[SMM Analysis] DRC Export Ban Extension + Official Quota Release Impact on MHP Market

Policy Content Description

• On the evening of September 21, 2025, the DRC announced an extension of the export ban, originally set to expire on September 21, to October 15, and introduced a quota policy effective from October 16.
• The quotas and their allocation conditions will be specified in a separate decision, which will outline new export regulations, including control and supervision fees, an advance payment system for national dues, and a new export procedure system. The total volume set by this decision is as follows:

a. From October 16, 2025, to December 31, 2025: The maximum quantity of cobalt exports from the DRC to external markets is 18,125 mt in metal content, with 3,625 mt allowed in October 2025, 7,250 mt in November 2025, and 7,250 mt in December 2025.

b. From January 1, 2026, to December 31, 2026: A maximum of 96,600 mt in metal content will be approved for export from the DRC to external markets. This maximum includes 87,000 mt in metal content as the "basic quota" and 9,600 mt as the "strategic quota." The basic quota is set at 7,250 mt in metal content per month. The allocation of export quotas will be notified to each company as early as possible, with each company's quota calculated proportionally based on historical export volumes, except for EGC and the Lubumbashi Society (STL). The strategic quota will be allocated to ARECOMS and reserved for projects of national strategic importance. In 2026, this strategic quota will be capped at 9,600 mt in metal content, and ARECOMS will have sole discretion over its allocation. Any unused basic quota will be automatically reallocated to ARECOMS' strategic quota. In the event of a severe imbalance in the cobalt market, the above quota volumes will be adjusted quarterly.

c. From January 1, 2027, to December 31, 2027: The export quota for 2027 will be the same as that for 2026. However, ARECOMS reserves the right to adjust these volumes based on the evolution of the cobalt market from now until the end of 2026 and future prospects for processing cobalt hydroxide into higher value-added products.

An SMM survey found that this announcement has boosted sentiment for MHP procurement, though it has not yet led to an increase in the MHP cobalt payable indicator. The DRC's extended ban and quota policy introduce new variables to the global cobalt industry chain, with the supply-demand imbalance expected to cause certain structural gaps, leading to further cobalt price increases in Q4 and potential upside for the MHP cobalt payable indicator.

1. Ban Impact Period: Full-year imports of intermediate products are estimated at 90,000-100,000 mt in metal content. Domestic recycled cobalt is projected at 15,000 mt in metal content, and MHP imports at 50,000 mt in metal content for 2025. China's cobalt market is expected to undergo destocking of 10,000-20,000 mt in metal content this year. The market transaction price of the cobalt MB discount coefficient in MHP rose from around 55% at the beginning of the year to the current 73-75%.By year-end, due to the 2-3 month shipping cycle, cobalt intermediate products from the DRC cannot enter the domestic market, and enterprises will further destock.Cobalt prices still have room to rise, which will drive the MHP cobalt payable indicator higher.

2. Quota System: In 2026 and 2027, even assuming cobalt downstream demand is suppressed and remains around 180,000 mt in metal content due to high, and assuming MHP and recycling production increases due to high economic viability, with MHP imports of 70,000-80,000 mt in metal content and domestic recycling production of 20,000 mt in metal content, there will still be a demand for nearly 100,000 mt in metal content of cobalt intermediate products domestically. Considering the DRC uses its entire strategic quota and slightly exceeds it to 100,000 mt in metal content, with 80% of that volume exported to China, there will still be a gap of about 20,000 mt in metal content in China's cobalt resources. The MHP cobalt payable indicator is expected to fluctuate at highs.

SMM will continue to track subsequent market changes.