Chilean Copper Production Squeezed by Global Sulfuric Acid Shortage

Chilean copper producers are facing the most severe sulfuric acid supply crisis in nearly two decades, with the port city of Mejillones at the epicenter of the disruption. The CFR Mejillones benchmark, the standard reference price for Chilean miners, climbed from 190 USD per metric ton on 25 February 2026 to 300 USD on 8 April and 380 USD on 15 April, a near doubling in seven weeks. By mid-May 2026, spot quotations in northern Chile had stabilized in the 400 to 450 USD per metric ton range as buyers scrambled to cover uncovered second-half requirements.

The shortage is the product of two simultaneous shocks.

The closure of the Strait of Hormuz to commercial shipping since late February 2026 has cut off a substantial portion of seaborne sulfur flows from the Persian Gulf, which historically supplied roughly half of global merchant sulfur used to manufacture sulfuric acid.

The second blow came on 10 April 2026, when Beijing announced a formal ban on sulfuric acid exports effective 1 May 2026, citing the need to protect domestic phosphate fertilizer production and food security. Chinese shipments to Chile had already collapsed in March 2026 to zero metric tons, compared with 31,870 tons in February 2026 and 151,268 tons in March 2025.

Mejillones serves as the principal maritime gateway for sulfuric acid entering northern Chile, hosting the Noracid plant and acting as the unloading hub for cargoes destined to the copper belt of Antofagasta and Atacama regions. Most of the acid offloaded at Mejillones is trucked or piped to large heap leach and solvent extraction electrowinning operations that produce roughly 1.1 million metric tons of cathode copper annually, equivalent to more than half of Chile's refined copper output and about 20 percent of the country's total mined production of 5.5 million metric tons.

The technical exposure is acute because sulfuric acid is non-substitutable in SX-EW circuits (solvent extraction and electrowinning, the hydrometallurgical process used to produce cathode copper from leached ore). A typical Chilean operation consumes between 3 and 8 tons of acid for every ton of cathode copper produced, with the national average reported by the Chilean Copper Commission standing close to 6 tons of acid per ton of copper. Marginal projects, aging ore piles and low-grade secondary sulfide mines are the first to feel the squeeze when acid costs and availability deteriorate.

Major producers entered the crisis with varying degrees of protection. Codelco, the state-owned giant, secured its full 2026 acid requirements through long-term contracts before prices began rising, but the company has already reported a 5 percent increase in production costs since March attributed to the input shock. BHP, Anglo American and Freeport-McMoRan, which operate flagship assets such as Escondida, Los Bronces and El Abra, face similar pressure on cash costs. Smaller operators relying on spot procurement are the most exposed, with margins compressing rapidly as second-half coverage gaps widen.

Chile imports approximately 4 million metric tons of sulfuric acid each year. In 2025, 37.1 percent came from China, 24.1 percent from Peru, 11.1 percent from Japan, and the remainder from South Korea, Mexico, Canada and Europe. Peruvian capacity offers limited near-term relief because available export volumes are constrained and logistics for hazardous chemicals add weeks to any redirection effort. Japanese and Korean cargoes have been partially redirected toward Chilean buyers since April, but volumes remain insufficient to plug the Chinese gap of around 125,000 tons per month.

Russia compounded the disruption by extending its own sulfur export restrictions through June 2026, removing additional volumes from the global merchant market. Delivered acid prices in the Democratic Republic of the Congo, the other major leaching jurisdiction, have surged to between 1,000 and 1,500 USD per metric ton, demonstrating how thin the global market has become.

Chilean Q1 2026 copper output was already down 6 percent year on year before the full acid shock landed, according to figures released by the Chilean Copper Commission in May. Morgan Stanley estimates that up to 1.1 million tons of annual leached copper production could be at risk if the Chinese export ban persists for more than six months. The International Copper Study Group, meeting in April 2026, flipped its 2026 global balance from a previously forecast 150,000-ton deficit to a 96,000-ton surplus, but the surplus sits in the wrong locations and wrong forms, with LME warehouses (London Metal Exchange) holding 1.3 million tons of inventory while smelter gate availability tightens.

The price response on global exchanges has been dramatic. Copper futures on the COMEX pushed above 6.40 USD per pound on 12 May 2026, a fresh record, as traders priced in the cumulative effect of acid scarcity, treatment and refining charges at multi-year extremes, and Strait of Hormuz shipping risks. Wood Mackenzie, in its 30 April 2026 outlook, described sulfuric acid availability as a structural rather than cyclical constraint, displacing declining ore grades as the operative variable for copper supply.

As of mid-May 2026, Chilean buyers covered most of their first-half acid requirements before the crisis intensified, but a significant share of second-half tonnage remained uncovered when Chinese supply vanished. Buyers have been returning to the market through May, locking in spot cargoes at prices that would have been unthinkable a quarter earlier. Codelco, Noracid and Anglo American domestic capacity continue to cover near-term needs, but visibility deteriorates materially beyond the third quarter.

Industry analysts are watching three variables closely.
First, whether the Chinese export ban is extended into 2027 or relaxed after the domestic fertilizer planting season.
Second, whether maritime traffic through the Strait of Hormuz resumes on a meaningful scale, allowing Persian Gulf sulfur to reach Asian acid producers.
Third, whether marginal Chilean operations begin to reduce acid concentration, postpone new leaching pads or trim ore throughput, which would translate into actual production cuts visible in the second half of the year.

For downstream industries, the implications extend well beyond mining. Sulfuric acid is critical for phosphate fertilizer manufacturing, semiconductor wafer cleaning, lithium and uranium extraction, and battery materials processing. The compounded effect on copper supply, in particular, threatens electrification programs, electric vehicle manufacturing and power grid investments in Europe, North America and Asia at a moment when copper demand is structurally accelerating.