By Joseph Moss, International Banker
The global cobalt market currently stands at a major crossroads, defined by a dramatic and sustained price surge that has caught many industrial players off guard. After years of being characterised by structural oversupply and depressed valuations, cobalt has become one of the most volatile and expensive commodities of the mid-2020s, with prices skyrocketing by more than 240 percent since the early months of 2025. As a result of a perfect storm of aggressive geopolitical intervention, a radical shift in African export policies and a resilient demand profile, already high cobalt prices may experience further pronounced upswings in 2026.
To understand why cobalt has become so expensive, one must first examine the unprecedented regulatory shift that took place last year in the Democratic Republic of the Congo (DRC). As the source of roughly 70 percent of the world’s cobalt, the DRC commands an imposing dominance over the market. For years, the country has seen its production of the metal soar, as output from its numerous mines flooded the market and drove down prices to levels that the DRC government finally deemed unsustainable for the economy’s welfare. In February 2025, therefore, the Congolese authorities halted cobalt exports.
The initial four-month suspension was intended to implement a “reset” for the global market and flush out excess inventory. However, what began as a temporary measure evolved into a more permanent regulatory policy. By September, the Authority for the Regulation and Control of Strategic Mineral Substances’ Markets (ARECOMS)—a regulatory body in the DRC responsible for managing and controlling strategic minerals—introduced a rigid quota system that placed a hard cap on the volume of cobalt the country could export. For this year, the limit has been set at 96,600 metric tons. Given that the DRC’s production levels in recent years have frequently hovered around 180,000 tons, the country effectively halved the global supply of primary cobalt.
To allocate the new limit fairly, the DRC has also introduced a new quota system for major miners, including China’s CMOC and Glencore, and has directed some of the output to a strategic national reserve. The quotas took effect on October 16, although administrative bottlenecks have prompted the government to grant an extension, allowing 2025 quotas to be used until March 31 of this year.
This supply-side shock has since reverberated throughout the entire global manufacturing chain, especially in the refining operations of China’s industrial hubs, which process the vast majority of the world’s cobalt hydroxide into battery-grade chemicals. Major mining conglomerates were also forced to declare force majeure on long-term contracts, unable to fulfil their obligations to Western automakers and electronics giants because the physical metal was legally barred from leaving the DRC. And the resulting scramble for spot material available for immediate delivery has since sent prices skyrocketing.
While the supply contraction has been the primary driver of the current price rally, it has also run up against a robust wall of demand for cobalt, reflecting the shifting market dynamics for the metal in recent years. Indeed, the prevailing sentiment in the battery industry of “cobalt-free or bust” at the start of the decade led many manufacturers to pivot towards lithium iron phosphate (LiFePO4 or LFP) cells to avoid cobalt’s high costs and ethical concerns. In 2026, however, LFP’s limitations—namely, its low energy density and poor performance in cold climates—have reaffirmed the need for cobalt-based chemistries for long-range electric vehicles (EVs).
Indeed, the nickel-cobalt-manganese (NCM) battery has emerged as the most desirable for the premium EV market in Europe and North America. As global EV adoption rates continue to climb, the absolute volume of cobalt required has increased even as the amount of cobalt per battery has fallen. As a result, the EV sector remains the single largest consumer of the metal, accounting for more than 60 percent of total annual demand growth over the last year.
Beyond its critical role in batteries, cobalt is also proving necessary in traditional industrial and military-industrial sectors, especially at a time when the world is navigating heightened geopolitical tensions and a renewed focus on aerospace capabilities. With cobalt an essential component in superalloys—those materials capable of maintaining structural integrity at the extreme temperatures found inside jet turbines and rocket engines—and with the aerospace sector having few viable substitutes for cobalt-based superalloys, the demand for high-purity cobalt metal has surged amid the ramping up of defence spending and air-force modernisation efforts by powerful nations. Defence contractors have thus been willing to pay whatever is necessary to secure supply, further driving up benchmark cobalt prices.
Cobalt’s bullish price dynamics are further supported by the recent recovery of the portable electronics market, with smartphones, tablets and high-end laptops using lithium cobalt oxide (LiCoO2 or LCO) batteries, which have the highest cobalt content of any battery type. As the global economy recovered from the post-pandemic slump, demand for popular consumer electronic goods experienced a significant resurgence in 2024 and 2025. Given the sheer volume of consumer electronics produced globally, even a minor uptick in smartphone sales translates into thousands of tons of additional cobalt demand, further straining the restricted supply from the DRC.
Beyond the raw forces of supply and demand, moreover, the implementation of the European Union’s Critical Raw Materials Act (CRM Act) and similar legislation in the United States has required manufacturers to prove that their cobalt was sourced without the use of child labour or environmentally destructive practices. Eager to avoid reputational and legal risks, some automakers have turned to other producers of the metal in countries such as Australia, Canada and Morocco. However, the higher operational costs associated with these suppliers have only lent more steam to the market rally. While new projects are being explored in Indonesia—where cobalt is a byproduct of the surging high-pressure acid leach (HPAL) nickel industry—they have faced delays due to environmental concerns.
The copper market’s influence cannot be ignored, especially given that cobalt is invariably mined as a byproduct of copper and nickel extraction. Copper prices are at historic highs due to the global push for electrification and grid modernisation, which would ordinarily lead to increased copper mining and, in turn, spur an inadvertent surplus of cobalt. Given the DRC’s quota system now in place, however, a market decoupling has taken place, which means that, despite copper production remaining high, cobalt continues to be stockpiled within the DRC rather than being released onto the market. In turn, a paradoxical situation has emerged in which more cobalt is being mined than ever before, and yet the market is experiencing its most severe shortage in decades.
Investor sentiment in 2026 has also shifted. Cobalt has once again become a favourite among commodity hedge funds and institutional investors, which increasingly regard the metal as a strategic play in the friction between the East and the West. Indeed, trading of the cobalt metal contract on the Chicago Mercantile Exchange (CME), which settles against Fastmarkets’ benchmark standard-grade cobalt metal assessment, was recorded at more than 40,000 lots for the January-November 2025 period—a new record. “Over the past half-decade, the cobalt contract has continued to grow from strength to strength, providing a usable financial hedging instrument for the global market, underpinned by Fastmarkets’ benchmark cobalt price,” Przemek Koralewski, global head of market development at Fastmarkets, said. “As uncertainty and volatility continue to dominate the market, we are happy to see that customers are increasingly turning to the CME cobalt contract to manage their price risk.”
Looking ahead, the outlook for cobalt prices remains bullish, with analysts broadly acknowledging that the structural deficit created by the ARECOMS quotas is unlikely to be resolved easily. “If this quota is adhered to, there is no question that the market would run out of material before the middle of 2026, suggesting prices could potentially rise higher than in the previous bull market rally in 2022,” Macquarie Group noted back in October. At the time, the Australian bank also named cobalt as one of its three “most preferred” commodities for the ensuing six to nine months.
Ultimately, the DRC’s supply-side aggression is running up against a world that is more dependent on cobalt than ever—not just for the cars of the future, but for jet engines, smartphones and many other high-value applications. As long as restrictive quotas are maintained and the aerospace and EV sectors continue their expansions, the era of cheap, abundant cobalt does not appear to be returning anytime soon.