Tearing apart the sulphuric acid leaching pipeline

Sulphuric acid.

The financial press is covering the Strait of Hormuz as an energy story. Crude futures, LNG tankers, SPR releases. That's the headline and the headline is not wrong — it's just incomplete by about three industrial supply chains nobody is drawing on the same diagram.

Here's the one they're missing: roughly a fifth of all copper mined on earth doesn't get smelted. It gets dissolved. You pour sulphuric acid over crushed oxide ore, the acid leaches the copper out of the rock, and you recover it through a solvent extraction and electrowinning circuit — SX-EW. Clean cathode, no furnace required. Chile runs 1.15 million tonnes of copper a year through exactly this process. The DRC runs most of its oxide belt the same way. Zambia. Indonesia. It's not a niche technique. It's the production method holding a meaningful chunk of global copper supply together.

Sulphuric acid is not a commodity people track. It doesn't have a futures curve. It doesn't get a segment on CNBC. It is, however, the reagent that determines whether a quarter of the world's copper production runs or doesn't. And right now, two independent shutoffs have converged simultaneously — the kind of thing that happens once per decade in a physical commodity and takes the paper market months to process.

The Hormuz closure cut the sulphur. China's export ban cut the acid. Those are two different valves on the same pipe. Both are currently closed.

Story off. Here's the pipe and where it broke.

Elemental sulphur is the upstream feedstock. You burn it to make sulphur dioxide, react it with water, and you have sulphuric acid. The Middle East — Saudi Arabia, UAE, Qatar — produces roughly a third of the world's sulphur as a by-product of oil and gas processing. Historically, about half of all seaborne sulphur trade moved through the Strait of Hormuz. That flow stopped on March 2nd. Sulphur prices have gained approximately 70% since the conflict began.

China was the pressure valve. In 2025, Chinese sulphuric acid exports surged 73% to 4.65 million tonnes — most of it a by-product of the copper and zinc smelting capacity China built over the last two decades. Chile alone was importing more than a million tonnes of Chinese acid per year. That number went to near-zero in March. Then on April 10th, China formalized what the market already knew: export ban effective May 1st, covering smelter by-product acid, potentially through end of 2026. The stated rationale is protecting domestic fertilizer supply for spring planting. The practical effect is that the second-largest flexible supply source just locked its doors.

Russia extended its own export ban through June. Turkey has announced restrictions. The DRC has cut volumes. You can draw this as a flow chart but it's really just a list of every alternative route getting blocked one by one.

The SX-EW copper Chile produces via acid leaching is not a marginal number. It is roughly equivalent to the entire annual output of the DRC. The logistics of substituting hazardous chemicals across continents — even if you could find the supply — run on a timeline of months, not weeks. Chilean copper producers covered their first-half 2026 needs. Second-half visibility is deteriorating materially. That clock is now running.

The consensus is treating this as a cost-input story. Acid prices doubled, margins compress, maybe some production gets trimmed. That framing is too comfortable. The actual risk is binary at the mine level — you either have the acid or you don't, and when you don't, the heap leach pad doesn't pause, it stops.

Robert Friedland put it plainly in March: if disruptions lasted longer than roughly three weeks, copper oxide operations would face closure because they'd run out of acid. That three-week window passed in early March. The operations that are still running are running on pre-stockpiled inventory and on domestic Chilean supply from Noracid, Codelco, and Anglo American — sources with hard capacity ceilings. DRC miners are already reportedly rationing consumption to stretch what they have.

The paper market has, to its credit, noticed something is happening. Money managers are net long copper at levels not seen in months. Mining ETF assets under management doubled to $87 billion. But the market is pricing an oil-disruption story — geopolitical premium, SPR release, Hormuz reopening eventually. It is not pricing a structural production constraint that runs through a chemical supply chain most copper analysts didn't model as a primary risk before February.

Here's what's being missed: even if Hormuz reopens tomorrow, the sulphuric acid shortage doesn't resolve on the same timeline. You need sulphur to ship, then sulphur to be processed into acid, then acid to be transported to mine sites — in tankers rated for hazardous chemicals, which is a meaningfully smaller pool than bulk carriers. That logistics tail runs months behind the diplomatic headline. The market is going to price the ceasefire long before the acid is actually flowing again in Mejillones.

There is also a secondary fault line that has barely been discussed. Sulphuric acid feeds not just copper but phosphate fertiliser production — roughly two-thirds of global acid consumption goes to fertilizer. China has already restricted phosphate fertiliser exports through 2026. It is now restricting the acid needed to make them. The food supply chain sits downstream of this same pinch, which means the political pressure to keep acid flowing domestically in China is not going to relent. The ban does not lift on an economist's schedule.

The sequence isn't complicated once you see the lag structure. The diplomatic timeline and the chemical supply timeline are running in parallel but on completely different clocks, and the gap between them is where the trade lives.

The ceasefire trade — if it comes — sells copper down on the headline. That's the moment worth watching for, because the physical supply math doesn't actually improve on that timeline. The acid that wasn't shipped in March, April, and May doesn't retroactively exist. The heap leach pads that got rationed don't catch up. You get a diplomatic headline and an unchanged production balance.

Where does capital actually go in this setup? Not into the broad mining ETFs — they're diluted with iron ore and steelmakers who benefit from nothing here. Not into the major diversified miners who have hedged copper forward at prices that dampen their spot exposure. The edge, if there is one, is narrower. Producers with sulphide ore bodies — not oxide — are structurally insulated from the acid problem entirely; their smelting process generates acid as a by-product rather than consuming it. Kamoa-Kakula is the obvious case: Ivanhoe's on-site smelter produced 117,871 tonnes of sulphuric acid in Q1 2026 alone, which it sold to neighbouring oxide operations. They are, right now, selling a product that is worth roughly twice what it was worth in February, while simultaneously producing copper at a cost structure their oxide-dependent competitors cannot currently match.

I'll say what I always say when the physical and paper markets are running on different assumptions: one of them is wrong. The paper market thinks this resolves with the geopolitics. The physical market — the mine operators rationing acid in the DRC, the Chilean buyers with H2 uncovered — is operating as if it doesn't. In my experience, when those two disagree on a supply chain this deep in the plumbing, the physical market wins. It just takes longer than you want it to.