Cobalt can be considered the silent metal of the energy transition. Unlike lithium, which has become shorthand for the electric vehicle (EV) revolution, or nickel, which has long been a staple of industrial production, cobalt rarely makes headlines. Yet, it is cobalt that stabilizes the cathodes of high-performance Li-Ion batteries, enabling the size, safety, and durability that consumers demand. Without it, the green transition would likely be slower, more expensive and certainly more uncertain.
Cobalt mining is also concentrated in some of the world's most politically fragile regions, dominated by a handful of actors whose interests do not always align with those of consuming nations. 84%, or 220,000 metric tons (2024), of all the world's production comes from the Democratic Republic of Congo (DRC), mostly as by-products from copper and nickel mining. The second largest supplier is Indonesia, with 7% of the world supply. China, which dominates the world's refining capacity (roughly 70%), supplies less than 1% of the world's cobalt output. This leaves both cobalt mining and refining significantly exposed to geopolitical events and tensions. Recently, the Democratic Republic of Congo (DRC) set quotas of 96,600 tons of annual export through 2027. This is less than half what the country exported in terms of volume in 2024. Trump's recent tariffs might also significantly affect the global cobalt markets. These risks are not just hypothetical: they are already reshaping flows of investments, trade policies and corporate strategies.
Geographical dependence
Within the DRC, production is clustered in the copper belt of Katanga, where industrial-scale mines sit alongside thousands of miners working in precarious conditions. This concentration is not an accident of domestic policy but of actual geology. Cobalt is rarely mined on its own; it is a by-product of copper and nickel extraction (the exception being the Bou-Azzer mine in Morocco). The DRC's copper belt happens to be unusually rich in cobalt-bearing ores, giving it a natural monopoly. The cobalt belt is located in the south part of the country, near the borders of Zambia and Angola, leaving it vulnerable not only to domestic disruptions such as political instability, labor unrest, or regulatory change, but also geopolitical tensions in neighboring states. Sudden changes or events can quickly ripple through global supply chains (unlike oil, where multiple producers can offset disruptions).
Decades of conflict, corruption, and weak governance have left DRC with fragile institutions. Elections are often contested, and the state struggles to exert control over its vast territory. Political and ethnical violence is largely concentrated to the east of the country, near the Rwandan, Burundi and Ugandan borders. Recent insurgency by the rebel group M23 can be seen as a resurgence, possibly supported by Rwanda. The group emerged in 2012 and later surrendered in 2013 as part of a peace deal after a year of intense fighting with DRC government forces. The Allied Democratic Forces (ADF), a Uganda based Islamic group has recently performed attacks in North Kivu, killing more than 80 civilians. Geographically, these incidents are taking place more than 1,500 km north of the cobalt concentration in the country. Careful monitoring of the situation is required, as situations can evolve quickly, even over relatively large distances.
For mining companies, this creates a volatile operating environment. Besides the armed groups present in the country, local and national contracts can be renegotiated or revoked. Taxes and royalties can be raised unpredictably. Local communities, often excluded from the benefits of mining, can erupt in protest.
The hidden cobalt dependency: military and aerospace
While battery production and EVs dominate the cobalt conversation, the military and aerospace sectors have their own, less publicized, strong dependence on the metal. Cobalt is essential for superalloys used in jet engines and gas turbines (for power production). These alloys must withstand extreme temperatures and stresses, making cobalt's heat and corrosion resistance hard to replace. For defense applications, cobalt is also used in magnetic alloys for guidance systems (e.g. precision-guided missiles), smart bombs, and for armor resistant plating.
The aerospace and defense (A&D) industry faces unique challenges in replacing suppliers. Qualifying a new source of aerospace grade cobalt can take up to 10 years due to stringent performance and safety requirements. Even if alternative mines come online, they cannot be integrated into critical defense supply chains overnight.
Moreover, A&D grade cobalt is purchased in smaller quantities than grades for other industries, giving defense buyers less market leverage. In a tight market, EV manufacturers — with their larger, more predictable orders — may crowd out smaller but strategically vital defense procurement.
The Rise of Resource Nationalism
The DRC is not the only country reassessing its role in the global mineral supply chain. Indonesia, which has vast nickel reserves and growing cobalt by-products, has banned the export of raw nickel ores to force investment in domestic processing. The government's goal is to capture more value from its resources, moving up the supply chain into refining and battery production. This strategy might have paid off, as Chinese investments have significantly increased since 2020 and global export has grown from less than 2,000 tons/year in 2020 to close to 20,000 tons in 2024. The recent move by DRC is possibly reflecting the same goals. At the same time as it boosts local production, it also strengthens Chinas position and leverage globally. Increased Chinese investments would also add some level of security for the DRC government. What would China do if the threat from M23 or ADF become real for the Cobalt sector?
Other countries are following recent developments carefully. Governments are tightening control over critical minerals, raising royalties and demanding local beneficiation. This wave of resource nationalism reflects both economic ambition and political intention. Leaders see critical minerals as leverage in a world hungry for energy transition inputs.
