The US Department of Defense has canceled its long-awaited plan to buy up to US$500 million worth of cobalt, a mineral vital to electric vehicles, jet engines and advanced weapons systems.
The Defense Logistics Agency (DLA) confirmed the cancellation in a notice published Wednesday (October 15), saying there are “outstanding issues with the Statement of Work that need resolution before offers may be solicited.”
The decision comes after months of delays and moving deadlines. The agency added that the solicitation will be “re-issued with a new opening and closing date” once the matter is resolved.
The DLA first issued the tender in mid-August, seeking bids for up to 7,500 metric tons of alloy-grade cobalt over the next five years, with spending ranging from US$2 million to a maximum ofUS $500 million.
The offer window, which was initially due to close on August 29, was extended several times, ultimately to Wednesday.
The abrupt cancellation is being viewed as a setback to the American government’s ongoing strategy of stockpiling domestic supplies, especially as western nations race to reduce reliance on China for raw materials.
Cobalt plays a central role in rechargeable batteries used in electric vehicles and consumer electronics, as well as in the high-temperature alloys that power jet engines and industrial gas turbines.
The metal also has defense applications, including in precision munitions and magnetic systems.
Currently, China dominates the processing of cobalt and has built a significant state stockpile, while the Democratic Republic of Congo (DRC) produces roughly three-quarters of the world’s supply.
The cobalt market has also seen shifting volatility. In recent months, prices have doubled following export restrictions from the DRC, which initially banned shipments outright before shifting to a quota system.
Benchmark prices had languished below US$10 a pound earlier this year — levels not seen in over two decades — before surging as traders scrambled to adjust to the new policy.
The DLA had restricted its call for offers to three major suppliers: Vale’s (NYSE:VALE) operations in Canada, Sumitomo (OTC Pink:SSUMF,TSE:8053) in Japan, and Glencore’s (LSE:GLEN,OTC Pink:GLCNF) Nikkelverk refinery in Norway.
In April, US President Donald Trump invoked emergency powers to spur domestic production of critical minerals, part of a broader plan to reduce foreign dependence and strengthen national security.
The White House has also created a National Security Council office led by former mining executive David Copley to coordinate supply chain strategy across agencies.
The push to secure materials like cobalt, lithium and rare earth elements has taken on greater urgency as the US-China trade war ramps up, with China tightening export restrictions on rare earths last week.
Despite the suspension of efforts, officials insist the cobalt project is not abandoned. The DLA affirmed that solicitation is expected to be reopened with updated terms once it resolves its contracting issues.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.