I. Background
It is widely recognized that the Democratic Republic of Congo (DRC) is the world's largest cobalt producer, dominating global cobalt reserves and production. Cobalt, as a key raw material for power batteries and other high-tech industries, is increasingly strategically important. The DRC government has long been committed to enhancing its bargaining power and control within the global cobalt industry chain.
In order to regulate cobalt exports and ensure the maximization of national interests, the DRC recently announced that it will lift the previous cobalt export ban on October 16, 2025, and has introduced a new quota management system on October 10.
II. Policy Impact Analysis
Based on the latest market information and interpretation of the quota allocation details, the DRC's new policy will have more profound and specific impacts on all parties.
2.1 Impact on the DRC
2.1.1 Strengthening State Control and Profit Re-distribution
The new quota system allocates all quotas directly to mining companies and government-controlled platforms (like EGC, STL, ARECOMS), while refineries receive no direct quotas. This design significantly strengthens the government's direct control over cobalt resources. Government platforms obtain a significant number of quotas (totaling 16,700 tonnes in 2026) but do not produce cobalt themselves. This can be understood as a profit redistribution mechanism. The government grants quotas to these platforms, which then cooperate with refineries lacking quotas, generating revenue (possibly in the form of handling fees, etc.), thereby keeping more profits within the country and using them to support national key projects or encourage mine development and deep processing.
2.1.2 Regulating Market Order and Combating Gray Areas
The Decision strictly stipulates that quotas are non-transferable and non-extendable, and it restricts the processing of third-party or artisanal mining materials (except for EGC and STL), aiming to tackle the existing loopholes, combat quota speculation and illegal trade. Simultaneously, the introduced advance tax payment system and strict export procedures (like traceability certification) further regulate market order and increase transparency, but it also creates space for rent-seeking.
2.1.3 Promoting Local Industry Chain Upgrade
The Decision explicitly encourages the development of the downstream processing chain, for example, allowing applications for exemption for deep-processed products like electrolytic cobalt produced within the DRC. However, the lack of infrastructure, such as electricity, in the DRC is a major bottleneck to achieving this goal. Although the 9,600-tonne strategic quota can be used to support national key projects, effectively utilizing this portion of the quota to drive industrial upgrading remains challenging.
2.2 Impact on the Global Cobalt Market and Supply Chain
2.2.1 Structural Supply Shortage and Price Reshaping
The core impact of the new policy lies in creating a structural issue with cobalt raw materials, not just insufficient supply. As quotas are concentrated among a few large mining companies (6 companies including CMOC, Glencore, ERG obtain 79% of the share), all refineries without quotas (including those in the DRC and cobalt salt enterprises in China) must purchase raw materials from these quota-holding enterprises. This will lead to:
(1) Soaring Raw Cobalt Prices
The market will witness a scramble for raw cobalt, and its discount rate may narrow significantly, even less than 5%.
(2) Large Customers Also Affected:
Even large mining companies like CMOC may find their allocated quotas insufficient to meet the needs of all their major customers. This means that customers previously covered by long-term contracts may also need to enter the spot market to purchase raw materials, further intensifying market tightness.
(3) Shift in Pricing Power:
Cobalt prices will no longer merely reflect traditional supply-demand balance but will more reflect this structural shortage. Pricing power may shift away from the DRC government or producers to international giants like Glencore, which hold large quotas and occupy key positions in global trade, as all cobalt salt manufacturers will have to seek raw material supplies from them.
2.2.2 "Winners" and "Losers" Among Supply Chain Participants:
(1) Beneficiaries:
a. Quota-holding Mining Companies:
Companies like CMOC, Chengtun Mining, Glencore that directly receive quotas will possess strong bargaining power and market position.
b. Indonesian MHP Producers:
Uncertainty surrounding DRC raw materials will highlight the importance of Indonesian MHP as an alternative source. Companies with presence in Indonesia like Lygend, Huayou Cobalt, GEM will benefit significantly.
c. Enterprises with Self-Controlled Mineral Resources:
Companies like China's Xinjiang-based Xinxing Mining, whose mineral resources are unaffected by DRC policies, will see their value increase substantially.
(2) Challenged Parties:
a. Refineries in the DRC without Quotas:
These companies will have to incur additional costs by paying government platforms to obtain feedstock, squeezing their profit margins.
b. Cobalt Salt Enterprises in China:
They will face difficulties in raw material procurement and sharply rising costs.
c. Newly Built Mines without Quotas:
These include new projects by some large enterprises in the DRC, whose future operations and raw material exports face significant uncertainty.
