The 2026 US/Israel war with Iran is transmitting risk into global mining and metals markets less through direct supply disruption and more through chokepoints and cost escalation.
While the conflict, which began on 28 February, is centred on Iran, Israel and several Gulf countries, its effects are being transmitted globally via higher energy prices, shipping disruption, rising insurance costs and increased uncertainty across commodity supply chains. For the mining industry, the primary risk is not widespread production loss, but a sustained increase in operating and processing costs.
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However, recent developments indicate the conflict has already moved beyond cost pressures into sustained disruption of processing capacity, particularly in aluminium smelting.
A key transmission channel is the Strait of Hormuz, one of the world’s most strategically important maritime chokepoints. The Strait handled an average of 20 million barrels per day of crude oil and petroleum products in 2025, accounting for roughly 25% of global seaborne oil trade. Any disruption to flows through this corridor affects not only energy markets, but also the movement of industrial inputs and refined metals.
As security risks rise, mining companies are facing higher fuel bills, longer shipping times, tighter freight availability and elevated marine insurance premiums. These pressures are feeding directly into cost structures across both upstream mining and downstream refining.
The conflict is also reinforcing an existing structural weakness: mining supply chains remain highly exposed to concentrated trade routes and energy markets. In this environment, the industry is likely to see a stronger strategic push toward supply diversification, localised processing, renewable power integration and reduced diesel dependence. While the immediate market response has focused on oil price volatility, the more significant medium-term effect is likely to be increased investment in operational resilience.
Mining, processing and refining
Iran’s mining and metals sector is facing growing pressure from infrastructure disruption, power constraints and export bottlenecks. Even where mine assets remain operational, interruptions to electricity supply and industrial support systems are likely to reduce utilisation rates across energy-intensive activities such as copper smelting, steelmaking and aluminium production. At the same time, deteriorating shipping conditions are constraining export flows and delaying the movement of processed metals into international markets.
The impact is more pronounced in refining and processing than in mine production. Smelters and refineries are highly sensitive to energy availability, imported feedstock and uninterrupted logistics. As a result, prolonged disruption weakens the reliability of refined metal supply even where upstream extraction continues. This distinction is critical: disruptions at the processing stage tend to transmit more quickly into pricing, procurement decisions and downstream manufacturing activity. Recent attacks on Gulf smelting infrastructure reinforce this dynamic, demonstrating that processing assets — not mines — are emerging as the most immediate point of failure in the current conflict.
Unlike mining, which continues to operate in most regions, smelting disruptions are immediate and binary, with outages translating directly into lost refined supply.
Iron ore
The effect of the war on iron ore markets is likely to be driven more by cost inflation than by direct supply loss. Iran produced 61 million tonnes (mt) of iron ore in 2025, representing around 3.8% of global output according to the USGS, but the larger market impact lies in fuel and freight dynamics rather than lost volumes.
Iron ore mining is highly diesel-intensive across extraction, hauling and transport. Sustained increases in oil prices therefore translate directly into higher operating costs. In parallel, shipping delays and rising insurance costs linked to disruption in the Strait of Hormuz are increasing the cost of moving bulk commodities. For large-scale open-pit producers, this places pressure on margins and reinforces the longer-term shift toward electrification, renewable integration and reduced diesel dependence.
Logistics constraints compound this effect. Any rerouting of shipments around longer maritime pathways, such as the Cape of Good Hope, extends transit times and delays the delivery of mining equipment, consumables and industrial inputs. The result is a broad-based increase in cost and complexity across iron ore supply chains rather than a direct supply shock.
Aluminium
Aluminium is one of the metals most exposed to the combined effects of energy disruption and logistics constraints. The Middle East accounts for around 9% of global aluminium production, with major producers in the UAE, Bahrain, Saudi Arabia, Qatar, Iran, Oman and Egypt. According to the USGS, the UAE and Bahrain produced approximately 2.7mt and 1.6mt of primary aluminium respectively in 2025.
In Iran, aluminium production is already constrained by electricity shortages, gas supply limitations and financial pressures. Output reached 552,200 tonnes during the first 11 months of the 2025 financial year, down 5.2% from 582,200 tonnes in the same period of FY24, against installed capacity of around 650,000 tonnes per year. Further disruption to power supply, imported inputs or industrial continuity would increase the risk of deeper curtailments.
