The closure of the Strait of Hormuz to commercial shipping in February 2026 triggered simultaneous crises in aluminium, sulphuric acid, and critical mineral processing that no single policy framework anticipated. Together, the disruptions reveal a supply chain architecture built on geographic concentration so deep that a single waterway can destabilise the energy transition's core inputs. The IEA's 2026 Critical Minerals Outlook confirms that six years of government effort have made the underlying problem worse, not better.
Introduction
In late February 2026, the Strait of Hormuz closed to commercial shipping. Markets registered it as an oil story. They were not wrong, but they were incomplete. Over the months that followed, the closure cascaded through supply chains that analysts rarely discuss in the same breath as crude: aluminium smelters in the Gulf went dark, sulphur cargoes piled up in stranded vessels, and the acid that underpins lithium and nickel production doubled in price. By September, the disruptions had touched more than half of global 2026 production of lithium, cobalt, and rare earths.
Three separate developments now sit at the centre of this story. Gulf aluminium producers curtailed millions of tonnes of output as both their inbound feedstock and their outbound exports were blocked simultaneously. Sulphuric acid, a foundational industrial chemical whose shortage almost no contingency plan anticipated, became the most acute physical constraint in critical mineral processing. And the IEA's Global Critical Minerals Outlook 2026, published in July, delivered a damning verdict on the policy response to all of it: the top three refining nations now control 86% of key mineral processing, up from 82% in 2020, despite more than $200 billion in government commitments.
These are not three separate stories. They are three expressions of the same structural problem: a global critical minerals supply chain built on concentration so deep that a single waterway can simultaneously interrupt the ore, the chemistry, and the finished metal that modern manufacturing depends on. The Strait of Hormuz is not just a shipping lane. It is, at this moment, the master chokepoint of the energy transition.
The Dual Squeeze on Gulf Aluminium
To understand why the aluminium disruption was so severe, it helps to think of a Gulf smelter as sitting at the centre of a two-way flow. Alumina, the refined bauxite feedstock from which aluminium is made, flows in through the Strait. Finished primary aluminium flows out through the same corridor. When the Strait closes, both directions are blocked at once. This is not a pricing squeeze or a logistics inconvenience. It is a physical shutdown.
Approximately 5.14 million metric tonnes of primary aluminium transited the Strait annually before the disruption, representing around 9 to 10 percent of total global primary output. Wood Mackenzie estimated that Hormuz disruptions could sever up to 60 percent of alumina supply reaching Middle Eastern smelters. Before that estimate could be fully stress-tested, it was overtaken by events. On March 28, Iranian missile and drone attacks struck Emirates Global Aluminium's Al Taweelah facility in Abu Dhabi and Aluminium Bahrain's smelter in Bahrain. EGA confirmed significant damage and a full production halt. Alba declared force majeure and shut roughly a fifth of its 1.6 million tonne per year capacity.
The production numbers that followed were stark. EGA's Al Taweelah alumina refinery produced 602,000 tonnes in the first half of 2026, against 1.14 million tonnes in the same period of 2025, a fall of approximately 47 percent. EGA does not expect full capacity restored until the end of the year. The LME cash market swung from a $12 discount to a $91.5 per tonne premium over three-month futures in the weeks after the strikes, and three-month aluminium futures briefly reached $3,571 per tonne, their highest since March 2022. IEA analysis links the Hormuz and Bab al-Mandab disruptions to a price move from around $2,500 per tonne to nearly $4,000 over a year.
Producers improvised to keep material moving. Dark transits through the Strait, trucking of alumina from Fujairah and Sohar, and a transhipment operation routed via India all provided partial workarounds, but at sharply elevated cost. The improvisation also underscores a point that procurement and finance teams have been slow to price in: resilience workarounds are expensive, slow, and finite. They buy time; they do not replace structural capacity.
The Sulphuric Acid Crisis: Chemistry as a Chokepoint
While the aluminium disruption was visible and immediate, the sulphuric acid crisis unfolded more slowly and is, in some respects, more consequential for the energy transition. Sulphuric acid is to critical mineral processing what concrete is to construction: so ubiquitous, so foundational, that its shortage does not slow the project, it stops it entirely. Roughly 60 percent of global acid output feeds fertiliser production; the remainder is essential for copper extraction, nickel leaching, lithium conversion, uranium processing, and semiconductor manufacturing.
Sulphur, the raw material for approximately 80 percent of sulphuric acid production, became the first casualty of the Hormuz closure. The Middle East accounts for roughly one-third of global sulphur production and approximately half of seaborne sulphur trade. When loaded vessels could not exit the Gulf, Kpler tracked more than 600,000 tonnes of stranded sulphur in April alone, with global sulphur exports falling 45 percent below late-February levels. S&P Global Platts assessed the FOB Middle East sulphur price at $695 to $700 per tonne by March 19, up $200 per tonne from pre-conflict levels.