For investors, this obviously means greater uncertainty. Projects that looked profitable under one national policy can become unviable under another. Long-term contracts are no guarantee against political shifts, and geopolitical strategies are now more than ever affecting the strategies of businesses. That is why geopolitical risk recently has climbed into the top 10 risks for corporations to deal with.
Strategic Intelligence in Decision-Making
In such a volatile business environment, strategic intelligence has become indispensable. For mining companies, investors, and governments alike, the ability to anticipate risks and act preemptively is as valuable as the metal itself.
Strategic intelligence is not simply about collecting data. Intelligence is the product of data and information analysis, requiring both analytical skills and geopolitical awareness to be able to produce informed assessments. In essence it's about synthesizing political, economic, and social signals into actionable foresight. This can be divided into smaller segments of intelligence, for example:
- Political risk forecasting: Intelligence professionals monitor electoral cycles in the DRC, shifts in Chinese industrial policy, and the rise of resource nationalism in emerging markets.
- Supply chain mapping: By tracing cobalt flows from artisanal mines to refineries, companies can identify chokepoints and potential vulnerabilities.
- Scenario planning: Modeling of the impact of sanctions, export bans, or regional conflicts on cobalt availability, allowing firms to stress-test their strategies.
- ESG monitoring: Open-source intelligence (OSINT) and satellite imagery are increasingly used to verify supply chain claims and detect abuses in artisanal mining.
The intelligence function is no longer confined to governments and private intelligence firms. Corporations now employ former diplomats, analysts, and data scientists to build in-house capabilities. Multinationals share intelligence with allies and industry consortia, recognizing that resilience is collective.
To manage and stay on top of the full cobalt supply chain, businesses need to stay on top of what is happening on all levels.
Supply Chain Alternatives
Building alternative supply chains is easier said than done. New mines take years to develop, and environmental opposition can delay projects in developed countries. Processing capacity is still overwhelmingly concentrated in China. Even so, consuming nations are not passive and are constantly looking for alternative supply chain solutions to reduce the overall risk of supply concentrated to single resources. The United States, through the Inflation Reduction Act (IRA), was offering subsidies for domestic battery production and incentives for sourcing from allies. With the new Trump administration in place, the IRA has plunged into uncertainty, with funding being paused in January 2025. The US also has the Defense Production Act in place to fund domestic mining and refining of cobalt, nickel and lithium.
The European Union launched its Critical Raw Materials Act, aiming to secure diversified supply. The recent dramatic US change in the IRA policy, aimed at reducing funding of renewable projects could affect EU policies as well, as European far-right political parties gain momentum. Trump made it very clear in his latest speech at the UN General Assembly in New York that he's not a big fan of the green transition and called it 'the greatest con job.'
Japan and South Korea have their own resilience strategies and are investing in overseas mining projects, sometimes in partnership with Western firms. Canada and Australia are both part of the Minerals Security Partnership (MSP) together with the US, EU and Japan.
Recycling could also eventually provide a significant share of supply, but not on a scale in the near term. For now, dependence on the DRC—and by extension on China—remains a structural reality.
Managing Resilience
Risk transfer mechanisms help companies manage volatility and maintain operations. What are the risk transfer mechanisms available then for investors and end users?
- Political risk insurance (PRI) protects against expropriation, contract frustration, currency inconvertibility, and civil disturbance. For mining companies, this coverage can be critical in securing financing and maintaining access to capital markets.
- Trade credit insurance ensures the payment of receivables throughout a chain of intermediaries, reducing the risk of liquidity crises resulting from counterparty defaults.
- Supply chain interruption insurance mitigates risks arising from disruptions such as port closures, sanctions, or cyberattacks. For automotive manufacturers reliant on just-in-time cobalt deliveries, this type of coverage is essential to business continuity.
- Hedging instruments—though currently limited in the cobalt market—offer buyers the ability to fix prices or share financial risks with suppliers, thereby providing greater price stability.
- Parametric insurance: Trigger based payouts linked to measurable events (e.g., port closures, conflict escalation, strikes) that disrupt supply.
Traditional insurance, once seen as a peripheral cost of doing business, is increasingly central to the strategic calculus of companies exposed to geopolitical risk. Insurance alone, though, does not necessarily provide a complete solution. A great example of this would be the war in Ukraine. It has had a significant direct effect on the global transformer supply, as insulation used in transformers is fabricated in Ukraine, and Ukraine's domestic need for transformer significantly increased with Russian attacks on critical infrastructure. Today, lead times can be up to 36 months for high-capacity transformers, and with a typical cap of 18-24 months for business interruption insurance coverage, power generation and transmission companies risk significant loss of income that only partly would be covered by insurance.
In essence, what these tools can do is buy time — time for companies to diversify supply, invest in recycling, or adapt technologies to be less dependent on volatile materials. Risk transfer solutions focus more on managing resilience than eliminating exposure.
