China is taking advantage of tumbling cobalt prices to build up its inventories of the metal used in electric-vehicle batteries and aerospace alloys.

The National Food and Strategic Reserves Administration, the government stockpiling body, has agreed to purchase about 5,000 tons of cobalt from three local refiners and a state-owned trader this week, according to people familiar with the matter.

The volume is higher than the original plan to buy 2,000 tons, after additional offers from the suppliers prompted the state stockpiler to take more grades of the metal, said the people, who asked not to be identified because they’re not authorized to speak publicly.

The National Food and Strategic Reserves Administration didn’t reply to a faxed request for comment.

Global cobalt prices have tumbled more than 60% from May 2022 on rising output from the Democratic Republic of Congo and Indonesia. There could be a global surplus of 30,000 tons of the metal this year, which may widen further in 2024, according to Rystad Energy.

Chinese refiners, which dominate processing of cobalt, are heavily reliant on material that comes from DRC mines, although Indonesia is quickly emerging as an important source. Surging violence in the eastern DRC could further destabilize the country as it prepares for elections in December, a group of experts from the United Nations warned last month.

Read More: The Biggest Source of Cobalt Outside Africa is Now Indonesia

On the demand side, the adoption of cheaper cobalt-free lithium iron phosphate, or LFP, batteries, has gathered momentum. Ethical concerns about cobalt production from DRC have also fueled the shift away from cobalt in cathode chemistry. However, cobalt is still crucial in diverse applications from aerospace materials to magnets.

The last time China stocked up on cobalt was in 2020 when it bought 2,000 tons of the metal for its strategic commodity reserves, in order to counter supply disruptions in DRC due to Covid-19.

--With assistance from Winnie Zhu.

(Updates with purchase volumes in second paragraph, demand outlook in penultimate paragraph)