Costs of EV battery material cobalt hydroxide jump on Congo export restrictions

By Dylan Duan and Pratima Desai

SHANGHAI/LONDON, Dec 9 (Reuters) - Prices of cobalt hydroxide used to make chemicals for electric vehicle batteries have risen sharply this year due to cobalt export restrictions from top producer Democratic Republic of Congo, industry sources said.

Congo suspended all cobalt exports in February, but then introduced a quota system in October, aiming to boost state revenues and tighten oversight in a country that produces more than 70% of the metal globally, estimated at more than 280,000 metric tons this year.

It has set new conditions for exporters, potentially complicating the recently introduced quota system, which sources say is likely to exacerbate shortages and support cobalt hydroxide prices.

"Cobalt is currently registering as 2025's top price performer, but this has purely been driven by the introduction of export quotas by Congo which have caused an artificial market tightness, removing 160,000 to 170,000 tons from the market this year," analysts at Macquarie said in a recent note.

Cobalt hydroxide is produced in Congo and as a by-product of copper and nickel mining in Indonesia, the two primary global producers. The products are priced as a percentage of the underlying cobalt metal price and known as payables.

Sellers of cobalt hydroxide have been raising their prices since Congo first suspended exports in February.

Payables for Congo's hydroxide in top consumer China have jumped to 100% of the cobalt metal price OCBc1 currently trading around $24 a lb or $52,900 a ton, up from nine-year lows of around $10 a lb in February.

One source said there is some progress on getting exports moving, but that the significant amounts needed by China's electric vehicle battery makers would not arrive until February or March next year.

Two industry sources said some firms with cobalt hydroxide to sell were asking for a premium above the cobalt metal price.

For hydroxide produced in Indonesia, payables have jumped to 90% from 50% at the start of the year.

Three industry sources, who asked not to be named as they are not authorised to speak to media, said demand for cobalt hydroxide slowed this month and that high payables are sidelining buyers.

(Reporting by Dylan Duan and Pratima Desai; editing by)

((Dylan.Duan@thomsonreuters.com;))