Column: A tungsten-tipped answer to the West’s critical metals dilemma

 The critical minerals war is escalating.

China’s response to US President Donald Trump’s 10% tariff hike on Chinese imports includes restricting exports of another five esoteric components of the periodic table.

Exports of bismuth, indium, molybdenum, tellurium and tungsten will only be allowed subject to Ministry of Commerce approval they will not be used in military applications.

That’s a big problem for tungsten in particular.

In a world where just about every metal is critical for someone, the word may be losing its meaning, as my colleague Clyde Russell has argued.

But, for want of a better word, tungsten is a critical component of the 21st-century industrial supply chain, both civilian and military.

So critical indeed that users are starting to embrace new pricing mechanisms to guarantee non-Chinese supply.

Green ammo

Tungsten has the highest melting point of any element, is extremely hard and has good electrical and thermal conductivity.

The metal lit up the last century in the form of the incandescent light bulb and is now used in an extraordinarily wide range of applications.

Tungsten carbide is the hardest material after diamond and its use in drills spans every other metallic supply chain from mine to machining. Tungsten crucibles make it possible to melt just about any other element.

The metal has seeped stealthily into telecoms, electronics, semiconductor and power sectors.

Tungsten is a small market with global output of just over 100,000 metric tons and an estimated value of around $5 billion in 2023. But the industries that depend on it are exponentially bigger, which is why it is on everyone’s critical mineral list.

It is also the material of choice for what the military calls penetrators – high-density, armour-piercing projectiles.

The only other material that can match its kinetic performance is depleted uranium, which makes tungsten the environmentally friendly battlefield option.

And one that is in high demand in Ukraine.

Decoupling

China dominates the tungsten market, accounting for 83% of last year’s global mine production of 81,000 tons, according to the US Geological Survey.

Tungsten has not been mined commercially in the United States since 2015 and the country relies heavily on imports, 37% of which came from China last year.

The Joe Biden administration kick-started the process of weaning US companies off their dependence on Chinese tungsten with a 25% duty on imports from China imposed in December last year.

The US military faces a 2027 deadline for halting any purchases of tungsten manufactured or mined in China or Russia, which is the world’s third largest producer.

The Defense Logistics Agency holds stocks of tungsten concentrate and is in the market for up to 2,040 tons more in the current fiscal year to September 2025.

The Department of Defense has awarded $15.8 million to Canada’s Fireweed Metals Corp to accelerate the development of the Mactung tungsten mine in Yukon.

The money will fund test work and a feasibility study, which suggests it will be a while before a final go-ahead decision, let alone production.

No downside

Until the DoD’s money can deliver results in Yukon, the West’s tungsten fortunes hang largely on the restart of the Sangdong mine in South Korea.

Sangdong was once the jewel in the country’s mining crown but closed due to low prices in the 1990s.

It is being reactivated by Almonty Industries, with commissioning of the first 2,300-ton per year phase already in progress. A second phase of similar size could follow 12 months down the line.

All of the first-phase production has been committed to Global Tungsten & Powders, the US arm of Austria’s Plansee Group.

The contract comes with a minimum floor price of $235 per metric ton unit (mtu) basis the price of ammonium paratungstate and no upside cap. The current price is $342.50 per mtu.

Floor prices are by no means uncommon in the mining industry but normally they come in the form of fancy financial hedging programs paid for by the producer.

But there is no futures market in tungsten, which makes this particular contract unique – or almost unique: Almonty has pulled off the same trick with its Sangdong molybdenum project, locking in a hard floor price of $19 per lb with SeAH M&S, Korea’s largest processor.

The idea is to insulate the projects from the sort of destructive Chinese supply surge that is playing out in battery metals such as lithium, cobalt and nickel. Lacking any floor price protection, battery-metal start-ups have been crushed by low prices.

At any cost?

Almonty may not have to worry too much about floor prices if China starts choking off the supply of tungsten products to the West.

Although there is no outright ban yet, it is worth noting that germanium, gallium and antimony all got the special licensing treatment before Beijing put a total ban on exports of all three to the United States.

As buyers scramble for non-Chinese material at any price, antimony has rocketed to $47,250 from $11,000 per kilogram at the start of 2024.

Plansee Group’s granting of what is in effect a free put option on Amonty’s tungsten output bears testimony to how critical it thinks Sangdong’s output will be to the non-Chinese tungsten market.

The lesson for other critical mineral users is that relying on market prices alone to ensure supply will not guarantee you get the stuff you really need.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Barbara Lewis)