Ivanhoe Mines Robert Friedland, founder and co-chairman (TSX: IVN), warned that a prolonged closure of the Strait of Hormuz would have a “profound” impact on global supply chains, crippling copper producers by raising sulfur and sulfuric acid prices and causing shortages.
About 20% of the world Copper supply It is based on a process that uses sulfuric acid to leach copper from oxide ores. With about 50% of global seaborne sulfur supplies cut off, “markets for sulfur and sulfuric acid have become very tight,” according to Friedland.
“If the closure of the Strait of Hormuz continues, we are particularly concerned about the availability of raw materials necessary for the mining industry to continue operating,” Friedland said. He said on Monday In Ivanhoe’s first quarter production report. “The second derivative impact on global copper production will be due to the shortage of the world’s most important industrial chemical, sulfuric acid.”
Critical choke point
the Strait of Hormuz It is a critical chokepoint for shipments of sulfur – the main input of sulfuric acid – from the Middle East, which typically accounts for more than 40% of global exports. The disturbances have reduced sulfur charges, with implications for the processing of copper and other metals that rely on acid leaching.
To make matters worse, recent industry reports say that China, the world’s second-largest exporter of sulfuric acid after Japan, will Preventing the export of sulfuric acid Starting May 1st. Reports say the ban applies to sulfuric acid, a byproduct of copper and zinc smelting in China.
Asia’s largest economy exports about 2.7 million tons of sulfuric acid annually, according to data from Traubenbach Associates cited by Red Cloud Securities. Chile was the largest destination for Chinese sulfuric acid, according to BMO Capital Markets.
Data from Traubenbach Associates shows that phosphate fertilizer makers are the largest consumers of sulfuric acid, accounting for 54% of demand in 2024. This compares to 12% for chemical manufacturing and 10% for metal processing and mining.
The data also shows that copper smelting constitutes the largest segment of demand for metals and mining, representing 62 million tons of the sector’s consumption of 89 million tons.
The Chinese export ban “will lead to a significant shift in costs for the agricultural sector and some copper and nickel users. Overall, copper will be the hardest hit,” Kenneth Hoffman, commodities strategist at Red Cloud Securities, said in a note published Monday.
High prices
Real sulfuric acid prices have risen to more than $500 per ton in recent weeks amid supply constraints, Ivanhoe said on March 31. The company said at the time that continued closure of the Strait of Hormuz could lead to further increases.
Ivanhoe’s Kamoa-Kakula Copper Complex in the Democratic Republic of the Congo – which includes the largest copper smelter in Africa – plays an increasingly strategic role in the current market environment.
The process can produce its own sulfuric acid as a byproduct of copper smelting, reducing reliance on imported acid that has been affected by global supply disruptions. It also sells acid-to-oxide copper mining operations elsewhere in the DRC’s copper belt.
Ivanhoe said the smelter produced 117,871 tons of high-strength sulfuric acid in the first quarter.
“Kamoa-Kakula is ideally positioned as a producer and seller, and therefore not a consumer, of sulfuric acid,” Friedland said. “Our industrial process does not require sulfuric acid to produce 99.7% pure copper anodes.”
Revenue from sulfuric acid sales represents a “strategic advantage given the global supply chain disruptions caused by the closure of the Strait of Hormuz,” Sam Crittenden, a mining analyst at RBC Capital Markets, said Monday in a note.
However, Ivanhoe said on Monday that it had put in place contingency plans across its operating sites to continue operations during the US-led war on Iran. The moves include advanced purchases of diesel.
Quarterly output
The announcement came as Ivanhoe reported 71,417 tonnes of anode copper production in the first quarter from Kamoa-Kakula as ramp-up and recovery efforts continue following previous operational disruptions. The total includes 63,671 tonnes of copper in anode produced by the smelter and 7,746 tonnes of copper in blister produced by the Lualaba smelter in Kolwezi.
In a surprise move that reset investor expectations, Ivanhoe two weeks ago cut its near-term production guidance for Kamoa-Kakula.
Ivanhoe now expects 2026 copper anode production to reach 290,000 to 330,000 tons, down from 380,000 to 420,000 tons, while 2027 production will reach 380,000 to 420,000 tons versus the previous target of 500,000 to 540,000 tons, according to For a report dated March 31. statement.
Annual production at Kamoa-Kakula is expected to reach 500,000 tonnes from 2028 onwards, Ivanhoe predicted.
Kamoa-Kakula is one of the highest quality and fastest growing copper companies in the world. It contains about 1.3 billion tons of 2.65% copper for a mineral containing about 34 million tons of the metal, supporting the life of a mine for several decades, according to a resource released last month.
Ivanhoe stock rose 3.5% to C$11.90 on Monday morning in Toronto, giving the company a market value of about C$17 billion ($12 billion). The stock has traded between C$8.76 and C$20.34 in the past year.
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