The copper supply end is faced with a new problem of "burning eyebrows": Chile is short of sulfuric acid!

With the surge in global demand for copper, the shortage of this important industrial metal is becoming more and more prominent. As far as copper miners are concerned, they are now facing a new problem of "burning eyebrows": lack of sulfuric acid!

The process of extracting copper from metal ores is often the chemical reaction between the ore and sulfuric acid, slowly dissolving the copper ore to form copper sulfate, and then extracting copper by electrolytic refining. Nowadays, however, the compound used to extract copper from ore is becoming more and more difficult to obtain.

During the outbreak, a slowdown in oil refining led to a reduction in the supply of sulphur, a key raw material for sulfuric acid. At the same time, with the recovery of Asian industry, more sulfuric acid has been used locally. In Chile, the largest copper producer, the business of at least one copper mine has been affected and the spot price of sulfuric acid has soared.

"this series of events has never really happened before," said Peter harrison, a sulfur analyst. In mid-2020, it was the smelters who wanted not to produce too much sulfuric acid because there was not much demand, but now it is the smelters who want them to produce more sulfuric acid. "

The shortage of sulfuric acid comes at a time when copper demand is soaring and prices are at a record high, with LME copper rising to a record high of $10747.5 in intraday trading on Monday. Massive stimulus measures and accelerated vaccination have sparked optimism about the economic recovery. In the longer term, the role of copper in the energy transformation also supports demand.

If the "sulfuric acid shortage" aggravates, it may affect 12% of Chile's copper production.

Although some copper smelters produce sulfuric acid as a by-product, the widely used solvent extraction-electrowinning technology in Chile also uses it as a raw material, making Chile's mining industry one of the most sulphuric acid-intensive industries. Chile consumes about 8.5 million tons of sulphuric acid each year, of which only 5.5 million tons are produced locally, according to (Cochilco), the Chilean National Copper Commission.

Due to the decline in sulphuric acid exports from China and other countries, this has had an impact on some of the country's mines.

Although (Codelco), the Chilean state copper company, the world's largest copper producer, managed to increase copper production in the first quarter, production at its Gabriela Mistral mine plummeted 40 per cent. According to Carmen Zuleta, president of the union representing the workers at the copper mine, one of the reasons for this is the lack of access to adequate sulfuric acid.

Chile's ability to maintain high levels of copper production has already faced a series of threats, such as wage negotiations and a new wave of outbreaks. Cristian Cifuentes of Chile's National Copper Commission said that if the shortage of sulphuric acid supply became more obvious and persistent, it could affect as much as 12 per cent of the country's production.

Harrison also pointed out that although sulphuric acid futures contracts are currently trading at about $60 a tonne, spot prices have soared to $160-$170. Spot prices could fall back to $110-$140 by the end of the year as refining production increases, but supplies are expected to remain "structurally tight" over the next four or five years, he said.