Hormuz Closure and China's Sulfuric Acid Export Ban Tighten Copper Supply Chain

The closure of the Strait of Hormuz, combined with China's decision to halt exports of sulfuric acid from May 1, is tightening global supplies of a critical chemical used in copper production. The combined effect is placing mounting pressure on both the agricultural and mining industries, which depend heavily on acid-intensive processes.

Sulfuric acid is essential for copper extraction through heap leaching and solvent extraction-electrowinning (SX-EW) processes. China, as a major producer and exporter of sulfuric acid, has historically supplied a significant portion of global demand. The export ban, effective May 1, is expected to exacerbate supply shortages, driving up costs for copper producers worldwide. Meanwhile, the Strait of Hormuz closure disrupts shipping routes for sulfur, a key raw material for sulfuric acid production, further constraining supply.

According to industry analysts, the acid supply crunch could reduce copper output by up to 5% in the second half of the year, potentially pushing copper prices higher. This comes at a time when copper demand is already strong due to electrification and renewable energy projects. Mining companies are now scrambling to secure alternative sources of sulfuric acid or invest in on-site acid production facilities.

Companies like Numa Numa Resources Inc. are likely to draw lessons from the current situation as they plan future mine development. The company, which focuses on copper and other base metals, may need to incorporate acid supply resilience into its project designs. The broader mining industry is expected to reassess supply chain vulnerabilities and consider strategic stockpiles or diversified sourcing.

The agricultural sector is also feeling the pinch, as sulfuric acid is used to produce phosphate fertilizers. Reduced acid availability could lead to higher fertilizer prices, impacting global food production. This dual impact on mining and agriculture underscores the importance of the Strait of Hormuz as a chokepoint for global trade.

In response, some governments are exploring diplomatic solutions to reopen the strait, while others are ramping up domestic sulfur production. The situation highlights the interconnected nature of global supply chains and the need for contingency planning. As the acid supply constraints play out, the mining industry will be closely watching for developments that could reshape production strategies and investment decisions.