[SMM Analysis] Envisioning Global Cobalt Value Chain-Special Speech by Shirley, General Manager of SMM's Industry Research

The global cobalt market underwent significant changes in 2024 due to the impact of the Democratic Republic of the Congo's (DRC) export ban policy. Shirley, General Manager of SMM's Industry Research, delivered an in-depth analysis at the Global Cobalt Forum hosted by the Cobalt Institute in Singapore, focusing on the dynamics of China's cobalt industry chain, global resource competition landscape, and demand trends. The key points are as follows:

I. Chinese Market Post-Ban: Short-Term Price Surge Coexists with Supply-Demand Resilience

Significant Linkage between Price and Capacity: The DRC's export ban triggered a rapid increase in cobalt prices, but the domestic industry chain, buffered by sufficient inventory, avoided large-scale supply deficits. As prices recovered, domestic cobalt salt enterprises promptly ramped up capacity, with production increasing MoM.

Elasticity in Recycling Sector Emerges: The proportion of recycled materials in China's cobalt sulphate production surged from 10% to 16% within two months, reflecting the rapid responsiveness of price-sensitive capacity. If policies on importing lithium battery black mass are further relaxed, the proportion of recycled resources used will increase further.

DRC's subsequent policy direction: Currently, the DRC has not yet announced its subsequent policy direction, and it is expected to be announced in June.

II. Reconfiguration of Resource Competition Landscape: DRC's Dominance Faces Dual Challenges

1) Rise of Indonesia's Nickel-Cobalt Resources

Relying on the capacity expansion of hydrometallurgical projects (HPAL) for laterite nickel ore, Indonesia's supply of nickel-cobalt intermediate products continues to climb. It is expected to contribute over 35% of the global increase in cobalt resources in 2024, becoming the most robust emerging supplier.

2) China's Recycling Industry Poised for Growth

Global theoretical cobalt recycling volume has reached 66,000 mt (metal content) per year (with China accounting for 62%), but actual operating rates remain below 30% due to losses. If the metal price center continues to rise and policy support intensifies, the recycling sector may unlock unexpected incremental capacity.

Key Data: In 2024, the DRC still accounts for 75% of the global primary cobalt resource supply, but Indonesia and China's recycled resources are challenging its monopoly with a "cost + policy" dual-driven model.

III. Policy Motivations and Strategic Recommendations: How Can the DRC Avoid the "Resource Curse"?

Analysis of the Ban's Essence: The short-term policy aims to increase fiscal revenue by controlling resource volumes to push up prices, but in the long term, it is essential to be wary of the resource-dependent economic trap. Lessons from Indonesia: Drawing on Indonesia's policy approach to attract capacity construction in 2014, the DRC may attract foreign capital to establish localized factories, building an integrated "resources-processing-export" industry chain, while simultaneously enhancing government tax revenue, employment rates, and the added value of resources.

It may even increase imports of nickel ore resources from the Philippines to boost product added value and extend the lifespan of resource utilization.

IV. Outlook on the Demand Side: Concurrent Structural Surplus and Regional Mismatch

Overall Growth Slowdown: The growth in demand for 3C consumer electronics is constrained, while the penetration of high-nickel, low-cobalt technology in the power sector accelerates, narrowing the marginal growth in global cobalt demand to below 5%.

SMM Key Conclusions:

Deepening of Price-Sensitive Supply Landscape: The capacity flexibility of nickel-cobalt resources in Indonesia and the recycling sector in China will continue to erode the market share of the DRC.

Accelerated Value Transfer in the Industry Chain: Policy negotiations in resource-rich countries are driving a rebalancing of the location of smelting and processing operations. Enterprises with synergistic advantages in technology, cost, and policy will dominate the new round of competition, fostering sustained and healthy development that boosts domestic employment and tax revenue.

Strategic Opportunities for China: Strengthen policy support for renewable resources, deepen cooperation with emerging resource-rich countries such as Indonesia, and establish a dual-track supply chain of "primary + recycling" resources.