Andy Home: A tungsten-tipped solution to the West's metals crisis

The war for critical minerals is intensifying.

China's response, to President Donald Trump's 10% increase in tariffs on Chinese imports, includes a restriction of exports for five more esoteric elements of the periodic chart.

Exports of molybdenum (molybdenum), tungsten, tellurium, and bismuth will be permitted only with Ministry of Commerce approval. These metals will not be used for military purposes.

This is a major problem, especially for tungsten.

As my colleague Clyde Russell argues, in a world with almost every metal being critical to someone, this word could be losing its meaning.

For lack of a more appropriate word, tungsten, as a component of 21st century industrial supply chains, is critical for both the civilian and military sectors.

It is so critical that users are now adopting new pricing mechanisms in order to ensure non-Chinese supplies.

GREEN AMMO

Tungsten is the hardest element and has the highest melting temperature. It also has excellent electrical and thermal conductivity.

Metal is used for a wide variety of applications.

Tungsten carbide, the second hardest material in the world after diamond, is used to drill all types of metals from mines to machining. Tungsten crucibles can melt almost any element.

Metal has slowly seeped into the telecoms, electronic, semiconductor, and power sectors.

Tungsten has a relatively small market, with a global production of less than 100,000 metric tonnes and an estimated value around $5 billion by 2023. The industries that rely on it are much larger, and this is why it's on everyone's list of critical minerals.

The military uses it for high-density projectiles that penetrate armour.

Tungsten is the most environmentally friendly option for a battlefield because it can only be matched by depleted Uranium.

It is also in great demand in Ukraine.

DECOUPLING

According to the U.S. Geological Survey, China dominates the tungsten industry, with 83% of the global mine production last year of 81,000 tonnes.

Tungsten mining has been discontinued in the United States commercially since 2015. The country is heavily dependent on imports. Last year, 37% came from China.

In December of last year, the Joe Biden Administration began to wean U.S. businesses off their dependency on Chinese tungsten by imposing a 25% import duty.

The U.S. Military faces a deadline of 2027 for stopping any purchases made by the military from tungsten mined or manufactured in China and Russia, the third largest producers on earth.

Defense Logistics Agency has tungsten concentrate in stock and can purchase up to 2,040 more tons in the current fiscal period to September 2025.

Fireweed Metals Corp., a Canadian company, has received $15.8 million from the Department of Defense to help accelerate the development of Mactung's tungsten mine.

The money will go towards test work and feasibility studies, so it may be some time before the final decision is made, let alone a production.

No Downside

The West's tungsten fortunes are heavily dependent on the restart of South Korea's Sangdong Mine until the DoD money in Yukon can produce results.

Sangdong, once the crown jewel of the mining industry in Korea, closed in the 1990s due to low prices.

Almonty Industries is reactivating the plant, with a first phase of 2,300 tons per year already underway. In 12 months, a second phase with a similar capacity could be added.

Global Tungsten & Powders (the U.S. division of Austria's Plansee Group) has committed all of the production in the first phase.

The contract stipulates a floor price of $235 for each metric ton (mtu), based on the price of ammonium tungstate. There is no upper limit. The current price per mtu is $342.50.

In the mining industry, floor prices are not uncommon. However, they usually come in fancy financial hedging programs paid for by producers.

There is no tungsten futures market, so this contract is unique. Or almost unique. Almonty pulled off the exact same trick when it launched its Sangdong Molybdenum Project, locking in an initial price of $19 a lb for SeAH M&S - Korea's biggest processor.

It is hoped that this will protect the projects against the destructive Chinese supply boom, which is currently affecting battery metals like lithium, nickel and cobalt. Battery-metal startups have been smashed by low prices because they lack any price floor protection.

At What Cost?

Almonty might not need to worry about the floor price if China stops supplying tungsten to the West.

It is important to note that although there is not yet an outright ban, the export of germanium, antimony, and gallium was all subjected to special licensing before Beijing imposed a ban on all three.

Antimony prices have soared from $11,000 to $47250 per kilogram since the beginning of 2024, as buyers compete for non-Chinese materials at any cost.

Plansee Group's grant of what is essentially a free put on Amonty tungsten production is a testament to its belief that Sangdong tungsten will be critical to the non Chinese tungsten markets.

Other critical mineral users should learn that depending on the market price alone to guarantee supply won't ensure you get what you need.

These are the opinions of the columnist, who is also an author. (Editing by Barbara Lewis).

(source: Reuters)