The production of key energy and battery metals such as copper, nickel, cobalt and lithium could be affected as sulphur shipments have come to a halt due to the Iran war. A prolonged war may result in prices of these critical metals increasing.
In its fourth week now, the war between Iran and the US-Israel axis has brought shipments also to a halt due to increasing hostilities on both sides. Ship movements being reduced to a trickle in the Strait of Hormuz has compounded the problem.
“Within the metals complex, the copper market – particularly within Africa – emerges as one of the hidden vulnerabilities, with copper production in the Democratic Republic of Congo (DRC) and Zambia remaining heavily reliant on the Middle East sulphur shipments,” said research agency BMI, a Fitch Solutions unit.
Copper production from oxide ores in the Copperbelt is driven by hydrometallurgical processing, where imported sulphur is burnt to produce sulphuric acid for leaching metal from ore. This is followed by solvent extraction and electrowinning to refine it into copper cathodes. A similar method is followed in the case of other metals.
Hidden bottleneck
Multinational financial services firm HSBC said in a commentary that sulphur is a more hidden bottleneck, repricing the fertilizer and some metal supply chains.
It said there was a super squeeze of sulphur, which had surged before the Iran war due to restricted supply and increasing demand. The war has lifted sulphur prices to record highs, it said.
US-based Modern War Institute said sulphur prices have surged by 25 per cent since the Iran war began. Overall, prices are up by 165 per cent year-on-year.
It said the near-total disruption of shipping through the Strait of Hormuz has aggravated the situation in an already tight market. The Strait accounts for approximately 50 per cent of global seaborne sulphur trade flows.
Elusive substitutes
Chemistry World said sulphur supply curbs will have an impact on sulfuric acid – used extensively in metals refining and microchip production – and fertiliser production. At least 60 per cent of global sulphur demand is for the fertilizer sector.
BMI said viable substitutes for acid-leaching are elusive. Copper output in Congo and Zambia has been exposed to sulphur chokepoints. It said that in 2024, Congo imported 89 per cent of its sulphur from the Middle East.
“… an imminent surge in sulphur prices is poised to add to the costs of leaching copper oxides, should the conflict persist beyond current expectations,” said the research agency.
Chemistry World said some Gulf states have cut production of oil, gas and chemicals either because of attacks or stores are full and there are no ships to take cargoes away.
Prelogistical logic
BMI said while stockpiles may be enough in the short term, and as copper smelters produce sulphuric acid as a by-product, the regional industry players with access to the acid will find some reprieve.
“…however, tightened availability for downstream users, notably copper processors that still depend on sulphuric acid, threatens to feed directly into metal production costs,” it said.
The Modern War Institute said chemicals such as sulphuric acid are in the upstream of copper extraction. “Copper is the clearest example of why this is a warfighting problem right now. Sulphuric acid is central to the hydrometallurgical processes,” it said.
The institute said the same prelogistical logic applies to nickel and cobalt.
BMI said Indonesian nickel production will likely face similar problems, lifting mixed hydroxide precipitate (MHP) production costs and eroding its low-cost advantage.
“In 2025, Indonesia imported about 5.35 million tonnes (mt) of sulphur, with around 76 per cent sourced from the Middle East, including 1.76 mt from Saudi Arabia and 0.93 mt from Qatar.
Cost shock
“This cost shock could lift nickel intermediates’ marginal costs and, if prolonged, fuel upside to nickel prices via tighter supply along with higher input and freight costs,” said the research agency.
The War Institute said nickel and cobalt were important for lithium-ion batteries that power various drones and tactical-level electronics.
HSBC‘s chief economist, Paul Bloxham, said last year’s trade tensions exposed the world’s reliance on rare earths such as gallium and yttrium. The current disruption caused by the Iran war conflict has revealed the bottleneck in the sulphur supply.
BMI said beyond copper and nickel, a prolonged Strait of Hormuz closure will send knock-on effects across other battery metals supply chains.
Cobalt, often co-produced with copper in the DRC, and lithium, for which both hard-rock spodumene conversion to lithium chemicals and some direct lithium extraction and brine-based technologies depend on sulphuric acid, are particularly exposed, it said.