China then added a second shock. In April 2026, Beijing announced a full export ban on sulphuric acid, effective from May and initially running through August, replacing a quota of 700,000 tonnes with a complete cessation. The rationale, explained by ING Bank's chief economist for Greater China, Lynn Song, was domestic food security: keeping acid at home to protect Chinese fertiliser production took priority over export revenues. From a Chinese policy perspective, the logic is coherent. From a global market perspective, the effect was a crisis multiplier. As analyst Syed Salman Shaffi put it, the Iran conflict created a shortage of raw materials, and China's export halt triggered a commercial drought. Russia's sulphur export ban, extended through June 2026 after drone strikes hit the Astrakhan facility, and Turkey's ban from April 2026 completed what analysts are calling a quadruple supply shock, the most acute sulphur disruption in a generation.
As I covered in detail earlier this year in my analysis of the Hormuz closure's chemical spillovers, the impact on critical mineral cost structures has been fundamental, not marginal. Sulphuric acid now accounts for approximately 11 percent of hard-rock lithium operating costs, up from around 3 percent before the disruption, making it the single largest cost component. For nickel produced via high-pressure acid leaching, sulphur now represents 42 percent of total costs, up from 26 percent. Indonesia, which accounts for more than 60 percent of global nickel production and sources around 75 percent of its sulphur from the Middle East, has seen major producers including Huayou cut output at Indonesian plants by approximately 50 percent. Benchmark Mineral Intelligence research manager Will Talbot has warned that the outstanding risk is that more critical minerals players cut production or shut down operations entirely. That is not a tail risk. For some operations, it is already the base case.
Concentration: The Policy Failure That Made Everything Worse
The Hormuz disruptions did not create a fragile supply chain. They revealed one that was already fragile. The IEA's Global Critical Minerals Outlook 2026, published in July, provides the most comprehensive accounting of how deep that fragility runs. The top three refining nations now control 86 percent of key mineral processing for copper, lithium, nickel, cobalt, graphite, and rare earth elements, up from 82 percent in 2020. Almost all supply growth over that period came from the dominant supplier in each category: Indonesia for nickel, China for everything else. For gallium, graphite, manganese, and rare earths, China alone accounts for over 90 percent of global refined supply.
This is the context in which the sulphuric acid crisis landed. Indonesia's HPAL nickel sector, now the world's largest, was built on a feedstock supply chain routed through Middle Eastern sulphur and Chinese acid exports. When both were disrupted simultaneously, there was no fallback. Indonesian buyers scrambled to source acid from Japanese and Korean smelters, competing directly with Chilean copper producers for the same by-product volumes. Replacement supply was real; it was not sufficient.
The IEA's analysis of why concentration has worsened despite massive policy effort is important. Public finance commitments in advanced economies reached around $65 billion in 2025, more than four times the 2023 level. More than 55 bilateral minerals agreements have been signed. Yet the report identifies a persistent structural imbalance: investment has gone disproportionately into mining rather than refining. Capital costs for refining projects outside the dominant supplier are 20 to over 150 percent higher than for incumbent producers, and operating costs average around 50 percent more. The economics are real, and they are not easily overridden by political intent. Building on my analysis of Europe's midstream processing gap from August, this is precisely the vulnerability that leaves manufacturers exposed even when the ore they use never touched Chinese soil: it is the refining step, not the mining step, that determines where supply security actually sits.
The copper market illustrates the midstream stress in a different way. Benchmark copper smelter treatment charges settled at zero dollars per tonne in 2026, the lowest ever agreed in annual negotiations, while spot charges have been negative since 2024. Zinc and lead smelter fees have also turned negative. This matters beyond copper. The IEA identifies base metal smelters as strategic processing hubs that enable recovery of critical by-products: gallium from zinc and aluminium, tellurium from copper and lead, germanium from zinc. When smelter economics deteriorate outside China, the entire by-product supply chain for these materials comes under pressure. Smelter utilisation outside China fell below 70 percent by 2025, against roughly 85 percent in China. The gap is widening.
National Security, the EV Transition, and the Tension That Nobody Has Resolved
The disruptions have exposed a specific and underappreciated vulnerability for the United States. The US domestic aluminium smelter base has a capacity of just 1.36 million tonnes, with primary production of only 670,000 tonnes and a net import reliance of 47 percent. Roughly 22 percent of US aluminium imports originate from GCC states. More significantly, the United States imports nearly all of its high-purity, defence-grade aluminium from the Middle East, material essential for aerospace, missile systems, and advanced manufacturing. That supply is not interchangeable with standard-grade imports from Canada. The Iranian attacks on EGA and Alba struck facilities that sit inside the US defence industrial supply chain.
