With the rapid development of the global new energy vehicle (NEV) and energy storage sectors, cobalt's strategic importance as a key battery raw material has become increasingly prominent. Recently, Electra Battery Materials, the operator of North America’s only large-scale battery-grade cobalt refinery, has launched preliminary engineering work at its facility in Canada. This marks a significant step toward the localization of the North American cobalt supply chain. This development not only reflects a profound geopolitical restructuring of global supply chains but may also have potential implications for China's dominant position in the global cobalt market and its pricing dynamics.
I. Impact of North America’s Cobalt Refining Revival on China’s Cobalt Industry Chain
China currently accounts for over 70% of global cobalt refining capacity, especially dominating the refining and processing stages of cobalt sourced from the Democratic Republic of Congo (DRC), through companies such as Huayou Cobalt, H.C. Starck (Hanrui Cobalt), and GEM. In comparison, even if the Electra project is successfully completed, its annual capacity is expected to be no more than 5,000 metric tons of cobalt metal equivalent—approximately 4% of global capacity—which makes it unlikely to challenge China’s dominance in quantitative terms.
Therefore, in the short term, the impact of this project on China's cobalt supply chain will likely be more about market sentiment and policy expectations. Concerns about "de-Sinicization" of the supply chain may lead overseas customers to rethink their medium- and long-term procurement strategies.
Meanwhile, Chinese cobalt enterprises are facing growing pressure regarding “country-of-origin compliance”. With the implementation of the EU Battery Regulation, the U.S. Inflation Reduction Act (IRA), and the Canada–U.S. Critical Minerals Agreement, battery materials exported to Western markets must now disclose full traceability. Chinese cobalt producers that rely on DRC-origin ores and perform refining domestically before exporting may face policy scrutiny and trade barriers.
In contrast, Electra’s positioning around “low-carbon” and “traceable” cobalt products is more aligned with the preferences of Western automakers and energy storage companies. This presents a tangible challenge to Chinese exporters, especially manufacturers of high-nickel ternary cathodes and precursors such as Dangsheng Technology and Ronbay Technology. If these firms fail to strengthen supply chain compliance, they risk being marginalized in Western markets.
II. Potential Impact on Cobalt Prices
From a pricing perspective, North American government support for local critical mineral supply chains reinforces expectations of a gradual shift away from dependence on China. Such policy support and capital investment improve market sentiment and provide a psychological floor for cobalt prices.
Although the Electra project will not contribute significant supply in the near term, the initiation of its engineering phase signals to investors that long-term supply may remain constrained, prompting a shift in price expectations. This reflects both a concern about limited alternative sources and a recognition of the growing strategic value of local refining capacity.
However, from the perspective of actual impact, the Electra cobalt refinery is still in the early stages of construction and cannot provide substantial relief to the current tight supply situation in the short term. Therefore, its direct influence on cobalt prices is more reflected in medium- to long-term expectations. Meanwhile, given the announcement on June 22nd of the three-month extension of the cobalt export restrictions by the Democratic Republic of Congo, coupled with global inventory tightness, cobalt prices have rebounded significantly from the lows seen earlier this year and are likely to maintain a phase of high-level fluctuations in the short term. In the medium to long term, as projects like Electra gradually come online, the market is expected to develop a more optimistic outlook on future supply, with price volatility likely to stabilize gradually.
III. Strategic Recommendations for Chinese Cobalt Enterprises
In response to this evolving situation, Chinese cobalt companies should consider the following actions:
Supply Chain Management: Proactively establish certified “traceable cobalt” systems and strengthen upstream partnerships, particularly in the DRC and Indonesia.
ESG Compliance: Implement full lifecycle carbon footprint tracking to meet Western automaker requirements and qualify for inclusion in compliant materials lists.
Capital & Technology: Explore licensing cooperation or strategic investments in overseas projects like Electra to diversify global footprints.
Investment Strategy: Maintain a cautious outlook toward short-term price rebounds and focus on long-term structural shifts in policy and demand.
In summary, although the Electra project is unlikely to immediately alter the global cobalt supply-demand landscape, it is a symbolic milestone in the “localization” of North America’s critical mineral strategy. For Chinese companies, this development is both a warning and an opportunity for transformation. The medium- to long-term price trajectory of cobalt will still depend on the recovery of end-user demand, particularly from the 3C electronics and high-nickel battery sectors. For now, Electra represents a strategic signal more than a disruptive supply force.
