CHARTS: How the sulphuric acid crunch is driving up critical minerals costs

Conflict in the Middle East and the closure of the Strait of Hormuz have sent sulphuric acid prices soaring, sharply increasing production costs for lithium, nickel and other critical minerals essential to the energy transition.

Benchmark Mineral Intelligence said sulphur prices have climbed more than 50% since the start of the war in Iran, while sulphuric acid prices have more than doubled in some regions, disrupting supply chains for battery metals and forcing some refiners to curb production amid shortages of physical sulphur supply.

“Sulphuric acid is a vital feedstock for many critical minerals, and the disruption to the sulphur market from the ongoing Middle East conflict has had knock-on effects across key markets,” Benchmark raw materials research manager Will Talbot said. “The outstanding risk is that more critical minerals players cut production or even shut down operations entirely.”

Lithium squeeze

The supply shock is reshaping the economics of battery materials production. Benchmark said sulphuric acid previously represented about 3% of the cost of producing lithium chemicals from hard rock sources but now accounts for 11%, overtaking energy as the largest individual C1 cost component. 

Sulphuric acid now contributes 22% of total hard-rock lithium conversion costs and has become “the single most volatile and material input” in lithium processing, Benchmark said. 

Nickel production via high-pressure acid leaching (HPAL) has also become heavily exposed to sulphur markets. Benchmark said sulphur now represents 42% of HPAL nickel costs, up from 26% before the conflict.

Indonesia, the world’s largest nickel producer, sourced 76% of its sulphur imports from the Middle East last year, while more than 10 tonnes of sulphur are required to produce one tonne of nickel through HPAL processing.

Supply risks

The authors warned that physical availability, not just pricing, has become the industry’s biggest risk because at least half of global seaborne sulphur trade passes through the Strait of Hormuz.

More than half of global lithium, cobalt, rare earth and purified phosphoric acid production expected in 2026 is exposed to sulphur and sulphuric acid disruptions, according to Benchmark. High-purity manganese sulphate monohydrate, used in EV batteries, is entirely dependent on sulphuric acid supply.

China’s unofficial restriction on sulphuric acid exports has compounded the pressure on refiners outside the country. Benchmark said spot acid prices in Indonesia and Chile have climbed above $380 and $440 per tonne respectively as converters scramble for alternative supplies. Battery-grade lithium carbonate prices in China have already risen about 65% this year in U.S. dollar terms.

Wider fallout

Copper producers are feeling the impact unevenly. While solvent extraction and electrowinning operations that account for 22% of global mined copper output require large volumes of acid, copper smelters are benefiting because sulphuric acid is a profitable byproduct of the smelting process.

Benchmark said treatment and refining charges for copper concentrate have dropped sharply since strikes on Iran as rising acid prices improve smelter economics.

The supply squeeze highlights how geopolitical conflict is increasingly colliding with energy transition supply chains. Benchmark said countries with domestic sulphur and acid production capacity, such as the U.S., are likely to be more insulated than import-reliant jurisdictions including Australia.

Even if the Strait of Hormuz reopens quickly, the firm warned damaged Gulf refining infrastructure could take significant time and investment to restore, prolonging pressure across global critical minerals markets.