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Speaking at an event hosted by Bloomberg on Tuesday October 14, Kenny Ives, vice president and chief commercial officer at Chinese copper and cobalt producer CMOC Group – the world’s largest cobalt producer – and CEO of its trading arm IXM*, gave his thoughts on the quota system that is due to be imposed by the DRC later this week and the long-term picture for cobalt.
‘Anyone in cobalt needs to realize that the demand engine needs to be humming again,’ Ives said.
Ives felt the “biggest challenge” for the long-term future of cobalt is the battery chemistry risk from downstream consumers pivoting away.
Original equipment manufacturers (OEMs) have previously stated a preference for their future mass-market fleets to use lithium-iron-phosphate (LFP) battery chemistries, so the re-opening of the DRC for cobalt exports comes at an important crossroads chapter for the blue metal.
“The reality is that demand growth for cobalt over the last four years has been underwhelming for cobalt. The biggest challenge is chemistries… it is positive that cobalt exports will flow again as key customers need to see that flow,” Ives said.
Cobalt, due to its predominant byproduct nature, is guided heavily by copper price movements. At the beginning of LME Week, Robert Friedland, founder of Ivanhoe Mines, said that the world was in “the foothills of a major copper shortage” while cash prices for copper seek to push above the $11,000-per-tonne mark.
“Cobalt’s long-term production outlook is going to be higher every year as copper demand increases. The quota system will support prices as it has done but it can’t last forever; demand has to kick in, but OEMs seemingly only want cobalt for their high-end cars,” a market participant said on the sidelines of LME Week.
Fastmarkets’ daily price assessment for cobalt hydroxide 30% Co min, cif China, was $19.50-20.20 per lb on Tuesday, up from $19.00-20.00 per lb on Monday. The latest price assessment is 245% higher than the $5.65-5.75 per lb assessed on February 21, ahead of the DRC’s initial ban announcement.
Cobalt prices had rallied after the DRC export quota announcement because market participants were of the view that the market will “remain tight for the foreseeable” due to the quota being less than half of usual monthly export volumes. Much of the allocated quota volumes will be tied up in long-term contracts, leaving the spot market increasingly tight, according to market participants.
“The price direction is really only one way now and will remain that way; we’ll keep moving our offer levels higher as each new level gets booked,” a trader on the sidelines of LME Week said.
“If [the price of] cobalt is too high, I fear it’s a different risk; prices are probably at the upper end of what’s tolerable long term, because if you starve downstream of units then they will switch away,” Ives said.
The quota system will limit total DRC cobalt exports to 7,250 tonnes per month from November through 2026, with 3,825 tonnes permitted from October 16 for the month.
These quotas will primarily be distributed to qualifying companies based on their historical export performance between January 2022 and December 2024, which Ives felt had to an extent “penalized” CMOC due to their Kisanfu (KFM) project only having extraction begin in the middle of 2023.
‘It’s a consequence of KFM exceeding everyone’s expectations, including my own, in its ramp-up… we will export all of our quota and [explore] can we obtain more,” Ives said.
“Every pound of cobalt contained hydroxide is valuable to us, we will maximize our quota volumes absolutely,” a producer source said.
CMOC was given an export quota of 31,200 tonnes for 2026, which accounts for 27% of their total cobalt production in 2024. CMOC produced 61,073 tonnes of cobalt in the first half of this year.
Market participants on Monday – the first day of LME Week – had asked the question of whether the DRC government would “open up” the quotas in the event of prices continuing their rapid increase and the DRC would permit more material to be exported.
“I don’t think they will increase the quotas between now and the new year, unless maybe prices go parabolic but those figures look set in stone for the next few months,” a second trader said.
The DRC have said they reserve the right to adjust the quota volumes, basis the evolution of the cobalt market between now and the end of 2026, in the statement explaining the quota system dated September 20.
*Note: Kenny Ives is stepping down as chief executive officer of Switzerland-headquartered trading house IXM after more than three years at the company. Ives is also stepping down from his roles as vice president and chief commercial officer at CMOC Group, the largest global cobalt producer.
In a statement to Fastmarkets, IXM said Ives was stepping down to spend more time with his family, with Branko Buhavac named as his successor at IXM.
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