A geopolitical resource war has erupted in the battery metals midstream. China has slashed import tariffs on black mass to 3% while enforcing a mandatory "Digital ID" for domestic battery recycling, effectively vacuuming global feedstock into its refining complex. Simultaneously, Indonesia and the DRC are cutting primary export quotas to force prices higher. This bifurcated market sees China flooding with Russian and Indonesian nickel, while the West struggles to secure compliant minerals, highlighted by the U.S.-backed bid for the DRC's Chemaf SA.
While Western nations focus on mine development, Beijing has executed a masterstroke in the secondary market. Effective January 1, 2026, China reduced the provisional import tariff on recycled black mass to 3%, creating a margin advantage that allows Chinese refiners to outbid global competitors for battery scrap. This policy is rapidly draining feedstock from Europe and North America, starving nascent Western recyclers.
Domestically, China has further tightened its grip with the "Interim Measures for the Recycling and Comprehensive Utilization of Scrap NEV Batteries," issued January 16, 2026. This regulation carries mandatory legal force, establishing a "digital ID card" system for full lifecycle traceability and enforcing strict producer responsibility. The result is a closed-loop ecosystem where scrap is meticulously tracked and retained within China, while international scrap is sucked in via lower tariffs. Consequently, payables for nickel and cobalt black mass have risen to 78–80%, squeezing refiner margins but ensuring volume dominance.
In the primary markets, state actors are intervening to halt price deflation. Indonesia continues to manipulate the nickel market via quota cuts, leading to a "Range-Bound" forecast despite high LME inventories. Meanwhile, China’s imports of refined nickel surged 85% MoM in December 2025, driven by a 1,334% increase in Russian supplies and a 251% jump from Indonesia. This flood of "non-Western compliant" metal is creating a two-tier market: cheap, abundant nickel for China, and expensive, scarce nickel for the IRA-compliant West.
The geopolitical tug-of-war is most visible in the Democratic Republic of Congo. Gécamines, the state-owned miner, has proposed acquiring the troubled producer Chemaf SA to prevent its assets from falling to Chinese bidders. The proposal explicitly aims to prioritize output for the U.S. market, aligning with Washington’s strategic interests. This deal represents a rare counter-offensive by Western-aligned interests to secure cobalt supply against Chinese dominance in the region.