Cobalt Price Outlook — Volatility, Oversupply, and the Battery Boom

The Price Collapse — From Boom to Bust

Cobalt has experienced one of the most dramatic price collapses of any critical mineral in recent years. After reaching approximately $82,000 per tonne in early 2022 — driven by the convergence of surging EV demand, supply chain disruptions from the COVID-19 pandemic, and speculative buying — cobalt prices fell precipitously, declining to roughly $25,000 per tonne by early 2025. This decline of approximately 70 percent over three years destroyed billions of dollars of value for cobalt producers, triggered production curtailments, and forced a fundamental reassessment of the cobalt market's supply-demand dynamics.

The price collapse was driven by a confluence of factors, each reinforcing the others. On the supply side, production from both the DRC and Indonesia expanded faster than the market anticipated. On the demand side, the shift toward lithium iron phosphate (LFP) battery chemistry — which contains no cobalt — reduced the per-vehicle cobalt consumption intensity below the levels projected in earlier demand models. And in the middle, inventory accumulation during the 2021-2022 price spike created an overhang of material that depressed prices even as underlying consumption grew.

The 2022 price peak was itself an anomaly. Cobalt prices had traded in a range of $25,000 to $40,000 per tonne through most of the 2018-2021 period, with a prior spike to $95,000 in 2018 triggered by supply fears related to artisanal mining disruptions and speculative buying by financial traders. The 2018 spike and subsequent crash provided a template for the 2022 cycle: a rapid price increase driven by fear of scarcity, followed by a supply response that overwhelmed demand, followed by a multi-year period of depressed prices as the market works through excess inventory and surplus production capacity.

DRC Export Intervention

The DRC government's response to the price collapse was unprecedented. In early 2025, President Tshisekedi's administration imposed a temporary ban on cobalt exports, subsequently modified into a quota system, with the explicit objective of reducing global supply and supporting prices. The intervention produced an immediate rally — cobalt prices recovered from approximately $22,000 per tonne to over $48,000 within weeks of the announcement — validating the DRC's market power as the producer of roughly 74 percent of global supply. However, the sustainability of policy-driven price support depends on the DRC's ability to maintain export discipline over extended periods, a challenge that OPEC's experience with oil production quotas suggests is far from guaranteed.

Supply-Side Dynamics

Understanding the supply-side forces that drove the price collapse is essential for assessing the price outlook. Two supply developments proved more significant than the market anticipated: Indonesian cobalt-nickel production and DRC production expansion.

Indonesian Competition

Indonesia has emerged as the most disruptive new entrant in the cobalt market. Indonesian cobalt production is a by-product of the country's massive nickel laterite processing industry, which has expanded dramatically since Indonesia imposed a ban on raw nickel ore exports in 2020 to force domestic processing investment. Chinese-financed high-pressure acid leach (HPAL) and nickel matte smelting operations on Sulawesi and the Maluku Islands produce mixed hydroxide precipitate (MHP) that contains both nickel and cobalt — typically at a ratio of approximately 10:1 nickel to cobalt.

The scale of Indonesian nickel expansion has generated cobalt output that, while a by-product, is substantial in absolute terms. Indonesian cobalt production has grown from negligible levels to an estimated 15,000 to 25,000 tonnes per year, with further expansion underway. This volume represents approximately 7 to 12 percent of global cobalt supply — material that was not in any cobalt supply model five years ago and that has arrived at near-zero marginal cost to its producers (the nickel pays for the operation; the cobalt is a free increment).

The Indonesian cobalt supply is structurally insensitive to cobalt prices. Because the operations are built and financed for nickel production, they will continue to produce cobalt as long as nickel prices support their operation — regardless of whether cobalt prices are $20,000 or $80,000 per tonne. This price insensitivity makes Indonesian cobalt a persistent source of supply that does not respond to the market signals that normally bring supply and demand into balance. It represents a fundamental change in the cobalt market's structure, akin to the disruption that US shale oil caused in the petroleum market by introducing a large volume of by-product natural gas liquids at prices unrelated to their standalone economics.

DRC Production Growth

DRC cobalt production has expanded steadily, driven by the ramp-up of CMOC Group's operations and the expansion of Huayou Cobalt's and other Chinese operators' output. Tenke-Fungurume, under CMOC's ownership, has increased production beyond the levels achieved under Freeport-McMoRan's operation. Kisanfu, CMOC's high-grade development project, is ramping toward full production. Glencore restarted Mutanda, the world's largest cobalt mine by capacity, after a period of care and maintenance. Smaller operators across the Copperbelt have also expanded output.

