The widening conflict in the Middle East threatens to squeeze the supply of sulphur through the strait of Hormuz, with potential long-lasting second-order effects on key battery metals production.
The most immediate industrial vulnerability lies in sulphur produced in Mideast Gulf countries — and by extension sulphuric acid — a critical input for copper and cobalt leaching in the central African copperbelt, nickel leaching in Indonesia and lithium extraction and refining globally.
Roughly half of global seaborne sulphur trade transits the strait of Hormuz. With Middle Eastern refinery operations disrupted and shipping largely halted, global sulphur availability has tightened sharply.
Africa is particularly exposed. Nearly all sulphur imported by southern African buyers last year originated in the Middle East.
Argus assessed spot sulphur prices at the key hub of Dar es Salaam, Tanzania, at $615-630/t fca on 3 March, an increase of just $20/t since 27 February, as stocks in the port are ample. But the structural vulnerability is clear.
Delivered trucking costs from Dar es Salaam to Kolwezi in the Democratic Republic of Congo (DRC) are about $280/t. That implies delivered sulphur prices approaching $900/t dap Kolwezi this week. At typical 3:1 conversion ratios, that suggests sulphuric acid costs nearing $300/t, much higher than other regional benchmarks. Sulphur fob Middle East prices were assessed at $494-496/t. Both prices had experienced a slight dip ahead of the conflict but have jumped in the initial days of the war.
Copperbelt heavily impacted
The central African copperbelt imports roughly 2mn t/yr of sulphur, producing around 6mn t/yr of sulphuric acid for oxide copper leaching. An additional 2.5mn t/yr of acid is generated by regional copper smelters processing concentrates.
Higher acid prices directly raise copper production costs in one of the world's fastest-growing supply regions. The same belt is also the centre of global cobalt production.
The DRC accounts for roughly 70pc of global mined cobalt supply. Major producers include Glencore, whose Mutanda and Kamoto operations produced around 40,000t of cobalt in 2024, and China Molybdenum (CMOC), whose Tenke Fungurume and Kisanfu mines together produced more than 55,000t of cobalt last year.
But the DRC has room to manoeuvre in the cobalt markets, as it has imposed an export quota on producers since late last year. There is probably a significant production overhang in the country itself, so a loosening of the policy could be used to shore up market supply in the event of a tight squeeze.
The mechanism that shuts down global trade is not necessarily naval blockades but the withdrawal of war risk insurance, Robert Friedland, the founder of Ivanhoe Mines, noted this week.
Seven of the 12 members of the International Group of P&I Clubs have issued cancellation notices for war risk coverage in the Mideast Gulf, extending beyond the strait of Hormuz itself to Iranian waters and the Gulf of Oman.
Nickel mines and lithium refineries exposed
Sulphuric acid also plays a critical role in the wider battery metals supply chain. It is a key reagent in pressure acid leach (HPAL) operations used to produce nickel from laterite ores in Indonesia, now the world's dominant source of battery-grade nickel, producing more than 50pc of global supply. Several large Indonesian HPAL projects consume millions of tonnes of sulphur annually to generate acid for leaching operations.
Indonesian nickel mixed hydroxide precipitate (MHP) producers have ceased offering long-term contractual material to assess the potential impact of sulphur supply disruptions.
Fuel impacts in Indonesia could also be acute. Indonesia's crude supply from the Middle East passes through Hormuz and makes up around a fifth of national demand, energy minister Bahlil Lahadalia said on 3 March.
Sulphuric acid is also widely used in lithium extraction and processing. Hard-rock spodumene concentrate is typically converted into lithium chemicals using sulphuric acid roasting, while several emerging direct lithium extraction and brine conversion routes also depend on large volumes of sulphuric acid. A sustained rise in sulphur prices therefore risks feeding directly into global battery metal production costs.
Again, Africa is most exposed, but a recent lithium concentrate export ban in Zimbabwe may actually relieve the pressure on other mines in the region. Australia, the world's largest lithium spodumene producer, receives most of its sulphur from Canada, so should remain far more insulated. That said, the second-largest supplier is Qatar, albeit by some distance.
General inflationary pressures brought on by an extended crisis can and will affect the Chinese refining industry, which was already struggling with margin pressure from growing spodumene prices and could emerge as the weak link in the lithium supply chain.
Lithium refining is an energy and reagent-intensive process. Elevated LNG and power costs in Asia, combined with rising sulphur and sulphuric acid prices used in the conversion of spodumene into lithium chemicals, could significantly increase operating costs for converters. At the same time, demand uncertainty or weaker downstream battery markets could limit refiners' ability to pass those costs on.
China accounts for roughly 80pc of global lithium chemical refining capacity, meaning that any sustained pressure on Chinese converters would have disproportionate consequences for global lithium supply.
