Tungsten: Mining’s Next Boom Metal?
The recent decision by China to restrict tungsten exports has ignited a growing interest in tungsten as a significant commodity for investors in the resource sector. With China accounting for about 80% of the world’s tungsten supply, these export cuts are reshaping the global tungsten market, creating ample opportunities for miners outside of China.
Why China’s Decision Matters
China’s control over tungsten production plays a critical role in shaping the global market. As a key player in the mining and industrial metals sectors, China’s export restrictions reflect a broader trend of resource nationalism, particularly involving influential players like China and the United States. This shift is likely to influence the global supply chain for tungsten and possibly other vital minerals, including bismuth, indium, and tellurium.
Tungsten’s Importance to US Industry
The reliance of the US on tungsten imports underscores the strategic importance of this metal, especially within the defense and aerospace industries. Tungsten, known for its high density and ability to withstand extreme temperatures, is integral in manufacturing components for satellites, military ammunition, and more. China’s tightening grip on tungsten exports emphasizes the urgent need for North American tungsten miners to step up and fill the gap.
Market Dynamics and Price Trends
In the wake of China’s announcement, tungsten prices have started to stabilize after a period of decline, with projections for further increases as we move into 2025. Several factors, including ongoing port disruptions in San Diego and escalating production costs, contribute to this market dynamic. While current downstream demand for tungsten is relatively subdued—partly attributed to the slowing Chinese economy—the export restrictions could result in an accumulation of tungsten inventories in China, affecting global pricing and availability.
Supply Constraints and North American Response
Supply constraints outside of China are anticipated to continue, putting increased pressure on North American traders to manage their inventories wisely. With the US government prioritizing supply chain security, the local tungsten market is projected for growth in the coming years. The defense industry, in particular, is likely to depend heavily on tungsten, highlighting its importance within the mining agenda.
Key Players to Watch
Almonty Industries (TSX: AII)
Almonty Industries is drawing substantial investor interest, particularly following its strategic move to sign an off-take agreement with SeAH M&S, the largest processor of molybdenum products in South Korea. Under this agreement, SeAH has committed to purchasing 100% of the material produced by Almonty’s Sangdong molybdenum project for the duration of its operation. The Sangdong site is situated just 150 meters away from Almonty’s tungsten project, allowing for significant operational synergies. Almonty’s stock has doubled year-to-date, and with China’s latest actions, further gains are expected.
Fireweed Metals (TSXV: FWZ)
Another company positioning itself to benefit from this evolving landscape is Fireweed Metals. It has attracted considerable investment, having received funding from both the US Department of Defense (US$22.5 million) and the Canadian government (C$12.9 million). Fireweed holds ownership over the Macpass District, which is rich in tungsten, along with other valuable metals such as zinc, gallium, and germanium. Notably, following China’s ban on gallium and germanium exports, Fireweed’s relevance has surged. Recently, its stock price jumped from C$1.43 to C$1.76 within just a few trading days, marking a significant increase from C$1.16 in September.
Conclusion
The global tungsten market is poised for a shift as China’s export cuts create ripple effects across various sectors. Investors focusing on North American tungsten miners, such as Almonty Industries and Fireweed Metals, may find themselves tapping into a potentially lucrative opportunity. As we approach 2025, the dynamics of the tungsten market will be essential to watch, especially for those seeking strategic investments in the commodities and resource-driven stocks landscape.
