How China's Sulphuric Acid Ban Will Impact EV batteries

China's export halt on sulphuric acid is creating bottlenecks in battery supply chains and could raise costs for EV production.

This decision removes flexible global supply at a time when nickel processing and copper extraction face mounting input constraints.

The drying up of Chinese sulphuric acid could tighten availability of a chemical used across metals extraction and battery material processing.

Battery material processing at risk

Nickel processing in Indonesia depends on stable sulphur inputs. Sulphur is the primary feedstock for sulphuric acid.

Indonesian nickel processor Tsingshan operates facilities that supply battery-grade nickel to manufacturers, including China's EV battery maker CATL.

Disruptions at this stage could increase costs for EV production and energy storage systems. Battery supply chains already face pressure from raw material bottlenecks and refining capacity constraints.

Peter Harrisson, Principal Analyst at CRU, writes on LinkedIn: "Acid traders are experts in problem solving but not all of this problem will be solved. The loss of Chinese trade cannot be replaced with other origins. Exports will be lower and imports will adjust to that. How and where are the real questions."

China is set to stop exports from May as it looks to prioritise domestic demand.

This follows a year of record exports in 2025.

Much of China's export capacity comes from acid produced as a by-product of copper and zinc smelting. The restriction is hyper relevant for global metals markets that supply battery and EV manufacturing, including for companies based in China. 

Middle East disruption

Conflict in Iran has disrupted sulphur shipments from the Middle East. The region accounts for roughly one third of global output and a substantial share of seaborne trade.

As sulphur is the primary feedstock for sulphuric acid, the upstream shock has intensified downstream shortages.

Around 60% of sulphuric acid is used in fertiliser production. The rest supports metals extraction, oil refining and advanced manufacturing.

Nickel processing in Indonesia relies on acid for leaching operations that produce battery-grade material. Supply tightness could mean higher input costs for refiners and delays in material availability for cell manufacturers.

According to the Nickel Institute, Tesla uses 90% nickel, 5% manganese and 5% cobalt for its batteries. It is one of many examples of carmakers who could be hit by the downstream effects of pausing of Chinese sulphuric acid. 

Copper shortages threaten EV components

Copper is used in EV motors, wiring harnesses and charging infrastructure. According to industry analysts, copper and silver are each in short supply for current levels of demand.

Chile produces the most copper globally and depends on imported sulphuric acid for oxide processing. 

Prices are rising and supply shortages could limit output of a metal used in EV wiring and charging infrastructure.

Codelco, the largest copper producer, uses sulphuric acid in its leaching operations. BHP and Anglo American hold assets in Chile and face similar exposure as input costs climb and supply tightens.

Sasa Jarvis, National Co-Leader of Mining and Partner at McMillan, writes on LinkedIn: "If China is indeed curbing sulphuric acid exports, this could quietly reshape metals markets, particularly when sulphur from the Middle East is subject to severe shipping risks through the Strait of Hormuz.

"Acid leaching is required for much of global copper and nickel production - and impacts silver supply by extension given the amount of silver produced as a byproduct in copper mining. Copper and silver are each in short supply for current levels of demand already."

Freeport-McMoRan is vulnerable to the broader market squeeze. The company produces copper used in electrical applications including EV components.

Rising costs for copper cathodes could mean higher prices for automakers and charging network operators.

Supply constraints in Chile could limit availability of a metal that battery electric vehicles use in higher volumes than internal combustion vehicles.