Tungsten, a critical metal prized for its hardness and high melting point, is an essential component in various industries, including defense and technology. Known for its applications in manufacturing weapons and semiconductors, tungsten has been predominantly sourced from China, which has historically controlled around 80% of its global supply. However, with rising geopolitical tensions and the announcement of export limitations by China, the landscape of tungsten sourcing is poised for significant change.
As of December 1, China will enforce new regulations that restrict the export of tungsten, along with other critical materials classified as “dual-use.” This designation indicates that the metals can be utilized for both civilian and military purposes. According to recent reports, businesses desiring to export tungsten must now acquire licenses, thereby tightening access to this vital resource.
This decision appears to be driven by a confluence of factors, ranging from trade wars with the United States to a broader shift in global supply chain dynamics. The impending bans on U.S. military contractors from purchasing Chinese-sourced tungsten further underscore the urgency of establishing alternative supply routes. The shifting policy not only affects importers but also sends ripples throughout the entire tungsten market.
Despite China’s attempts to regulate tungsten exports, analysts argue that this could accentuate the demand for tungsten sourced from other countries. The United States has already implemented a 25% tariff on Chinese tungsten imports, reflecting a protective stance toward domestic industries. Many industry experts speculate that these tariffs may catalyze a revival in mining activities across North America, where a significant number of untapped tungsten resources remain.
While the immediate reaction to the announcement of export limitations has been mild, experts like Christopher Ecclestone from Hallgarten & Company argue that the real implications of China’s ban are yet to unfold. The intrinsic value of tungsten could rise if mining operations outside of China ramp up. Notably, current prices hovering at approximately $335 per metric ton indicate that for mining operations to be economically viable, prices must significantly increase.
In response to the tightening grip of Chinese tungsten on the global market, other nations are mobilizing to establish alternative sources of tungsten. One notable example is the Sangdong mine in South Korea. Once closed in 1994, the mine is on the verge of resuming operations, backed by extensive investments and collaborations with local governments aimed at enhancing industrial viability in the region. The strategic reopening of the Sangdong mine, alongside similar projects in Canada and Australia, reflects a concerted effort to diversify global tungsten supply chains.
The Canadian company Almonty Industries is spearheading the revival of the Sangdong mine, with ambitious goals to restore half of its capacity by 2025. This approach not only highlights the potential for increased production but also emphasizes the need for cooperation among nations to reduce dependency on a singular supplier.
The future of tungsten will heavily rely on strategic partnerships and collaborative efforts between nations. For instance, Almonty’s initiatives include a long-term supply contract, pledging a significant portion of the Sangdong mine’s output to U.S. markets. Such agreements are crucial in ensuring that the U.S. can recuperate some of its lost tungsten production capabilities, given that the country has not engaged in serious tungsten mining since 2015.
Interestingly, despite the challenges, the U.S. Geological Survey has identified around 100 active tungsten sites across several states, setting the stage for potential future production. States such as Idaho and California could become integral players in the tungsten market, provided they effectively capitalize on these resources.
As the global tungsten market faces unprecedented shifts, stakeholders must remain vigilant and proactive. While U.S.-China tensions and policy changes pose obstacles, they also present an opportunity for diversification within tungsten supply chains. The transition from dependency on Chinese tungsten to a more multifaceted sourcing strategy will be pivotal in shaping the metal’s availability in the coming years.
In the face of these transformations, the rise of new tungsten production initiatives in places like South Korea, Canada, and potentially the U.S. suggests that the landscape is set for evolution. As demand for tungsten continues to grow, the global market may gradually restore balance, allowing for a more stable and resilient international resource network.