Do Export Bans Build Value Chains? Lessons from Cobalt, Lithium and Nickel Markets

The OECD finds that export restrictions on cobalt, lithium and nickel can encourage some domestic processing and raise short-term revenues, but their benefits are often limited, uneven and heavily dependent on foreign investment. Overall, such measures tend to distort global markets, concentrate supply further and create environmental and social risks, making international cooperation a more sustainable solution.

Produced by the OECD Trade and Agriculture Directorate with support from Japan’s Ministry of Economy, Trade and Industry, this study looks at how export restrictions affect global markets for critical raw materials. As demand for cobalt, lithium and nickel rises sharply due to electric vehicles, batteries and renewable energy, many resource-rich countries are restricting exports to keep more value at home. These policies include export bans, taxes and licensing rules. Governments argue that such measures help build domestic industries, create jobs and increase revenues. The OECD report asks a central question: do export restrictions really deliver these benefits, or do they create new problems for both exporters and the global economy?

Cobalt in the Congo: More Processing, Same Dependence

The Democratic Republic of the Congo dominates global cobalt supply, producing over 70% of the world’s output. When the country banned exports of raw cobalt ores in 2017, exports quickly shifted toward semi-processed products such as cobalt mattes and powders. These products were sold at much higher prices than raw ore, suggesting greater domestic value addition. However, almost all of this semi-processed cobalt was exported to China. The report finds little evidence that the ban helped the Congo move into advanced refining, such as producing cobalt chemicals for batteries. Instead, China retained control over the most valuable stages of the value chain. At the same time, the expansion of mining and processing raised serious environmental and social concerns, showing that higher processing does not automatically mean better development outcomes.

Lithium in Argentina and Zimbabwe: Taxes, Bans and Trade-Offs

Lithium export restrictions are far less common. Argentina uses export taxes rather than bans, mainly to raise government revenue. The OECD finds a clear pattern: when export taxes fell, lithium exports increased; when taxes rose, exports declined. Government revenues often increased when taxes were higher, but this came at the cost of lower exports, which may hurt long-term industry growth. Because Argentina is not a dominant global supplier, it cannot easily pass these costs on to buyers.

Zimbabwe’s recent ban on exporting unprocessed lithium ores produced quick results, attracting large foreign investments, mainly from Chinese firms, and sharply increasing export revenues. However, the report stresses that it is too early to call this a success. Infrastructure gaps, skills shortages, falling prices and environmental risks already threaten the sustainability of these gains.

Indonesia’s Nickel Strategy: Success Story or Costly Gamble?

Indonesia’s export bans on raw nickel are often praised as a model of industrial policy. The country became the world’s largest nickel producer and developed a major stainless-steel and processing industry after restricting ore exports. Exports of nickel-based products surged, reshaping global markets. Yet the OECD’s analysis shows a more mixed reality. For several years after the bans, Indonesia’s total nickel-related export revenues actually fell before recovering later. Much of the new processing industry is controlled by Chinese investors, raising doubts about how much value stays in Indonesia. Environmental damage, heavy coal use and labour concerns further complicate the picture.

What the OECD Concludes for Global Policy

Across cobalt, lithium and nickel, the OECD reaches a cautious conclusion. Export restrictions can sometimes promote domestic processing or raise government revenue, but their effects depend heavily on investment conditions, infrastructure and who controls new industries. Benefits are often limited to early processing stages and may flow mainly to foreign investors. At the same time, these policies reduce supply for trading partners, raise global prices and risk triggering retaliatory restrictions.

Because no country has all the minerals needed for the energy transition, the report argues that unilateral export restrictions are a fragile solution. Instead, it calls for stronger international cooperation through initiatives such as the Minerals Security Partnership, EU raw-materials partnerships and OECD frameworks for responsible supply chains. These approaches aim to balance supply security, domestic development and high environmental and social standards, goals that export restrictions alone cannot reliably achieve.