The Hormuz blockade has turned sulphur into a black swan event in the mining industry. This is because a large proportion of the global sulphur trade passes through the Strait of Hormuz. Sulphur is the raw material from which sulphuric acid is produced, which is indispensable in mining, amongst other things. Consequently, a disruption to the availability of sulphuric acid on the world market could mean that the conflict in the Middle East affects a number of less obvious sectors, such as the uranium sector.
Sulphuric acid is mainly produced during the processing of oil and gas. Consequently, the situation in the Middle East affects the sulphuric acid market in two ways: firstly, less sulphur is entering the global market, leading to a reduced supply of sulphuric acid; secondly, the infrastructure for hydrocarbon processing – and thus the infrastructure in which sulphur is produced – is being destroyed. This means that even if the Strait of Hormuz is reopened, the supply of sulphur will remain limited for some time.
One of the world’s largest uranium producers – the Kazakh company Kazatomprom – will be particularly affected by this problem. The recent floods in the country meant that sulphuric acid supplies for uranium mining operations did not arrive on time, which restricted production and ultimately led to a decline in the expected supply of uranium on the market. It is all the more significant that Kazatomprom extracts uranium using the ISR (In-situ Recovery) method. This is a technology in which a chemical solution is injected into the uranium minerals to dissolve them, and sulphuric acid forms the basis of this solution. Furthermore, it turns out that more than 90% of the sulphur imported into Africa comes from the Middle East… and therefore flows through the Strait of Hormuz. New uranium exploration projects are currently underway on the African continent (for example, in Namibia), where sulphuric acid is urgently needed for operations. Traders are already struggling to secure any supplies. Consequently, sulphuric acid prices in Africa are rising significantly… and if the shortages last longer than three weeks (and there are many signs that, in our view, they will last much longer), then mining projects will have to be temporarily shut down because they are running out of acid.
The problem with sulphuric acid is therefore becoming a more global issue and will affect more companies, which, paradoxically, would significantly improve the long-term outlook for the price of uranium.
As for helium: Qatar is the world’s second-largest producer of helium and is set to account for around 33% of global production in 2025 – 63 million m³.
When the Ras Laffan plant, the world’s largest LNG export facility, was shut down due to the war with Iran, helium supplies were halted, as helium is produced as a by-product of natural gas processing. As a result, the market is currently losing around 5.2 million m³ of helium per month, with virtually no global reserves of this raw material – helium evaporates during storage and should reach consumers in around 45 days. The disruption has already doubled helium prices since the start of the war with Iran. The ships transporting this gas have stopped sailing through the Persian Gulf and the Red Sea. This is a serious problem, as a large proportion of the world’s helium supply is transported via this very route. Consequently, companies such as Samsung and SK Hynix, which account for 60% of global SSD production, have reported problems. Helium is, in fact, absolutely essential for the manufacture of semiconductors. It is used to cool and stabilise lithographic equipment, and there is no substitute for it. If the supply of helium is cut off for an extended period, chip factories will begin to scale back production within a matter of days. This will immediately trigger a domino effect: memory production for Nvidia will fall, Apple will be unable to assemble iPhones, Tesla will cut back on car production, and AI data centres will not receive enough GPUs. The entire semiconductor industry – worth more than $600 billion – could start to grind to a halt. Unlike the 2021 chip crisis, which was caused by the pandemic and factory downtime, the current problem is geopolitical in nature. The raw material is not reaching the factories because sea routes are blocked or too risky. And helium is just one of many critical gases whose absence could cripple global technology production.
Iran did not need to target a semiconductor factory with missiles. It was enough to jeopardise road safety to undermine the foundations of the modern digital economy and the energy supply.