The combined effect of Indonesian by-product supply and DRC production growth has been a market in structural oversupply. Total global cobalt supply has exceeded consumption by an estimated 15,000 to 30,000 tonnes per year during the 2023-2025 period, building inventories that now overhang the market and suppress prices. For prices to recover sustainably, either supply must be curtailed (as the DRC's export controls attempt) or demand must grow fast enough to absorb the surplus — or, most likely, some combination of both.

Demand Drivers — The Battery Boom

Despite the price collapse, the fundamental demand story for cobalt remains intact: the global electric vehicle market is growing rapidly, and the majority of EV batteries produced outside China contain cobalt in their cathode chemistry. The question is not whether cobalt demand will grow, but how fast, and whether that growth will be sufficient to absorb the surplus supply that currently depresses prices.

EV Battery Demand

Global EV sales have grown from approximately 3 million units in 2020 to over 14 million in 2023 and are projected to exceed 20 million by 2025 and 30 million by 2030 under the International Energy Agency's Stated Policies Scenario. Each EV battery containing nickel-manganese-cobalt (NMC) cathode chemistry requires approximately 8 to 15 kilograms of refined cobalt, depending on cathode formulation. NMC 811 (8 parts nickel, 1 part manganese, 1 part cobalt), which is increasingly the standard for premium long-range EVs, uses less cobalt per kWh than earlier NMC formulations but still represents substantial per-vehicle consumption.

Cumulative cobalt demand from EV batteries is projected to reach 150,000 to 200,000 tonnes per year by 2030 under the IEA's Stated Policies Scenario, up from approximately 80,000 to 100,000 tonnes in 2023. Under the more ambitious Net Zero Emissions Scenario, battery cobalt demand could reach 250,000 to 300,000 tonnes by 2030. These projections assume that NMC cathode chemistry retains a significant share of the global EV battery market — an assumption that the rise of LFP chemistry has called into question.

Non-Battery Demand

Cobalt's non-battery applications account for approximately 30 to 40 percent of total demand and provide a stable demand floor that is independent of EV market dynamics. Superalloys for jet engine turbine blades, hard-facing alloys for industrial equipment, catalysts for petroleum refining, pigments for ceramics and glass, and medical applications (cobalt-60 for radiotherapy) all consume cobalt in quantities that are relatively stable and price-insensitive. These applications provide a demand baseline of approximately 60,000 to 80,000 tonnes per year that will persist regardless of developments in battery technology.

Energy Storage

Stationary energy storage — grid-scale batteries, commercial and residential storage systems — represents an emerging demand category that could contribute meaningfully to cobalt consumption in the medium term. While LFP chemistry currently dominates the stationary storage market due to its lower cost and longer cycle life, NMC batteries are used in applications where energy density is a priority. If stationary storage installations grow at the projected rates of 40 to 50 percent annually, even a modest NMC market share translates into tens of thousands of additional tonnes of cobalt demand per year by the end of the decade.

The Thrifting Risk — LFP and Beyond

The most significant structural threat to cobalt demand is the progressive reduction of cobalt content in battery cathodes — a process the industry terms "thrifting" — and the outright substitution of cobalt-containing chemistries with cobalt-free alternatives.

LFP's Market Share Gains

Lithium iron phosphate (LFP) batteries, which contain no cobalt, nickel, or manganese, have gained dramatic market share over the past five years. LFP now accounts for over 60 percent of the Chinese EV battery market and is expanding in Western markets through models such as the Tesla Model 3 Standard Range, the BYD Seal, and an increasing number of mass-market vehicles. LFP's advantages — lower cost, longer cycle life, better thermal stability, and freedom from cobalt supply chain risk — have made it the preferred chemistry for standard-range vehicles and for markets where cost sensitivity outweighs range performance.

The rise of LFP has fundamentally altered the cobalt demand trajectory. Models published before 2020, when LFP was considered a niche chemistry confined to Chinese buses and stationary storage, projected cobalt demand multiples that assumed NMC would dominate the global EV battery market. Those projections are no longer valid. Current consensus estimates assume LFP will capture 40 to 50 percent of the global EV battery market by 2030, with NMC retaining the balance — primarily in premium, long-range, and performance vehicles where energy density justifies the higher cathode cost.

NMC Cobalt Thrifting

Within the NMC family, the trend is toward higher nickel content and lower cobalt content. The progression from NMC 111 (equal parts nickel, manganese, cobalt) to NMC 532 to NMC 622 to NMC 811 has reduced per-kWh cobalt content by approximately 70 percent. Further thrifting — NMC 9.5.5, ultra-low-cobalt formulations, and cobalt-free nickel-manganese cathodes — is under development at major cathode manufacturers. Each incremental reduction in cobalt content per battery cell erodes the growth in total cobalt demand even as the number of NMC batteries produced increases.

