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US DLA extends cobalt alloy grade acquisition

The US Defense Department has extended its contract opportunity to seek offers for the purchase of up to 7,500 tonnes of cobalt to close on September 11 instead of August 29.

September 3, 2025
By Alexander Cook
China Cobalt Europe United States

Key takeaways:

  • The United States Department of Defense wishes to build a stockpile of cobalt with up to $500 million to spend. 
  • The pool of approved brands for alloy grade applications is considerably smaller compared to other grades.
  • The DLA has also stated the preference is for the contract to be awarded to a single company rather than a collective group.

The contract opportunity extension has also reduced the number of deliverable alloy brands in the contract, with the exception that at least two letters of support from aerospace alloy manufacturers are required for brands in the process of being qualified for usage in aerospace rotating parts.

Vale Long Harbor rounds were cut from being able to be delivered with Vale Port Colborne rounds, Glencore’s Nikkelverk cut cathode and SMM cut cathode able to be delivered. Some market participants have said this was due to the three brands already being certified for superalloy usage in rotating parts.

The Defense Logistics Agency (DLA) intends to award a contract minimum of $2 million (guaranteed) with the maximum of as much of $500 million of cobalt cut cathodes or rounds for delivery over a five-year period at a fixed price on an indefinite delivery, indefinite quantity (IDIQ) basis.

Some market participants have expressed confusion over the lack of specifics on how much exactly will be purchased. However, the DLA states the IDIQ awardee will receive the initial delivery order to satisfy the guaranteed minimum (GM) purchase ($2 million) at the time of IDIQ award. The US government is only obligated to purchase the GM once, but has the right to place multiple delivery orders over the five-year ordering period, not to exceed the $500-million ceiling.

The DLA has also stated the preference is for the contract to be awarded to a single company rather than a collective group. The DLA published its responses to questions that have been submitted so far.

The US currently does not have any active primary mined cobalt or refined cobalt metal production.

EVelution Energy, a US critical minerals processor, expects to be fully operational for US domestic alloy-grade cobalt metal production by 2027, which in theory could feature as a delivery option toward the end of the decade, provided the material undergoes the certification process for use in rotating parts.

In April of this year, EVelution Energy signed a letter of intent to supply “substantially all” of its cobalt metal and cobalt sulfate production to Japanese trading house Mitsui & Co once operational.

According to the DLA scope of work document, the objective of the contract is “to reduce the risk of availability in the rotating grade cobalt in the aerospace and defense supply chain.”

Alloy grade supply has struggled to keep pace with demand, which has posted annual increases after seeing impacts as a result of the Covid-19 pandemic on commercial air travel.

“The purchase is for military reasons rather than economic. The budgetary legislation takes far too long to be approved for the objective to be a market buy-and-sell focus,” a source said.

After news first broke of the contract opportunity, sentiment in the alloy-grade market picked up, with market participants eager to see if a purchase is realized.

“Short term, I don’t expect the DLA news to impact the market other than sentiment, which is positive. But going out 6-12 months, this really tightens up the alloy market, which should lend a lot of support to cut cathodes in Europe,” said one trader.

Fastmarkets’ daily price assessment for cobalt, alloy grade, in-whs Rotterdam was $18.25-20.00 per lb on September 3, narrowing from $18.00-20.25 per lb in the previous session but up from $18.00-19.80 per lb on August 22, when the contract opportunity began.

As a result of the sustained contrasting availability environments for alloy and standard grade, prices for alloy-grade material since late 2022 have established a premium above standard grade.

Alloy grade has a much smaller pool of approved brands suitable for alloy applications. At the same time, the US — a major manufacturing hub for alloy grade — currently imposes a 35% tariff on cobalt metal of Chinese origin, which is the main source of the brands currently traded.

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