(Ecofin Agency) - Cobalt prices in the Democratic Republic of the Congo (DRC) have fallen to their lowest level since 2016. The DRC is the world's largest cobalt producer, with 140,000 tonnes expected to be mined in 2023. An oversupply in the market has led to declining prices, impacting the country's revenues.

Last week, cobalt prices dropped to between $10 and $11.80 per pound, according to Fastmarkets. This marks a continued decline over more than two years. On the London Metal Exchange, cobalt prices have decreased by 54% since September 2022, reaching $23,610 per tonne on September 20.

The Cobalt Institute reports that global demand for cobalt was 197,000 tonnes in 2023, while supply reached 210,000 tonnes. This year, production is expected to exceed demand again. Production is anticipated at 245,000 tonnes and demand at 237,000 tonnes. The DRC is projected to produce 110,000 tonnes this year.

As the world’s top cobalt producer, the DRC faces significant impacts from falling prices. According to the International Monetary Fund,  falling cobalt prices "are likely to weigh further on the country's external position" in 2024. The drop in cobalt export revenues, induced by falling prices, could reduce foreign currency reserves and make it more difficult to finance the DRC's imports.

In response to these challenges, the DRC considered implementing export quotas earlier this year to help boost prices. However, no decision has been made yet, and any price recovery will likely depend on increased demand.

Despite current low prices, the long-term outlook for cobalt remains positive due to the global shift toward renewable energy and rising electric vehicle production. The International Energy Agency predicts that cobalt demand could double by 2030, reaching 410,000 tonnes under a "net zero emission" scenario.

Emiliano Tossou