Cobalt Market Forecast: Top Trends for Cobalt in 2025

Cobalt demand projected to rise long term

Critical minerals have become a key focus as nations look to fortify domestic supply chains. The cobalt sector’s production concentration in the DRC makes it even more prone to geopolitical upheaval.

According to the International Energy Agency’s (IEA) 2024 Global Critical Minerals Outlook, the cobalt market has a heightened geopolitical risk rating because 84 percent of production is focused in a single country.

Despite the current cobalt glut, the IEA is projecting that demand will soar from 213,000 metric tons in 2023, rising to 344,000 metric tons in 2030 and then to 454,000 metric tons in 2040.

This steep uptick has prompted the IEA to project a potential 16 percent shortfall by 2035.

Although countries like Indonesia and Australia are starting to see cobalt sector growth, experts agree that the DRC will continue to be the dominant player in the industry into the future.

“The DRC is going to maintain its position for the foreseeable future; however, Indonesian MHP is rapidly growing as an alternative source of cobalt in the market. In line with this, we’ve seen an influx of cobalt metal from Indonesia becoming more prevalent in recent months, being aggressively marketed by Indonesian producers,” said Aubry.

Those circumstances mean Indonesia could capture a larger piece of market share this year.

“With CMOC (OTC Pink:CMCLF,SHA:603993) not planning any new expansions this year, it is unlikely we'll see any significant growth from the DRC in cobalt production in 2025,” he added.

Refinement capacity will also play an important role in meeting growing cobalt demand.

Australia’s Cobalt Blue Holdings (ASX:COB,OTC Pink:CBBHF) is advancing plans for the Kwinana cobalt refinery near Perth, proposing an initial production capacity of 3,000 metric tons of cobalt sulfate and 500 metric tons of nickel metal annually. Construction is slated to commence in H1 2025, with completion expected within 12 months.

Changing battery chemistries threaten cobalt demand

In 2024, record-breaking global electric vehicle (EV) sales helped solidify cobalt's role in the energy transition. China is spearheading a 40.7 percent surge in EV and hybrid adoption, supported by aggressive pricing and subsidies.

China remained the largest growth market as domestic automakers outpaced foreign rivals. European sales rebounded from setbacks early in the year, with stricter emissions penalties set to drive further adoption in 2025.

Despite US market uncertainties, growing EV demand globally will sustain cobalt's importance, although supply chain challenges and alternative battery technologies may influence its trajectory.

“As LFP becomes increasingly dominant in China, sentiment for cobalt chemicals used in batteries has turned more bearish,” Aubry said. “A downturn in demand may put sulfate refiners under additional pressure, particularly at a time where the current market dynamics already present significant challenges due to prices.”

Rising copper, nickel production boosts cobalt glut

Another factor that could lead to additional cobalt surpluses is the production correlation with copper and nickel.

A November 2024 Fastmarkets report notes that 76 percent of global cobalt supply comes from copper-cobalt mines in the DRC. This by-product status exposes cobalt to market dynamics in the copper space.

In 2024, copper production in the region was on the rise, which in turn weighed on the cobalt market.

“But with cobalt demand remaining decidedly sluggish, copper’s upward trajectory will continue to fuel cobalt oversupply and, combined with the fact that copper production is poised to expand further, this will keep cobalt prices under pressure,” the Fastmarkets report reads.

A similar picture is playing out in Indonesia, where cobalt is mined as a by-product of nickel.

Indonesia’s rise as a cobalt powerhouse is poised to reshape the market, fueled by its booming MHP production. In 2024, the country supplied 10 percent of global cobalt, up from 7 percent in 2023, driven by Chinese-backed investments in nickel laterite ore projects using high-pressure acid leach technology.

Despite weak nickel prices, these projects are ensuring long-term cobalt output growth, with MHP-derived cobalt production projected to rise by a sizeable 17 percent in 2025.

Producers are increasingly favoring cobalt metal over sulfate due to higher profitability and easier storage.

Additionally, cobalt from Indonesia may be immune to US tariffs — that's in contrast to Chinese cobalt, which faces a 25 percent import tariff, as per Fastmarkets. “That possibility could raise concerns about shifting global supply dynamics and increase the pressure on cobalt prices," the firm explains.

Due to these factors, Fastmarkets is expecting a continued surplus of 21,000 metric tons in 2025, a slight decrease from 2024’s glut of 25,000 metric tons. Increased copper and nickel production is driving this trend, but challenges loom.

Weak nickel pricing, driven by Indonesia’s rapid growth, is squeezing producers in higher-cost regions like Australia and Canada, threatening project viability. Meanwhile, geopolitical tensions, trade barriers and a strong US dollar could further disrupt cobalt flows, especially from Chinese-backed Indonesian operations. The market’s trajectory will depend heavily on economic conditions, trade dynamics and evolving technologies, the report concludes.

Ethical supply concerns continue

As the global mining sector faces increased scrutiny for its extraction practices, the DRC’s cobalt industry has proven to be a focal point for sustainability and social governance concerns.

Child labor at artisanal and small-scale cobalt mines in the country has drawn international attention, prompting the US Department of International Labor to establish a program to fight cobalt-related child labor in the DRC.

Since its inception in 2018, the project has trained 458 stakeholders from the government, civil society and the private sector on fighting child labor. Its other accomplishments include introducing tools like the Bureau of International Labor Affairs' Comply Chain to 28 mining entities in Lualaba and Haut-Katanga.

While these are moves in the right direction, the long-running negative attention that the DRC’s cobalt sector has faced could be a deterrent to new capital entering the country.

“Alternatives to the DRC are likely to become more attractive to investors if it can sidestep other potential pitfalls, such as high refining energy costs. Until a more sustainable supply chain is embedded, or there are more substantial regulations implemented to limit the prevalence of artisanal mining, prices are unlikely to see a premium for sustainably sourced cobalt in the immediate term,” Aubry told the Investing News Network.

Trump’s tough tariff talk

Although Indonesian supply may be exempt from current US trade rules, that could change in the near term.

The re-election of US President Donald Trump has introduced significant uncertainty into the cobalt market, particularly concerning the future of electric vehicle (EV) policies and potential trade measures.

Industry participants have expressed concerns that Trump may reverse existing EV legislation, notably the Inflation Reduction Act, which has been instrumental in channeling approximately US$312 billion into US EV production and infrastructure. The American president has previously indicated intentions to "end the electric vehicle mandate on day one" in a bid to "save the auto industry from complete obliteration."

Despite these statements, the proliferation of EV manufacturing facilities in predominantly Republican states suggests that any policy reversals could face resistance due to the economic benefits they bring to local communities.

Stricter tariffs on Chinese-origin cobalt and EVs is also a concern among market watchers.