The conflict has now moved beyond structural exposure into active supply disruption. Iranian strikes have damaged major Gulf smelting operations, including Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba), forcing output reductions and temporary shutdowns. Combined affected capacity is estimated at roughly 3mt per year, representing a meaningful share of global supply.
Gulf producers including Aluminium Bahrain and Qatalum have declared force majeure or initiated controlled shutdowns, with restarts expected to take six to 12 months, indicating that disruption is likely to persist rather than resolve quickly.
More broadly, aluminium smelters across the region depend on stable imports of alumina and other raw materials, as well as uninterrupted energy supply. Disruption in the Strait of Hormuz is therefore affecting both input availability and cost structures. Delays in raw material inflows, higher freight and insurance costs, and operational inefficiencies are tightening margins and increasing the risk of further temporary shutdowns.
The aluminium market entered the conflict in a structurally tight position, with inventories already near historic lows, amplifying the impact of production outages and logistics disruption.
As shipping, insurance and port access constraints persist, delays risk converting into outright supply loss, particularly for export-oriented producers dependent on uninterrupted trade flows.
The Gulf’s role as a major export hub amplifies these effects, with disruptions feeding directly into supply shortages in key import markets such as Europe and the United States.
Market signals reflect this shift, with aluminium prices rising sharply following the attacks and physical supply concerns intensifying.
Nickel, lead and zinc
The conflict also affects nickel, lead and zinc through the sulphur market, creating a secondary transmission channel linked to energy disruption. Sulphur, a by-product of oil and gas refining, is a critical input for sulphuric acid production, which is in turn essential for processing several base metals.
Disruption to Middle Eastern refining affects both sulphur production and trade availability, tightening supply and increasing costs. For zinc and lead, where sulphuric acid is a key processing reagent, this raises refining costs and risks constraining output where smelters rely on imported inputs.
For nickel, the implications are particularly significant in high-pressure acid leach operations, which require large volumes of sulphur to produce mixed hydroxide precipitate for battery supply chains. Indonesia, the world’s largest nickel producer, imports around 75% of its sulphur requirements from the Middle East. This creates a direct transmission channel from regional conflict to global battery metal supply. Any sustained tightening in sulphur availability would increase processing costs, weaken project economics and potentially slow the pace of supply growth.
Commodity price volatility
The conflict is contributing to commodity price volatility, but the impact varies by exposure to energy, refining inputs and trade routes. Aluminium, copper and nickel are more vulnerable to sustained cost pressure and supply disruption at the processing stage, while bulk commodities such as iron ore are more exposed to margin compression driven by rising input costs. Among major metals, aluminium is currently showing the clearest signs of a physical supply shock rather than purely cost-driven volatility.
Aluminium is now exhibiting the clearest signs of a physical supply shock, with production outages, contract disruptions and low inventories reinforcing upward price pressure.
More broadly, the conflict is highlighting the structural vulnerability of globally interconnected mineral supply chains. Metals depend heavily on seaborne trade, port access and specialised processing infrastructure, making them particularly sensitive to geopolitical chokepoints. This is likely to result in a more risk-sensitive pricing environment, especially for metals linked to industrial manufacturing and energy transition technologies.
At the same time, the conflict may deepen the strategic importance of China within global mineral supply chains. As economies respond to energy insecurity by accelerating electrification and renewable deployment, dependence on existing processing hubs is likely to increase. This creates a dual challenge for consuming nations seeking to balance energy security with mineral supply resilience.
Broader disruption to oil and gas markets is also shaping industrial responses, particularly in Asia. Countries facing fuel supply constraints are adjusting consumption patterns, prioritising essential sectors and, in some cases, turning to coal and nuclear power to stabilise electricity supply. These shifts have direct implications for mining and metals, as changes in the energy mix affect production costs across energy-intensive commodities.
In markets such as India, higher petrol and diesel prices may accelerate interest in electric mobility and alternative energy systems. However, in systems where coal continues to dominate power generation, short-term responses may increase reliance on fossil fuels even as electrification advances. For the mining sector, this reinforces a central paradox: near-term disruption is raising dependence on conventional energy sources while strengthening the longer-term case for electrification, renewable integration, greater energy independence and domestic energy security.
