China is currently the world’s largest exporter of sulphuric acid, a chemical which they produce as a by-product of copper and zinc smelting. With around a third of global sulphur output coming from the region, the sulphuric acid export ban due to begin in May could create a ripple effect across supply chains worldwide.
The ban comes just as Middle Eastern sulphur shipments, another main provider of sulphuric acid, are impeded by the ongoing US/Israel - Iran conflict and the closure of the Strait of Hormuz.
China’s decision threatens a new crisis for global supply chains, testing procurement and logistic staff working in the metals, fertiliser and food industries. The ban, combined with the disruption of trade flows through Hormuz, means that a once-background industrial chemical could now have a catastrophic effect on food security. Roughly two thirds of sulphuric acid production feeds fertiliser output, and with China already restricting phosphate fertiliser exports, and now tightening exports of the acid needed to make them, the food supply chain is going to feel the impact.
Sulphuric acid is also an essential component for leaching in copper operations, meaning that mining industries will begin to see higher prices and potential shortages. This will particularly effect major producing countries such as Zambia and the Democratic Republic of Congo, but especially Chile - who import more than one million tonnes of Chinese sulphuric acid a year on average. The effect of a decrease in copper output would trickle down through copper intensive sectors, including electrical equipment, construction and electric vehicles, and Indonesian high pressure acid leach (HPAL) nickel projects that supply the global battery industry.
New sulphuric acid capacity and shipping routes take years to develop, so there will be no swift solution. Procurement teams are already planning ahead by looking at building buffer stocks ahead of planting seasons; securing multi-year contracts with non-Chinese suppliers; and co-investing in on-site acid production or closed loop recycling where possible.