(Financial Times Europe, Simon Mundy, 23 Apr 2026)
The conflict around the Strait of Hormuz is strengthening the long-term push towards renewable energy and electric vehicles, but it is also creating immediate challenges for companies in these sectors, especially for nickel refiners in Indonesia, the world’s largest producer of this essential metal for electric car batteries. The Indonesian government has raised the minimum price for purchasing nickel ore to cope with the fiscal impact of soaring oil prices and the additional $5.9 billion in fuel subsidies, while refiners already hit by the war depend on sulfuric acid derived from sulfur, a by-product of oil and gas processing mainly imported from the Gulf, thus suffering a sharp price increase and supply tightening that has forced some to reduce production.
Besides nickel, sulfuric acid is also crucial for processing other metals for clean energy such as copper, cobalt, and lithium, as well as for phosphate-based fertilizers, creating a problematic dynamic in which the energy transition and global food security compete for the same chemical through the same disrupted strait, as highlighted by the Atlantic Council. This underscores the partial dependence of the clean energy sector on the fossil fuel industry it seeks to replace, making it vulnerable to external shocks.
Another example is manganese, a key ingredient for electric car batteries, whose extraction and transport in major producers like Gabon and South Africa heavily depend on diesel: rising fuel prices could increase production costs by up to 8%, threatening the profitability of many miners already operating with tight margins. Aluminum, also produced significantly in Gulf states such as the United Arab Emirates, Bahrain, Saudi Arabia, and Qatar, suffers direct hits from Iranian missiles and drones, with the virtual closure of the Strait blocking both exports and raw materials, pushing metal prices up by 10% and severely impacting solar module manufacturers, where aluminum frames account for over 10% of the product cost.
Dependence on fossil fuels in clean metal production
“Their industrial process makes heavy use of sulfuric acid, derived from sulfur that is mainly produced as a by-product of oil and gas processing. Most of Indonesia’s sulfur imports normally come from suppliers in the Gulf, leaving its refiners severely exposed to supply tightening and price spikes caused by the US-Israeli war with Iran.”
Competition between clean energy and food security
“We now have an ugly dynamic where ‘the energy transition and global food security are competing for the same chemical, through the same disrupted strait,’ as Alvin Camba of the Atlantic Council said.”
Rising costs for manganese
“If cost increases exceed gains on ore prices, a substantial portion of manganese production […] could become unprofitable,” warned Princess Rochelle Gan of S&P Global Market Intelligence.
Problems for solar module manufacturers
“This is a particular problem for solar module manufacturers, who use aluminum frames that represent more than 10 percent of the product cost, according to a recent industry estimate.”
Structural advantage for clean technologies
“This is seen as short-term pain for all but structurally beneficial for clean technology,” said Antoine Vagneur-Jones of BloombergNEF. “There’s a reason why the stock price of practically every single Chinese clean energy producer has risen.”
(Excerpt from the newsletter by Giuseppe Liturri)
