rising prices of both cobalt and nickel and the difficulty for end users to access the raw materials as a result of recent policy interventions,” said Kwasi Ampofo, head of metals and mining at BloombergNEF. "}],[{"start":153.84999999999997,"text":"NMC batteries have been losing market share to lithium iron phosphate batteries, which do not contain cobalt. They are typically cheaper and are “less exposed to nickel and cobalt supply risks”, said Morgan Stanley analysts last month."}],[{"start":167.94999999999996,"text":"The DR Congo imposed a ban on exports of cobalt hydroxide in early 2025, which was replaced by a quota system last September, in an attempt to tackle persistently low prices and a glut in the market. "}],[{"start":null,"text":""}],[{"start":181.99999999999997,"text":"In response, the price of cobalt hydroxide more than quadrupled last year, while the price of the refined metal rose by 130 per cent, according to the Cobalt Institute."}],[{"start":192.74999999999997,"text":"With shipments from the DR Congo running at reduced volumes, traders said Chinese refiners were increasingly looking for alternatives. Andries Gerbens, trading director at Darton Commodities, said “a clear shortage in feed material” meant demand for MHP had “picked up quite significantly — but now also MHP availability is compromised”, meaning smelters were also turning more to recycling cobalt metal."}],[{"start":220.04999999999998,"text":"Even without the effects of the Iran war, there has not been enough alternative feedstock available to replace Congolese hydroxide, traders said. "}],[{"start":228.6,"text":"Southgate said there were “signs of stress” among Chinese buyers, and that he had sold “off spec” material that was of a lower quality than refiners usually wanted for a “very good price”. The buyer “bit my hand off” for the material, he said, without waiting for a sample as they wanted to close the deal quickly."}],[{"start":246.35,"text":"Turning off a smelter is a costly and time-consuming process, and operators may prefer to operate at a loss so as to keep fulfilling customer contracts. "}],[{"start":null,"text":""}],[{"start":256.55,"text":"Jervois Global, which operates one of the largest cobalt production facilities outside China, said its profitability and that of other refineries was “currently severely impacted” by the market dynamics. "}],[{"start":269.05,"text":"“Jervois is actively exploring and sourcing a range of alternatives to address the limitations caused by the restrained feed supply chain,” said Sami Kallioinen, president of Jervois Finland. "}],[{"start":281.3,"text":"Olivier Masson, a cobalt expert at Fastmarkets, said the elevated prices of cobalt hydroxide, black mass and other alternatives were “not sustainable . . . the numbers don’t add up” for smelters."}],[{"start":293.2,"text":"After rising sharply last year, cobalt metal prices have been roughly stable this year. Analysts said this reflected muted demand and the fact that the market had previously been oversupplied. "}],[{"start":305.9,"text":"Thomas Matthews of research group CRU said limited availability of cobalt hydroxide and reduced production in China was likely to lead to a consolidation of refining in the country."}],[{"start":324.35,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781081158_7635.mp3"}