China holds a dominant position in the global supply chain of critical minerals, including tungsten. Tungsten, known for its hardness and high energy density, plays a crucial role in various industries such as weapons, autos, electric car batteries, semiconductors, and industrial cutting machines. Companies like Taiwan Semiconductor Manufacturing Company and Nvidia rely on tungsten for their operations. Despite China’s grip on the tungsten market, concerns about diversification efforts have been raised.
While the Biden administration imposed tariffs on tungsten imports in May, China did not include tungsten in its latest regulatory measures for rare earths production. Although there are growing efforts to diversify away from Chinese tungsten, the Chinese government remains unfazed by the new tariffs. Calls for the removal of additional duties by the U.S. have been made, highlighting the importance of diplomatic relations in the tungsten market.
The U.S. and Europe have been pushing for China-free supply chains, with legislations like the U.S. REEShore Act and European Commission tariffs on Chinese tungsten products. The recognition of the need to secure non-Chinese tungsten sources reflects the changing dynamics in the global tungsten market. Prices have surged due to rising demand and limited supplies, prompting strategic assessments of future tungsten supplies outside of China.
The U.S. faces the prospect of transitioning from a net seller to a buyer of tungsten in the near future, as stockpiles dwindle and domestic production remains scarce. With only a few companies capable of producing tungsten in the U.S., the reliance on overseas sources for tungsten supply creates vulnerabilities in the national security framework. Efforts to establish tungsten projects outside of China have struggled to materialize, emphasizing the long-term planning required in the mining industry.
As China continues to dominate the tungsten supply chain, potential opportunities for projects outside of China have emerged. Countries like South Korea have attracted investments in tungsten manufacturing facilities, signaling a shift towards diversification in the industry. The pursuit of tungsten production in regions beyond China represents a strategic response to the challenges posed by China’s stronghold on critical minerals supply chains.
The global tungsten market is at a critical juncture, with China’s dominance raising concerns about supply chain security and strategic dependencies. While efforts to diversify away from Chinese tungsten sources are gaining momentum, the challenges of establishing viable alternatives remain significant. As countries navigate the complexities of the tungsten industry, collaborative initiatives and investments in non-Chinese tungsten projects are essential for ensuring a sustainable and secure supply chain for critical minerals.