How the Iran conflict and disruptions in the Strait of Hormuz are increasing costs and creating logistical challenges for the mining industry.
The Iran Conflict and the Strait of Hormuz: What Does It Mean for Precious Metal Mining?
The military conflict involving Iran and the repeated threats to restrict traffic through the Strait of Hormuz have raised concerns across global commodity markets. While most attention has focused on oil prices and shipping, mining companies are also monitoring the situation closely.
For the precious metals industry, however, the consequences are more nuanced than many headlines suggest.
At present, there is little evidence that the conflict is causing widespread mine closures. Instead, the primary impact is a gradual increase in production costs, particularly through higher energy prices, logistics expenses and disruptions in the supply of certain industrial chemicals.
The Strait of Hormuz Matters Far Beyond Oil
Approximately one-fifth of global petroleum consumption passes
through the Strait of Hormuz each day, making it one of the world's most
important maritime chokepoints.
Less widely known is its importance for sulfur exports. The Middle East
accounts for roughly one-quarter of global sulfur production, much of
which is transported through the Strait before being converted into
sulfuric acid, an essential reagent used throughout the mining
industry.
Before the conflict, approximately half of global seaborne sulfur passed through the Strait of Hormuz. Kpler data cited by Reuters show that monthly shipments fell from an average of 1.27 million tonnes before the war to 180,000 tonnes in March and only 30,000 tonnes in April 2026. This represents declines of approximately 86% and 98%, respectively.
The disruption also caused delivered sulfur prices in Asia to rise to as much as USD 880 per tonne, approximately 50% above their level at the beginning of the conflict.
Why Sulfuric Acid Is Important
Sulfuric acid is a critical input for several large-scale mining processes.
It is heavily used in:
- copper solvent extraction and electrowinning (SX-EW)
- nickel high-pressure acid leaching (HPAL)
- various hydrometallurgical refining processes
If sulfur exports are disrupted, sulfuric acid becomes more expensive and harder to obtain, increasing operating costs for mines that rely on these technologies.
Reuters reported that mining companies in the Democratic Republic of Congo have already reduced chemical consumption and searched for alternative supply routes after Middle Eastern sulfur exports became constrained.
The logistical impact has also become measurable. In the DRC, premiums for sulfuric acid and sodium metabisulfite transported through Tanzania have nearly doubled since the conflict began. Delivery times that previously averaged around three months have extended to between four and six months.
Reuters also reported that one 2,000-tonne sodium metabisulfite order was cancelled outright, while a separate 1,800-tonne shipment was withdrawn after contracts had already been signed.
What About Gold and Silver?
The impact is considerably smaller.
Gold mining primarily depends on:
- sodium cyanide
- diesel fuel
- electricity
- explosives
- activated carbon
- lime
Sulfuric acid is generally used only during certain processing or refining stages rather than throughout the mining operation.
Silver is similar. According to the Silver Institute, approximately 70% of global silver production is generated as a by-product of other metals, primarily lead, zinc, copper and gold.
Global silver mine production reached approximately 846.6 million ounces in 2025. Based on the Silver Institute’s estimate that around 70% of silver is produced as a by-product, this implies that approximately 593 million ounces of annual silver mine supply originate from operations whose primary output is another metal.
Silver output from copper operations increased by approximately 6% in 2025, further illustrating the importance of base-metal mines to global silver supply.
Therefore, even if no silver mine closes, prolonged disruptions affecting copper and base-metal production would eventually reduce silver supply.
This means that silver is exposed mainly through disruptions affecting base-metal mining rather than through sulfuric acid itself.
Rising Costs Are the Immediate Risk
Current evidence suggests that higher operating costs represent the most significant consequence of the conflict.
Mining companies have reported increases in:
- diesel prices
- freight cost
- LNG price
- explosive
- chemical reagents
- sulfuric acid prices
Gold Fields provides one of the clearest quantified examples of the cost impact on precious-metal mining. The company reported that diesel prices had increased by as much as 70%, freight costs by approximately 40%, LNG costs by around 30%, and both cyanide and explosives by approximately 10%.