III. Conclusion
The DRC's quota system is a significant move to strengthen control over strategic mineral resources and promote the development of local industries. The Decision aims to optimize cobalt resource management, enhance national revenue, and promote the localization and upgrading of the cobalt industry chain through setting quotas, standardizing allocation conditions, introducing an advance payment system, and strict export procedures.
However, the implementation of the Decision will depend on ARECOMS's execution efficiency, transparency, and control over potential corruption risks. For the global cobalt market, the Decision will bring adjustments to supply structure and prices, requiring relevant enterprises to closely monitor policy dynamics and flexibly adjust their strategies to adapt to the new market environment.
Appendix: Clause-by-Clause Analysis of Decision No. °005/ARECOMS/2025
The following provides a detailed analysis of the key provisions in Decision No. °005/ARECOMS/2025 dated October 10, 2025.
Article 1 -- Object
This Decision outlines the conditions for obtaining and allocating cobalt export quotas and details the practical arrangements for implementing the quota policy set out in Decision n°004/ARECOMS/2025 dated September 20th 2025.
Analysis:
This clause clarifies the core objective of this decision: to provide specific operational guidelines for the implementation of cobalt export quotas. It indicates the DRC government's intention to manage cobalt exports through a quota system rather than a simple export ban, aiming for more refined control. This marks a shift from extensive management towards more strategic resource control, designed to optimize resource allocation and enhance the country's influence in the international cobalt market.
Article 2 -- Allocation of the base quota
2.1 ARECOMS organizes the allocation of cobalt export quotas in accordance with the relevant laws and regulations, the principles set out below and the provisions relating to the regulation and control of strategic mineral substances markets.
Analysis:
This emphasizes ARECOMS as the leading authority in quota allocation, with its allocation actions following existing laws, regulations, and specific principles. This establishes the legality and standardization of the quota allocation but also grants ARECOMS significant discretionary power.
2.2 The base quota, expressed in tons of equivalent cobalt metal content, will be 3,625 tons in October 2025, 7,250 tons in November 2025, and 7,250 tons in December 2025.
Analysis:
This specifies the monthly basic quota volumes for the fourth quarter of 2025. These figures show a lower quota in October, possibly due to the initial phase of policy implementation, while November and December see increases. Based on external information, the export cap for the remaining period of 2025 is 18,125 tonnes, which matches the sum from the Decision (3625+7250+7250=18,125 tonnes). This indicates strict government control over short-term export volumes, likely aiming at stabilizing market expectations and leaving room for subsequent policy adjustments.
2.3 The following are excluded from the base quota: a. Any company that exported less than 100 tons of cobalt in 2024, with the exception of Entreprise Générale du Cobalt (EGC). b. Any company that owns a cobalt refinery but has not operated its own cobalt mine for the past 5 years. c. Any company whose cobalt mineral reserves are depleted.
Analysis:
This clause sets thresholds for obtaining basic quotas, aiming to exclude small, inactive, or resource-depleted enterprises. Excluding EGC suggests it may enjoy special status or separate quota arrangements, aligning with the DRC government's intension of strengthening control over strategic minerals through state-owned enterprises. Restricting companies with refineries but without mines encourages enterprises to have a complete industry chain or at least upstream resources, preventing pure traders or processors from benefiting from the quota system, thereby promoting the deep development of the local mining industry.
2.4 In accordance with Article 6 of Decision No n°004/ARECOMS/2025, dated September 20th 2025, the base quota is attributed prorata basis historical export quantities between January 1st 2022 and December 31st 2024, with the exception of Entreprise Générale du Cobalt and Société du Terril de Lubumbashi (STL).
Analysis:
This clarifies that the basis for allocating basic quotas is the enterprises' historical export volume over the past three years, a common allocation mechanism aimed at rewarding existing active exporters. However, EGC and STL are again excluded, further confirming the special status of these two state-owned or local enterprises in quota allocation, possibly enjoying priority or allocation methods independent of historical export volumes. This reflects the DRC government's policy direction of supporting local enterprises and enhancing state control over cobalt resources.
2.5 The base quota applicable from October 16th 2025 to December 31st 2025 will be allocated in accordance with the list set out in the annex of this press release. This distribution will also be communicated individually to each beneficiary company.
Analysis:
This emphasizes the transparency and specificity of quota allocation, informing beneficiary companies through an annex list and individual notifications. This helps enterprises understand their specific allocated quotas and plan their production and exports accordingly.
2.6 The December 2025 base quota allocation per operator as set out in the appendix will be automatically renewed in 2026, except in case of non-compliance with the rules in place during the fourth quarter of 2025.
