Sulphuric acid now costs more than energy to produce lithium. That sentence would have made no sense six months ago. Today, according to Benchmark Mineral Intelligence, the chemical accounts for 11% of hard-rock lithium production costs and 22% of total conversion costs -- overtaking electricity as the single largest input . Sulphur prices have climbed more than 50% since the start of the Iran war, while sulphuric acid prices have more than doubled in some regions , Mining.com reported Wednesday.
The squeeze is reshaping the economics of the energy transition. More than half of global lithium, cobalt, rare earth and purified phosphoric acid production expected in 2026 is exposed to sulphur and sulphuric acid disruptions , according to Benchmark. At least half of global seaborne sulphur trade passes through the Strait of Hormuz , which has been effectively closed since March. China halted sulphuric acid exports on May 1 to protect domestic fertilizer production. Spot acid prices in Indonesia and Chile have climbed above $380 and $440 per tonne respectively , The Northern Miner reported. Battery-grade lithium carbonate prices in China have already risen about 65% this year in U.S. dollar terms .
Can the Quad Break China's Rare Earth Grip?
Four democracies think $20 billion might help. The Quad partner nations -- United States, Japan, Australia and India -- released plans Tuesday to invest $20 billion to further support the buildout of a reliable critical minerals supply chain in an effort to counter China's dominance , The Northern Miner reported. The Quad partners intend to mobilize up to $20 billion in combined government and private sector investments to support mining, processing, refining, and recycling of critical minerals across the Indo-Pacific region , according to the joint framework announced at the Quad Foreign Ministers' Meeting in New Delhi on May 26.
The timing is pointed. Two weeks ago, President Trump returned from Beijing claiming progress on rare earth access. The market disagrees. China's rare earth export regime remains largely unchanged following the May 14-15 summit, with a White House summary stating only that Beijing had agreed to address US concerns over shortages of key rare earths, including yttrium, scandium, and neodymium , Benchmark Mineral Intelligence reported. China continues to dominate heavy rare earth supply, with exports of key materials like dysprosium, terbium, and yttrium still heavily restricted , OilPrice.com noted Wednesday.
The numbers tell the story Trump's handshake didn't. Exports of yttrium, dysprosium and terbium are running at just 42%, 41% and 49% respectively of volumes recorded in the 12 months before the restrictions , according to BMI data cited by OilPrice.com. Yttrium -- a thermal barrier coating used on turbine blades and a key insulator in semiconductor manufacturing -- has seen its price rise roughly 15-fold since the controls took effect .
The initiative aims to diversify markets and reduce reliance on China, which processes 90 per cent of global rare earths , The National reported. But diversification takes time. Global appetite for dysprosium and terbium alone runs into the thousands of tons annually, according to industry estimates. In the first quarter of 2026, Lynas produced a combined 8 tons of them , Bloomberg reported. Lynas is the only company outside China that refines heavy rare earths.
Who Pays for the Sulphur Shortage?
Nickel producers in Indonesia. Copper miners in Chile. Lithium refiners everywhere. Sulphur now represents 42% of HPAL nickel costs, up from 26% before the conflict , according to Benchmark. Indonesia, the world's largest nickel producer, sourced 76% of its sulphur imports from the Middle East last year , Mining.com reported.
Chile faces a double squeeze. Chile's mining sector, responsible for producing over 5.5 million metric tons of contained copper annually, now faces severe constraints on sulfuric acid procurement, with Chinese sulfuric acid exports to Chilean markets ceasing completely in March 2026 . The country typically imports more than one million tonnes of Chinese sulphuric acid annually for heap-leach operations that produce roughly a fifth of global copper, according to industry data.
Some miners are better insulated than others. Integrated copper smelters produce sulphuric acid as a byproduct, creating regional supply independent of import channels. The Kamoa-Kakula copper mine in the Democratic Republic of Congo produced 117,871 metric tons of sulfuric acid during the first quarter of 2026, with annual capacity projected between 600,000-700,000 metric tons at full operation . But that's a drop against global demand. The fertilizer industry accounts for 60% of global sulphuric acid demand , putting miners in direct competition with food security.
Meanwhile, Chile is betting $3 billion on technology that uses less acid. Chilean mining companies Codelco and SQM are budgeting $3 billion to deploy new extraction technologies at their lithium joint venture in the Atacama Desert , Bloomberg reported. After years of testing, Novandino is advancing toward commercial operations of technologies known in the industry as direct lithium extraction, or DLE. They are touted as cleaner and faster than the traditional evaporation method , Mining Weekly reported. The venture plans to submit an environmental impact study to regulators in June , with construction starting toward the end of the decade.
