Process of copper refinement in large electrolysis bathtub with installed metal anodes at production plant extreme closeup
From the Australian outback to Ethiopia and the Democratic Republic of Congo, the global mining industry is beginning to feel the effects of disruption caused by the war in Iran.
War-driven snarl-ups are starting to ripple through supply chains, squeezing access to key mining inputs while driving up costs to produce some of the world’s most sought-after metals. The biggest impacts are from diesel, the main fuel powering heavy equipment at mine sites, as well as sulfur, used in processing about a sixth of the world’s copper.
“The supply chain is breaking down,” Ivanhoe Mines Ltd. founder and co-chairman Robert Friedland told a conference in Switzerland Tuesday, warning that war’s impact on mining has barely started.
So far, there hasn’t been a significant impact on global metals output because big mining companies have been able to secure supplies and absorb higher costs. But smaller producers from Africa to Australia are starting to feel the pain as the conflict drags on. The longer the war continues, the greater the risks to an industry already strained by mining outages and project delays at a time of accelerating demand for critical minerals.
The Middle East accounts for about half the world’s seaborne sulfur and at least 10% of shipped diesel, according to data compiled by Goldman Sachs Group and Bank of America. Sulfur — and by extension, sulfuric acid — are vital inputs for a type of processing known as SX-EW, which accounts for 17% of copper supply, according to Goldman.
If war-related upheavals intensify, it could start eroding the 23 million tons of copper mined per year in a more meaningful way and drive up already elevated metal prices even more. Futures on the London Metal Exchange are more than 40% higher than a year ago, and in January touched a record high above $14,500 a ton.
Congo — the world’s No. 2 copper producer and biggest supplier of cobalt, a battery metal — is particularly exposed because most of its sulfur comes from the Middle East and its output is unusually reliant on SX-EW plants. SX-EW uses acid to leach copper and cobalt out of certain types of ore, without needing smelters that actually generate acid as a byproduct.
Securing new sulfur supply could take almost two months while inventories at some facilities cover only a month, according to a person with knowledge of the situation. Some smaller cobalt and copper operators are slowing output amid difficulties getting affordable sulfur and spiking diesel costs, said the person.
Local sulfur prices have surged to about $1,200 a ton, about double from before the Iran war, according to pricing agency Argus. Some local buyers said smaller parcels even reached $1,400 a ton as copper plants are eager to stock up.
Mining.com