The energy transition paradox is equally pointed. The supply chains most severely disrupted by the Hormuz closure are precisely the ones that battery manufacturers and EV programmes depend on. HPAL nickel, the chemistry of choice for high-energy-density batteries, requires more than ten tonnes of sulphur per tonne of nickel output. Lithium chemical conversion from hard-rock spodumene requires large acid volumes at every stage. High-purity manganese sulphate, used in manganese-containing battery chemistries, has 100 percent of its supply exposed to the sulphur shortage, according to Benchmark Mineral Intelligence. The energy transition is not just a consumer of critical minerals. It is a consumer of the industrial chemistry and logistics infrastructure that produces them, and that infrastructure is geographically concentrated in exactly the regions and supply chains that 2026 has shown to be vulnerable.
There is a further tension that corporate sustainability teams have not fully worked through. Gulf aluminium, produced in large part with cheap gas and expanding renewable energy integration, carries a lower carbon footprint than much of the alternatives available to Western buyers. A procurement team reducing Scope 3 emissions by shifting to Gulf metal was, until this year, pursuing both a sustainability goal and a cost goal simultaneously. The Hormuz disruption has demonstrated that the same sourcing decision also concentrates geopolitical risk in a single corridor. Sustainability strategy and supply-chain resilience strategy, which pointed in roughly the same direction for years, are now pulling against each other.
What Comes Next
There are no fast fixes here, and it is worth being direct about that. New sulphuric acid capacity and alternative shipping routes take years to develop. The IEA estimates the net annual cost of strategic stockpiling for eleven high-risk minerals at less than $900 million for countries outside the dominant supplier, a modest figure relative to the economic disruption a shortage can cause, and the 2026 Outlook recommends exactly that. But stockpiles buffer existing supply chains; they do not change the underlying concentration. The structural work required is building refining and processing capacity outside China at a scale and pace that current investment trajectories do not support. Critical mineral investment fell nine percent in 2025, the first decline after several consecutive years of growth, with battery metals bearing the sharpest cuts: lithium company investment fell around 40 percent, and nickel and lithium exploration spending each fell roughly 45 percent. That is movement in the wrong direction.
The diplomatic picture remains unresolved. The plausible paths back toward balance in sulphur and acid markets are a de-escalation that restores Gulf sulphur flows, a rollback of the Chinese, Russian, and Turkish export restrictions, or a cooling of demand. Until several of those conditions move together, most analysts expect elevated prices and unpredictable lead times to persist through at least the end of 2026. For aluminium, EGA has indicated that full restoration of Al Taweelah could take up to a year from when hostilities end, meaning much of the lost 2026 supply is not recoverable regardless of when a ceasefire arrives.
For policymakers, the 2026 disruptions have done something that years of reports and warnings could not: they have made the abstract concrete. Concentration in refining is not a theoretical risk metric in a supply security index. It is the reason a conflict in the Middle East can simultaneously cut the nickel Indonesia feeds to EV batteries, the acid Chile needs to produce copper, and the aluminium the US defence industrial base depends on. The IEA's observation that the conflict provided a stark reminder of supply chain vulnerabilities is accurate, but understated. It was not a reminder. It was a demonstration. Whether governments and industry respond with the structural investment the situation requires, or manage the immediate crisis and return to pre-crisis assumptions, will determine whether this year's disruptions are treated as a warning or merely as an episode.
Conclusion
The Strait of Hormuz will eventually reopen to normal commercial traffic. When it does, there will be pressure to treat the sulphuric acid crisis, the Gulf aluminium curtailments, and the critical minerals disruptions as geopolitical accidents: severe but temporary, attributable to a specific conflict rather than to the structure of global supply chains. That interpretation would be wrong, and the IEA's 2026 Outlook provides the evidence to counter it. Concentration has deepened over six years of policy effort and $200 billion in commitments. The Hormuz disruption did not create the vulnerability; it illuminated a vulnerability that was already there and getting worse.
The more useful frame is to treat 2026 as a stress test that produced results. The test showed that sulphuric acid is a critical material that appears in no critical materials list. It showed that smelting infrastructure outside China is under economic pressure that will, without intervention, drive further concentration into the dominant supplier. It showed that a single waterway can simultaneously interrupt ore, feedstock chemistry, and finished metal supply for the same downstream industries. And it showed that the policy architecture built to manage these risks, bilateral agreements, government pledges, diversification targets, did not perform as intended when the shock arrived.
The question for governments, investors, and procurement teams is whether the architecture gets rebuilt around what 2026 actually demonstrated, or around what pre-crisis assumptions had predicted. The answer to that question will shape the critical minerals supply chain for the next decade.