Cobalt Crisis 2025: For African Producers and Investors

The Democratic Republic of Congo supplies more than 70% of global cobalt mine production. This concentration - unmatched by any other commodity at this scale - makes African cobalt the single most important input variable in any global EV battery supply chain model.

The 2025 Supply Squeeze - What Changed

Three converging forces have tightened cobalt supply entering 2025. First, the 2022-2023 price collapse pushed dozens of artisanal cooperatives out of viable production, reducing informal supply by an estimated 15-20%. Second, Glencore's Mutanda mine - responsible for approximately 20% of global output - completed its ramp-up from the 2019 care-and-maintenance period but has not expanded beyond initial guidance. Third, Chinese smelter inventory drawdowns, which artificially suppressed apparent demand through 2023-2024, have now normalised.

Artisanal Mining Formalisation - The Structural Opportunity

The most significant medium-term opportunity in DRC cobalt is not in the large-scale industrial sector - which is already well-served by major trading houses - but in the responsible formalisation of artisanal supply. Hasnihl Capital estimates that 15-30% of DRC cobalt output passes through informal channels that are currently incompatible with EU Battery Regulation and US IRA sourcing requirements. Companies that build compliant ASM sourcing programs now will hold a structural competitive advantage as regulatory timelines tighten through 2026-2027.

Investment Positioning for 2025-2026

For institutional investors, the current phase of the cobalt cycle - depressed spot prices, tightening physical supply, and rising compliance requirements - historically precedes significant price recovery. The 2016 and 2020 cobalt price cycles both exhibited similar setups 12-18 months before their respective peaks. Hasnihl's base case models a cobalt price recovery to the $35-45/kg range by mid-2026, driven by demand normalisation rather than supply disruption.