A sharp rise in sulphur and sulphuric acid prices, triggered by geopolitical disruption in the Middle East and the closure of the Strait of Hormuz, is significantly increasing production costs across key critical minerals used in the energy transition.
According to Benchmark Mineral Intelligence, sulphur prices have risen by more than 50%, while sulphuric acid prices have more than doubled in some regions, tightening supply and disrupting global battery‑materials supply chains. The scarcity of physical sulphur supply has already forced some refiners to reduce output.
Sulphuric acid is a key input in the processing of minerals such as lithium, nickel and cobalt, and its rising cost is materially reshaping project economics. In hard‑rock lithium processing, sulphuric acid now accounts for approximately 11% of operating costs, up from around 3% prior to the disruption, making it the largest single cost component. In nickel production via high‑pressure acid leaching (HPAL), sulphur’s contribution has increased to around 42% of costs, compared with 26% previously.
The disruption also presents broader supply risks. Roughly half of global seaborne sulphur trade passes through the Strait of Hormuz, exposing a significant portion of the critical minerals supply chain to geopolitical volatility. Benchmark estimates that more than half of global production of lithium, cobalt, rare earth elements and related battery materials could be affected by sulphur supply constraints in 2026.
Further pressure has come from China, where unofficial restrictions on sulphuric acid exports have tightened global availability. As a result, spot prices in key processing hubs such as Indonesia and Chile have surged, while battery‑grade lithium carbonate prices in China have risen significantly this year.
The impact is uneven across commodities. While acid‑intensive operations – such as lithium conversion and HPAL nickel projects – face rising costs and potential production curtailments, copper smelters are benefiting, as sulphuric acid is produced as a by‑product of the smelting process, improving their margins.
Industry analysts note that countries with domestic sulphur and sulphuric acid production capacity are likely to be better insulated, while import‑dependent regions face continued exposure to supply disruptions.
The current supply squeeze highlights the growing intersection between geopolitical risks and critical minerals supply chains, with continued disruption likely to place sustained pressure on costs and production across the sector.
