Tungsten: Mining’s Next Boom Metal?
The recent decision by China to cut tungsten exports is sending ripples through the global tungsten market, signaling considerable opportunity for tungsten miners outside of China. As we approach 2025, tungsten could emerge as a hot commodity for serious investors eyeing the commodities and resource sectors.
Why China’s Decision Matters
China holds a staggering 80% share of global tungsten production, so any constraints on its exports carry significant weight. This move is indicative of a broader trend of resource nationalism that’s become prevalent in the industrial metals sector, not only in China but also in the U.S., with other countries likely to adopt similar stances. China’s measures go beyond tungsten as the state also restricts exports of other critical minerals such as bismuth, indium, and tellurium.
Tungsten’s Importance to U.S. Industry
The U.S. has become increasingly reliant on tungsten imports, primarily sourced from China. This dependency positions North American tungsten miners as crucial players in the tungsten landscape. Tungsten is essential for various applications, especially in aerospace and military manufacturing, where it is utilized in satellites, ammunition, and other critical products. The recent export restrictions from China underscore its strategic control over this vital resource.
Market Dynamics and Price Trends
Tungsten prices, which had experienced a downtrend, are showing signs of recovery following China’s export announcement. Analysts expect further price increases by February, fueled by various factors including port disruptions in San Diego and rising production costs. Although downstream demand for tungsten has softened somewhat due to China’s economic slowdown, the export limitations might lead to a build-up of tungsten inventories within China, creating supply constraints that could influence the global market further.
Supply Constraints and North American Response
Looking ahead, supply constraints are expected to persist, particularly outside of China. Reports suggest that North American tungsten traders are holding onto their inventories as they anticipate tighter supplies. With the U.S. tungsten market projected to grow by 2025, there will be increasing emphasis on securing supply chains, particularly given the defense sector’s reliance on tungsten. This growing importance will likely place tungsten higher on the government’s mining agenda.
Key Players to Watch
Almonty Industries (TSX: AII)
One of the most noteworthy companies in this sector is Almonty Industries, a Canadian firm that is gaining substantial attention. Almonty has recently inked a major off-take agreement with SeAH M&S, which is 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 life of the mine. The proximity of this project to Almonty’s tungsten operations in Korea—just 150 meters apart—enables significant operational efficiencies. Notably, Almonty’s stock has doubled year-to-date, and if current trends continue, its performance may receive an additional boost as a result of China’s export cuts.
Fireweed Metals (TSXV: FWZ)
Another key player is Fireweed Metals, which is attracting noteworthy investor interest. The company has secured considerable funding; recently, it received US$22.5 million from the U.S. Department of Defense, along with C$12.9 million from the Canadian government. Fireweed owns the Macpass District, which is known for significant deposits of zinc, gallium, germanium, and tungsten. With China recently banning exports of gallium and germanium, the demand for tungsten in Fireweed’s portfolio is likely to increase. This company also enjoys backing from the influential Lundin family in Canada, known for its lead investments across several financing rounds. Fireweed’s stock has experienced a rapid rise, moving from C$1.43 to C$1.76 over the last week, up significantly from C$1.16 just a month ago.
Conclusion
The decision by China to restrict tungsten exports is reshaping the market landscape and creating a fertile ground for tungsten miners, particularly those in North America. As industry dynamics evolve and the U.S. government prioritizes resource security, tungsten’s profile as a critical metal is set to rise. Investors keen on commodities should closely monitor developments in the tungsten market and consider players like Almonty Industries and Fireweed Metals as potential investment opportunities.