Assuming an oil price of USD 100 per barrel, Gold Fields estimated that these increases could raise portfolio-wide production costs by approximately USD 40–50 per ounce of gold.
Higher costs reduce profit margins, particularly for mines operating close to their all-in sustaining costs.
Why Mine Closures Are Different
Although rising costs are important, mining companies generally try
to avoid shutting down producing mines.
According to Reuters, several Indonesian nickel producers had only one
to two months of sulfur inventories. Indonesia is particularly exposed
because it obtains approximately 75% of its imported sulfur from the
Middle East and accounts for more than half of global nickel
production.
Macquarie estimated that higher sulfur and sulfuric acid prices could
increase Indonesian nickel production costs by approximately USD 4,000
per tonne.
Some DRC producers were also believed to hold only a few months of
chemical inventories, meaning that a prolonged disruption could
eventually force production curtailments once existing stocks are
exhausted.
A mine closure is rarely a temporary decision.
Once a mine is placed on care and maintenance, restarting operations can require:
- rehiring skilled workers
- recommissioning processing plant
- obtaining regulatory approval
- rebuilding supply chains
- significant additional capital expenditure
In practice, this means that mining companies may continue operating at or even below their all-in sustaining cost for a period of time if management expects input prices to normalize. The immediate effect is therefore often margin compression rather than closure.
Has Production Already Been Disrupted?
So far, reliable public evidence suggests only limited production risk.
Goldman Sachs estimated that prolonged sulfur shortages could place approximately:
- 125,000 tonnes of copper production in the Democratic Republic of Congo at risk
- 200,000 tonnes of Chilean copper production at risk due to sulfuric acid shortages and export restrictions.
Combined, this represents roughly 325,000 tonnes, or approximately 1.4% of annual global copper mine production.
However, the production impact has so far remained limited. The DRC exported a record 823,887 tonnes of copper during the first quarter of 2026, approximately 4.8% more than a year earlier. Cobalt hydroxide exports increased by 24.5% to 51,940 tonnes, while gold exports reached 6.3 tonnes, valued at approximately USD 732 million.
Importantly, no reliable source has reported the closure of major
precious-metal mines directly because of sulfuric acid shortages or the
conflict in Iran.
Current impacts are largely confined to higher costs, tighter
chemical supplies and increased logistical complexity.
Indirect Effects on Silver Supply
Although silver mines themselves have not experienced widespread disruptions, silver production could still be affected indirectly.
Because a significant portion of global silver production comes as a by-product of copper, lead and zinc mining, any sustained reduction in base-metal production would eventually lower silver output as well.
At present, however, the quantified production risk remains relatively modest.
Even the largest published estimates suggest an impact of around 1–1.5% of global copper production, implying only a limited indirect effect on global silver supply under current conditions.
What Should Investors Watch?
The current situation does not point to an immediate disruption of global precious-metal mining.
Instead, investors should monitor several leading indicators:
- availability and pricing of sulfur and sulfuric acid
- diesel and marine fuel prices
- freight rates through the Middle East
- inventory levels held by mining companies
- duration of any disruption affecting the Strait of Hormuz
Should shipping disruptions persist for several months, temporary
inventory buffers may become exhausted, increasing the probability of
production curtailments.
For now, however, the evidence suggests that higher production
costs—not mine closures—remain the principal consequence for the
precious metals sector.
Conclusion
Based on currently available evidence, the Iran conflict is unlikely to cause widespread precious-metal mine closures in the short term.
The immediate consequence is higher operating costs rather than lower
production.
Unless disruptions to sulfur exports and the Strait of Hormuz persist
long enough to exhaust inventories, global precious-metal supply is
expected to remain largely unaffected.
The principal risk is therefore margin compression rather than physical shortages.