The U.S. Defense Department is seeking to purchase cobalt for its strategic stockpiles for the first time in decades, to stabilize domestic supply chains for critical metals.
The Defense Logistics Agency is seeking offers for up to 7,500 tons of cobalt over the next five years in a contract worth as much as $500 million, according to documents reviewed by Bloomberg. A person familiar with the purchase told the news service it is the first time the agency has sought to acquire cobalt since the 1990s.
During the 1990s and 2000s, the U.S. sold down much of its Cold War-era cobalt reserves to cut costs. Today, however, cobalt demand has surged, fueled not only by its role in batteries but also in defense applications such as munitions, jet engines, and high-performance magnets. Bloomberg estimated the requested volumes would equal about one-sixth of non-Chinese alloy-grade cobalt supply, showing the magnitude of this decision in the market.
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The Defense Logistics Agency’s solicitation limits eligible suppliers to Vale SA (NYSE:VALE), Sumitomo Metal Mining (OTCPK: SMMYY), and Glencore (OTCPK: GLCNF). The agency has asked those companies to propose fixed prices for delivery over five years. Tender documents set a minimum purchase of $2 million and a maximum of $500 million, with the full 7,500 tons valued at about $313 million at current prices.
Cobalt prices have already risen sharply this year, climbing 42% after the Democratic Republic of Congo (DRC), the world’s largest cobalt producer, imposed an export ban to lift prices. The DRC accounts for more than 70% of global supply, and the U.S. has been engaged in diplomatic efforts in the region to stabilize production and secure reliable access for Western buyers.
The Department of Defense has been steadily expanding its authority to stockpile and procure critical materials. Under legislation passed in late 2023, the Defense Logistics Agency can now enter into long-term contracts without case-by-case congressional approval.
Still, a recent study from Columbia University’s Center on Global Energy Policy found that the U.S. lacks a coherent stockpiling strategy for critical minerals, including cobalt.
“Building such a stockpile comes with significant design and implementation challenges. A successful effort will require clarity of purpose, strategic alignment between stakeholders, and substantial investment,” said Dr.Tom Moerenhout, a research scholar at the center who led the study.
The report warned that technical challenges make cobalt particularly difficult to store for future use, especially in the chemical forms most relevant for energy and defense supply chains. High-purity cobalt sulfate and battery-grade cobalt hydroxide can degrade over time if not correctly managed, requiring specialized facilities and expertise.
“Stockpiles can serve as an emergency response tool, but are not an efficient way to correct long-term issues of market concentration, volatility, or systemic over-undersupply for most commodities,” the study concluded.
Beyond the question of how much to buy, the Defense Department must contend with limited shelf life, the need for purpose-built infrastructure, and the scarcity of human capital with the expertise to manage such reserves.
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