Emerging Chemistries

Sodium-ion batteries, which use no lithium, cobalt, nickel, or manganese, are being commercialised by CATL and other Chinese manufacturers for low-cost, short-range applications. Solid-state batteries, expected to reach commercial scale in the late 2020s, may use cobalt-containing cathodes (NMC or NCA) but could also enable alternative chemistries that reduce or eliminate cobalt. Lithium-manganese iron phosphate (LMFP), which adds manganese to the LFP formulation for higher energy density without cobalt, is another emerging competitor. Each of these technologies represents a potential further reduction in cobalt's share of the battery market.

Long-Term Supply-Demand Balance

The long-term cobalt price outlook depends on the balance between growing demand (driven by EV market expansion) and the offsetting forces of supply growth (DRC expansion, Indonesian by-product) and demand erosion (LFP substitution, NMC thrifting). Assessing this balance requires scenario analysis rather than point forecasts.

Base Case: Moderate Recovery

In a base-case scenario, cobalt prices recover from their early-2025 lows to a range of $30,000 to $45,000 per tonne through the late 2020s. This recovery is driven by the absorption of current inventory surplus as EV production volumes continue to grow at 20 to 30 percent annually. LFP gains global market share to approximately 45 percent of the EV battery market, but NMC retains dominance in premium and long-range segments. Indonesian by-product supply stabilises as nickel price declines curtail marginal HPAL operations. DRC export management maintains a degree of supply discipline, preventing the return to the extreme oversupply of 2023-2024.

Under this scenario, cobalt mining remains profitable for low-cost DRC producers and marginal for higher-cost operations. Investment in new cobalt-primary mines is limited, with supply growth coming primarily from expansion of existing DRC operations and Indonesian by-product. The cobalt price recovers to levels that support the industry's operating cost structure but does not return to the $60,000-plus levels that incentivised the speculative excesses of 2021-2022.

Bull Case: Supply Discipline and Demand Surprise

In a bull-case scenario, cobalt prices recover to $50,000 to $70,000 per tonne. This requires two conditions: effective DRC supply management (sustained export quotas that prevent market flooding) and stronger-than-expected NMC demand (driven by a slowdown in LFP adoption in Western markets, perhaps due to cold-weather performance concerns or consumer preference for longer range). Under this scenario, the current supply surplus is absorbed rapidly, and the market transitions to deficit by 2027-2028, supporting prices at levels that incentivise new production investment.

Bear Case: LFP Dominance and Structural Oversupply

In a bear-case scenario, cobalt prices remain depressed at $20,000 to $30,000 per tonne through the late 2020s. This occurs if LFP captures 55 to 60 percent or more of the global EV battery market (including significant penetration of the premium segment through improved LFP variants), NMC thrifting accelerates beyond current projections, and Indonesian by-product supply continues to grow unchecked. Under this scenario, structural oversupply persists, DRC export controls prove difficult to maintain (generating incentives for smuggling and non-compliance), and marginal producers exit the market. The cobalt industry consolidates around a smaller number of low-cost DRC and Indonesian producers.

Implications for the Corridor

The cobalt price outlook has direct implications for the Lobito Corridor. Higher cobalt prices support mining investment in the Copperbelt, increase freight volumes for the Lobito Atlantic Railway, and generate fiscal revenues for the DRC and Zambian governments. Lower prices reduce mining activity, constrain freight volumes, and pressure the corridor's revenue model. The corridor's financial viability is not solely dependent on cobalt — copper is the higher-volume commodity and the corridor's primary revenue driver — but cobalt prices influence the marginal profitability of Copperbelt mining operations and the pace of new investment in the region.

The DRC's export management strategy also affects the corridor. If export controls reduce the total volume of cobalt available for transport, corridor throughput declines. If, however, export controls succeed in supporting prices and incentivising in-country value addition — converting cobalt hydroxide into refined cobalt sulfate before export — the corridor could benefit from higher-value freight that generates more revenue per tonne. The interaction between DRC mineral policy and corridor economics is a dynamic that will shape the investment case for the corridor over the coming decade.

Price data reflects publicly available market information from the London Metal Exchange, Fastmarkets, and Benchmark Mineral Intelligence. Forward-looking projections reflect consensus estimates and scenario analysis rather than definitive forecasts. This content is for informational purposes only and does not constitute investment advice.