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Pentagon to Buy $500M in Cobalt as China Restricts Minerals

The US Defense Department is seeking to buy up to $500 million worth of cobalt for strategic stockpiles over the next five years, marking the first time since 1990 that the military has sought to purchase the critical metal amid escalating competition with China over mineral supply chains.

The Defense Logistics Agency issued a tender this week for up to 7,500 tons of alloy-grade cobalt, according to procurement documents. The strategic metal has military applications in advanced batteries and specialized alloys for aircraft engines.

The purchase comes as the US seeks to reduce dependence on China, which dominates global processing of critical minerals. China controls roughly 85% of rare earth element refining and has recently imposed export restrictions on several strategic materials.

Related: EU Outlines Plans to Stockpile Critical Minerals —FT

The stockpiling effort follows China’s recent decision to restrict rare earth exports, intensifying concerns about supply chain vulnerabilities.

The Pentagon’s purchase would substantially impact the cobalt market. The tender restricts bidding to just three companies: units of Vale SA in Canada, Japan’s Sumitomo Metal Mining, and Norway’s Glencore Nikkelverk.

Cobalt prices have risen nearly 34% over the past year, driven partly by supply disruptions from the Democratic Republic of Congo, which produces about 70% of the world’s cobalt. The DRC imposed a four-month export ban in February that pushed prices to two-year highs before they stabilized around $33,335 per ton.

Read: Congo Extends Cobalt Export Ban 3 Months to Combat Oversupply


Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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