cross-posted from: https://scribe.disroot.org/post/8865304
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Electric vehicles (EVs) are widely considered to be one of the big winners from the current conflict between the United States and Iran [and the resulting blockade of the Strait of Hormuz], as they allow users to move away from reliance on fossil fuels.
But EVs are exposed to the Strait of Hormuz as the manufacture of their batteries is dependent on sulphuric acid, a key component in the extraction of metals such as nickel and lithium.
Sulphuric acid is vital in the high-pressure acid leach method of extracting battery-grade nickel from ore at mines in Indonesia, the top producer of the metal.
It is also used to extract lithium from hard rocks in Australia, the biggest producer of the metal, and is also important to produce copper.
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Sulphur is a by-product of producing crude oil and gas, and refining into fuels, making Middle East countries such as the United Arab Emirates and Saudi Arabia major suppliers of the raw material that is used to make sulphuric acid.
Sulphur is usually transported by bulk carriers and volumes through the Strait of Hormuz have collapsed since the start of the Iran conflict, with data from commodity analysts Kpler showing only 30,000 metric tons made it out in April and 180,000 tons in March.
This was down from an average of 1.27 million tons a month in the three months prior to the start of the conflict, according to Kpler. The loss of Middle East cargoes has sent the price of sulphur soaring, with delivered prices to Asia reaching as high as $880 a ton, up 50% since the start of the war.
The higher price for sulphur is feeding through to sulphuric acid and will raise costs for nickel, copper and lithium miners, but of more concern is that supply might be constrained.
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Several mining executives from Indonesia and Australia attending last month's Asian Battery Raw Materials Conference in Hanoi expressed concern that securing sulphuric acid supplies on a medium-term basis is becoming more challenging.
China's EV and battery storage makers are exposed to any loss of supply of nickel produced using HPAL as well as lithium from Australia.
There are some alternatives to using sulphuric acid in processing metals, but they are not suitable to produce battery-grade nickel, and for copper and lithium they require higher energy inputs to make lower volumes.
While the processing of metals is not yet a crisis point, the longer the Strait of Hormuz remains effectively closed the closer that point becomes.
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