Hormuz closure is business opportunity for Ivanhoe

Canada-based Ivanhoe Mines stands to benefit from any sulphuric acid shortage caused by prolonged closure of the Strait of Hormuz now that the company is running a copper smelter, according Co-Chairman Robert Friedland. The 500,000 t/a direct-to-blister smelter at company-operated Kamoa-Kakula mine in the Democratic Republic of Congo produced its first anodes at the turn of the year.

“Kamoa-Kakula is ideally positioned as a producer and seller, and therefore not a consumer, of sulphuric acid … which we sell to oxide copper mining operations in the DRC Copperbelt,” he said. Commenting on a wider impact of the Strait’s closure during war in the Middle East, Friedland said it is likely to have a profound effect on global supply chains. “Therefore, contingency plans have been drawn up across Ivanhoe’s operating sites to sustain their operations, including advanced diesel purchases. Our mine-site managers are prudent, and optimistic that we are well-positioned,” he added.

“If the closure of the Strait of Hormuz continues, we are especially concerned about the availability of precursor materials necessary for the mining industry to continue operating. A second, derivative effect will be on global copper production due to the shortage of the world’s most important industrial chemical, sulphuric acid. Approximately 20% of global copper supply relies on a process that uses sulphuric acid to leach copper from oxide ores. With approximately 50% of the global seaborne sulphur supply cut off, sulphur and sulphuric acid markets are becoming extremely tight.”

Friedland made his comments in Ivanhoe’s Q1 production report. Kamoa-Kakula’s smelter produced 63,671 tonnes of copper anodes and 117,871 tonnes of sulphuric acid during the quarter. The on-site smelter is targeting production of around 850 t/d, equivalent to an annualised rate of 300,000 tonnes of copper, which is 60% of design capacity.

“Further ramp-up of the smelter is constrained by concentrate feed. Management is currently evaluating the purchase and toll treatment of local third-party copper concentrates to further advance the smelter ramp-up and improve margins,” the company said. The mining complex is 39.6% owned by Ivanhoe Mines, 39.6% by the Zijin Mining Group of China, 20% by Gecamines, the DRC’s state-owned mining company, and 0.8% by Crystal River Global.