Strait of Hormuz Disruption: Will Mining Prices Actually Rise?

Sean Brazney: I’m seeing information about sulfuric acid, and because of the closure in the Strait of Hormuz that closure is going to cause some tightening on the supply of sulfuric acid. As we know, sulfuric acid is widely used in the mining sector. So now, I’m seeing online that people are pushing this idea that there’s going to be a disruption in mine production, lower production, higher prices. Do you see any data that points to that?

Jeffrey Christian: Some data that points to it, but there’s more data that points in the other direction. The reality is that there is a lot of sulfuric acid that’s been being produced in the GCC region in the Persian Gulf, and has been coming through the Straits of Hormuz, and that has been… that supply has been interrupted. But sulfuric acid is relatively easy to make and it’s made from very common materials. In addition to which, if you’re mining say an open pit mine or underground and it has sulfide ore, you’re going to be stripping that sulfur out of the ore as you process it. The traditional resolution for dealing with that byproduct sulfur is to use water and produce sulfuric acid, and then either sell it or dump it into a limestone quarry where it will interact with the limestone and neutralize itself. So, there’s a lot of sulfuric acid around, it’s easy to make, it’s easy to build and prepare the kinds of chemical vessels that are required to make it, and they’re relatively low cost. So, I don’t think that the sulfuric acid shortage will be critical either to the mining industry or to the myriads of other industries that use sulfuric acid in their processes.

Sean Brazney: Appreciate the information. As always, it’s a pleasure to have you with us. I think it’s very valuable info for our listeners and our viewers, and reminding everybody to call Monex to get your free report today. Thanks for being with us today, Jeffrey.