Analysis:
This provides an automatic renewal mechanism for quotas, offering stability for compliant enterprises. It means that as long as an enterprise has no violations in Q4 2025, its quota obtained in December will be automatically carried over into 2026. This helps encourage compliance and provides some certainty for long-term investment.
2.7 Company quotas may be revised based on their contribution to the development of strategic projects in the Democratic Republic of the Congo, particularly with regards to the development of the cobalt downstream value chain.
Analysis:
This is an important incentive clause, indicating that the government will adjust quotas based on enterprises' contributions to national strategic projects (especially the development of the downstream cobalt processing chain). This aims to encourage enterprises to conduct deep processing of cobalt within the DRC, shifting from exporting raw ore or primary products to exporting high-value-added products, thereby enhancing the country's industrialization level and economic benefits. This aligns with the DRC's long-standing strategic goal of shedding its "raw material exporter" image.
2.8 Base quotas per operator are neither transferable nor deferrable.
Analysis:
This clarifies the non-transferable and non-extendable nature of quotas. This aims to prevent quotas from being speculated on or illegally traded in the market, ensuring that the actual users of quotas are qualified enterprises. Simultaneously, non-extendability also encourages enterprises to complete exports within the stipulated time, avoiding hoarding quotas. It is worth noting that from 2026 onwards, monthly export quotas must be used within the month, otherwise they will expire and be automatically allocated to ARECOMS's annual strategic quota.
2.9 Monthly quotas per operator will be cumulable on an exceptional basis until December 31st 2025. However, from January 1st 2026, any monthly export quota not used by the last day of the month in question will be considered lost and automatically reallocated to the ARECOMS' annual strategic quota.
Analysis:
This stipulates a special accumulation policy for Q4 2025 quotas, allowing enterprises' flexible use of monthly quotas until the end of the year. However, from 2026 onwards, unused monthly quotas will be reclaimed and incorporated into ARECOMS's strategic quota. This provides some flexibility for enterprises while ensuring the effective utilization of quotas and increasing ARECOMS's control over the strategic quota, which can be used to support national key projects or new entrants.
2.10 Any mining, industrial or semi-industrial operator that does not benefit from quotas may submit a request to ARECOMS, in accordance with the applicable legal and regulatory provisions. This request must include: a. a certificate of compliance with environmental and tax standards; b. an indication of the quantities exported over the last three years; c. production data certified by the Mining Administration; d. any additional documents required by ARECOMS.
Analysis:
This provides an application mechanism for new entrants or enterprises that do not receive a basic quota. This ensures the openness and dynamism of the quota system, avoiding market monopolies. Application conditions include environmental and tax compliance proofs, historical export volumes and production data, and other documents that ARECOMS may require. This indicates that ARECOMS will conduct a comprehensive assessment of applicant enterprises to ensure their qualifications and compliance. This leaves a "window" for companies like Hanrui, Tengyuan, etc., who did not receive quotas, to obtain quotas, but it is expected that a certain handling fee will need to be paid.
Article 3 -- Strategic quota for ARECOMS
3.1 The strategic quota allocated to ARECOMS and reserved for projects of national importance will take effect on January 1st 2026.
Analysis:
This clarifies the establishment of the strategic quota and its effective date. The strategic quota, controlled by ARECOMS, aims to support national important projects, further strengthening the government's macro-control capability over cobalt resource allocation.
3.2 The strategic quota for 2026 is 9,600 tons. Any unused base quota will be added to this, in accordance with Article 2.9.
Analysis:
This stipulates the initial volume of the strategic quota for 2026 and indicates that unused basic quotas will automatically be translated into strategic quota. This gives the strategic quota a degree of flexibility, allowing adjustments based on market and enterprises' actual situations, ensuring effective resource utilization and the implementation of national strategy. With the total strategic quota standing at 9,600 tonnes, the total export quota amounts to 96,600 tonnes after counting in plus the basic quota of 87,000 tonnes. The strategic quota accounts for about 10% of the total, which can be used for adjustment, potentially mainly based on price changes and rent-seeking.
3.3 The strategic quota will be allocated at the sole discretion of ARECOMS.
Analysis:
This grants ARECOMS complete autonomy in the allocation of the strategic quota. This can ensure rapid response and implementation of national strategy but may also bring risks of power rent-seeking and lack of transparency, which will require robust oversight mechanisms for checks and balances.
Article 4 -- Prepayment system for contributions
4.1 All operators holding a quota must, prior to loading the cobalt for export and prior to the last day preceding the month of export, prepay the mining royalty owed to the State based on their maximum monthly export quota and the applicable cobalt prices on the day of prepayment.
