As geopolitical tensions escalate, China has announced significant limitations on tungsten exports that could reshape the global metal market. Effective December 1, the new regulations require companies seeking to export tungsten to apply for licenses, marking a notable shift in a country that previously dominated the tungsten supply chain. Historically, Chinese firms have underpriced tungsten to gain market share, leading to a staggering 80% control over the global supply, according to analysts from Argus. This article delves into the implications of these restrictions amid rising demand for tungsten as alternatives to Chinese supply begin to emerge.
Tungsten holds strategic importance due to its applications in both military and civilian sectors. Its exceptional hardness makes it vital for manufacturing weapons, electronics, and semiconductors. As the U.S. implements a ban on contractors sourcing tungsten from China by 2027, it signals a growing concern over national security and reliance on single-source suppliers. This is not merely a market adjustment but part of a broader strategy to diversify supply chains in the face of geopolitical uncertainties, which highlights the heightened significance of tungsten as a critical mineral.
Christopher Ecclestone, a noted mining strategist, indicates that China’s export ban, while timely, is not enough to curb global demand. He asserts that the urgency for more tungsten arises not solely from the Chinese restrictions but also from the profitability of mining operations. Current tungsten prices hover around $335 per metric ton, but Ecclestone estimates that a price increase of at least $50 is necessary for substantial mining operations to become viable. As U.S. tariffs on Chinese tungsten also rise and public sentiment favors these tariffs, domestic producers may see an opening for revival.
The U.S. has not commercially mined tungsten since 2015, but current developments indicate a potential renaissance for domestic production. One prominent project is the Sangdong mine in South Korea, which, after years of inactivity, is set to resume operations. Almonty Industries, based in Canada, is making strides towards reopening this significant mine, projecting a 50% recovery of its potential output by mid-2025. With 90% of South Korea’s tungsten sourced from China, this project represents a critical step in diversifying production away from Chinese dominance.
Moreover, U.S. ventures like Demesne Resources are exploring opportunities, such as acquiring the IMA tungsten mine in Idaho, hinting at a renewed interest in domestic resources. Such investments signal a pivotal shift towards self-sufficiency in a sector that has long been reliant on foreign supply.
Beyond domestic prospects, the future of tungsten supply might hinge on strategic partnerships. Gracelin Baskaran from the Center for Strategic and International Studies emphasizes that “friendshoring” is essential for U.S. interests. By solidifying supply contracts, as seen with Almonty’s partnership for the Sangdong mine, the U.S. can stabilize its access to tungsten while fostering cooperative relationships with allied nations. As countries like Kazakhstan, Australia, and Spain ramp up their mining endeavors, the global landscape for tungsten supply is poised for transformation.
Analysts project that demand for tungsten will continue to escalate, keeping prices elevated in the near term. However, with the anticipated increase in non-Chinese supply over the coming years, prices may stabilize eventually. Emre Uzun from Fastmarkets notes that while demand will surge, the expansion of mining operations can meet the supply requirements, thus easing price pressures. The global market may witness a shift that reflects a more balanced distribution of tungsten resources, reducing overreliance on any single country.
The impending export restrictions on tungsten by China serve as a wake-up call for industries reliant on this vital metal. While the immediate consequences may challenge current supply chains, they also cultivate opportunities for domestic production and international collaboration. As the geopolitical landscape unfolds, flexibility and strategic planning will be essential for both producers and consumers to adapt and thrive in the newly emerging tungsten market. As the saying goes, in adversity lies opportunity—particularly in the high-stakes world of critical minerals.