China’s Acid Ban puts Chile's Copper Output on the Line

Chile’s copper sector is becoming the first major casualty of China’s anticipated sulphuric acid export halt, offering a clear signal of how quickly disruption is cascading through global supply chains.

A recent Reuters report highlighted mounting concern among miners as Chinese shipments dry up, tightening availability of a key input used in oxide copper processing.

Chile, the world’s largest copper producer, relies heavily on imported sulphuric acid, much of it historically sourced from China. The result is a sharp rise in prices and growing fears of supply shortages that could constrain output.

The impact is already being felt by some of the world’s largest mining companies, who are planning for the challenge. Codelco, the biggest copper producer globally, sits at the centre of the issue, given its reliance on sulphuric acid for leaching operations.

Major operators including BHP and Anglo American, both with significant assets in Chile, will need to cope with similar exposure as input costs rise and supply tightens. Freeport-McMoRan, another leading global producer, is also vulnerable to the broader market squeeze.

Peter Harrisson, Principal Analyst at CRU, writes on LinkedIn: “Acid traders are experts in problem solving but not all of this problem will be solved.

“The loss of Chinese trade cannot be replaced with other origins. Exports will be lower and imports will adjust to that. How and where are the real questions.”

When will China halt sulphuric acid exports?

China is set to halt exports of sulphuric acid from May, removing one of the last flexible sources of global supply.

The move follows a period of record exports in 2025 and marks a sharp pivot towards prioritising domestic demand.

Much of China’s export capacity comes from acid produced as a by-product of copper and zinc smelting, making the restriction particularly significant for global metals markets.

The timing could hardly be worse. The recent conflict in Iran has already disrupted sulphur shipments from the Middle East, which accounts for roughly one third of global output and a substantial share of seaborne trade.

As sulphur is the primary feedstock for sulphuric acid, the upstream shock has intensified downstream shortages.

Sulphuric acid is a foundational industrial chemical, with around 60% used in fertiliser production and the rest supporting metals extraction, oil refining and advanced manufacturing.

The loss of Chinese exports therefore has cross-sector implications, transforming a typically low-profile input into a strategic constraint.

Beyond mining, fertiliser producers are among the most exposed.

Companies such as OCP Group, one of the world’s largest phosphate producers, depend on sulphuric acid to convert phosphate rock into usable fertilisers.

Rising input costs and tighter supply risk pushing up global fertiliser prices, with knock-on effects for food security, particularly in import-dependent regions.

Battery supply chains under pressure

Battery supply chains are also under pressure. Nickel processing in Indonesia, dominated by players such as Tsingshan, relies on stable sulphur inputs.

Disruptions at this stage threaten to ripple through to electric vehicle production and energy storage systems, increasing costs for manufacturers including downstream players like CATL.

Advanced manufacturing adds another layer of vulnerability. Semiconductor fabrication depends on high-purity sulphuric acid for wafer cleaning and etching.

While companies such as TSMC and Samsung are less exposed to bulk supply constraints, prolonged disruption and price volatility could contribute to bottlenecks in an already fragile chip supply chain.

Sasa Jarvis, National Co-Leader of Mining and Partner at McMillan LLP, writes on LinkedIn: “If China is indeed curbing sulphuric acid exports, this could quietly reshape metals markets, particularly when sulphur from the Middle East is subject to severe shipping risks through the Strait of Hormuz.

“Acid leaching is required for much of global copper and nickel production - and impacts silver supply by extension given the amount of silver produced as a byproduct in copper mining. Copper and silver are each in short supply for current levels of demand already.”