Analysis:
This introduces an advance payment system for the mining royalty. This system aims to ensure the timely collection of state taxes and may serve as a screening mechanism, as only enterprises with sufficient financial strength can bear the advance payment cost. The prepayment amount is linked to the maximum export quota and the cobalt price, keeping state revenue synchronized with market conditions. The requirement for prepayment before loading cobalt for export and before the last day of the month preceding the month of export may pose logistical and timing challenges, such as shipping delays causing mismatches between prepayments and actual exports.
4.2 The prepayment referred to in the above paragraph will be exceptionally cumulative for the period from October 16, 2025, to November 30, 2025, and will be necessary for the activation of the quotas for October and November 2025.
Analysis:
This clarifies the initial implementation scope of the prepayment system and its mandatory nature as a condition for activating quotas. This indicates the government's intention to ensure enterprise compliance with the new regulations and secure state revenue from the very beginning of policy implementation through the prepayment system.
4.3 The mining royalty owed to the State shall be settled in accordance with the relevant legal and regulatory provisions.
Analysis:
This emphasizes that the collection of royalties will strictly follow existing laws and regulations, ensuring the legality and standardization of the system.
4.4 A prepayment receipt is required for the issuance of the export authorization certificate.
Analysis:
This makes the prepayment receipt a necessary condition for obtaining an export permit, further strengthening the enforceability of the prepayment system and ensuring the priority of state interests.
Article 5 -- New export formalities
5.1 The issuance of the export certificate is conditional upon: a. The presentation of the prepayment receipt; b. The validation of the remaining available quota; c. The validation of the nature of the exportable product; d. The traceability certification issued by ARECOMS; e. The certificate of compliance with environmental and tax standards.
Analysis:
This details the five necessary conditions for obtaining an export permit. In addition to prepayment and quota verification, it includes product quality inspection, ARECOMS traceability certification, and environmental and tax compliance proofs. These measures aim to ensure the quality and legal origin of exported cobalt products, as well as the compliance of enterprise operations, helping to enhance the reputation of DRC cobalt products in the international market and combat illegal mining and smuggling. These strict conditions also provide potential space for rent-seeking.
5.2 ARECOMS will appoint an inspector to attend the sampling process during the standard export formalities.
Analysis:
This emphasizes ARECOMS's direct supervision of the export process, ensuring the authenticity of product quality and quantity through assigned inspectors participating in sampling, preventing fraudulent practices.
5.3 Quota holders who wish to use their quota must submit a control sample of all exported goods to ARECOMS. This sample will be subject to random testing to ensure compliance with the regulations in force and prevent fraud.
Analysis:
The Decision requires enterprises to submit comparison samples and undergo random inspection, which is an important means of further strengthening supervision and ensuring product compliance. This helps ARECOMS conduct quality control and traceability management of export products.
5.4 Failure to comply with these formalities, or any attempt at fraud, will result in the immediate suspension of the quota allocated to the relevant operator.
Analysis:
This specifies severe penalties for violations, namely the immediate suspension of quotas. This sets a strict compliance baseline for enterprises, aiming to deter potential violations and maintain the seriousness of the quota system.
5.5 Export operations must be carried out exclusively at border posts designated by regulation.
Analysis:
This restricts export ports, helping the government to centrally manage and monitor the cobalt export process, combat illegal smuggling, and improve regulatory efficiency.
Article 6 -- Penalties
ARECOMS reserves the right to withdraw the initial quota allocated to any company that: a. processes mining waste and/or concentrates obtained from third parties or artisanal sources of minerals, except for Entreprise Générale du Cobalt and Société du Terril de Lubumbashi, who are authorized to process such products in accordance with their own export quotas; b. transfers its quota to another company; c. refrains from exporting the volumes allocated by quota; d. fails to comply with applicable laws and regulations.
Analysis:
This details four specific situations where ARECOMS can revoke quotas. Among them, the prohibition on processing waste/concentrates from third parties or artisanal mining sources again highlights the special status of EGC and STL, which are permitted to process such products. This suggests the government may intend to use these two state-owned enterprises to integrate and regulate small-scale mining sources or assign them special social responsibilities. Prohibiting quota transfer and failure to export allocated quota volumes aims to prevent the misuse and idling of quotas. Non-compliance with laws and regulations serves as a catch-all clause, ensuring the comprehensiveness of the system. These penalty measures aim to uphold the authority and effectiveness of the quota system, combat illegal activities, and promote responsible management of the cobalt supply chain.
Edited by Aggie Hu, huchenying@mysteel.com
