Last year, China's state stockpiler, the National Food and Strategic Reserves Administration, purchased 8,700 tons of cobalt metal. This planned increase underscores China's dominance in cobalt processing, much of which originates from the Democratic Republic of Congo (DRC), a key source due to its cobalt-rich copper output.

While the National Food and Strategic Reserves Administration remained silent on the matter, indications suggest that part of the cobalt procurement may serve military purposes. Negotiations between the Chinese state stockpiler and local producers are ongoing, with discussions revolving around availability and price.

Market analysts anticipate that China's acquisition could narrow this year's surplus to approximately 20,000 tons, down from 2022 and 2023 surpluses of around 11,000 and 16,000 tons, respectively. However, the surplus remains substantial, with Congo supplying over three-quarters of the global total.

China's CMOC, operating in Congo, is a significant player in cobalt production. Last year, its Tenke Fungurume Mining site yielded over 55,500 tons of cobalt, indicating China's strategic interest in securing a stable cobalt supply chain.

Despite market oversupply and declining prices, Chinese cobalt producers remain resilient, buoyed by state support for an industry crucial to China's electric vehicle sector and broader energy transition goals.

The planned cobalt purchase underscores China's proactive approach to securing critical resources and its pivotal role in shaping global commodity markets, particularly in industries essential for future technological advancements.