In a significant policy shift, China is set to impose limitations on the export of tungsten starting this weekend, a move poised to reshape the international tungsten market. This decision aligns with increasing tensions between the U.S. and China, propelling a heightened demand for tungsten sourced outside of China. For decades, Chinese enterprises inundated the global market with cost-effective tungsten, effectively monopolizing up to 80% of the supply chain, according to analysts. This upcoming regulation is rooted in a broader strategy to limit the export of “dual use” goods—products that can serve both military and civilian purposes.
China’s Ministry of Commerce recently mandated that businesses wishing to export tungsten and other critical minerals must obtain licenses. These new export rules will come into effect on December 1, and they underline not only a geopolitical response but also an attempt to secure critical resources for its own production needs. Tungsten, renowned for its extraordinary hardness and resilience, finds applications in various sectors, including defense and semiconductor manufacturing.
Impact of U.S.-China Relations on Tungsten Demand
As the tension between the U.S. and China escalates, there is an increasing urgency for countries to secure alternative tungsten supplies. The U.S. Defense Department’s decision to prohibit contractors from acquiring China-mined tungsten, effective January 1, 2027, underscores this shift. However, industry experts suggest this change may be too late to substantially benefit U.S. tungsten production.
Christopher Ecclestone, a mining strategist at Hallgarten & Company, pointed out that the current tungsten market is undersaturated despite China’s impending export restrictions. The minimal reaction in tungsten prices, which hover around $335 per metric ton of ammonium paratungstate, indicates that a price increase of approximately $50 per ton may be necessary to incentivize further mining operations outside of China.
Alongside China’s export controls, the U.S. has raised tariffs on Chinese tungsten by 25%, a decision that has garnered substantial support for bolstering domestic manufacturing. Many stakeholders even argue for increased duties of up to 50% to further protect U.S. interests. Although establishing a new mine is a lengthy and complex process, escalating tariffs could make mining operations in the U.S. more economically attractive, leading to a revival of tungsten mining, which has been dormant since 2015.
While there are promising developments, such as the Sangdong tungsten mine’s reopening in South Korea by Canada-based Almonty Industries, the road ahead is fraught with challenges. Historically, most of South Korea’s tungsten has originated from China, reinforcing the need for alternative sources.
Almonty Industries has ambitious plans to restore that mine’s output to 50% capacity by the summer of 2025. As part of its strategy, the company has emphasized cooperation with local authorities and foreign investments, which could help establish the mine as a linchpin for other industrial ventures in the region, poised to generate both direct and indirect job opportunities.
Moreover, experts from the U.S. Geological Survey have been evaluating potential domestic sites for tungsten production, determining that around 100 locations across 12 U.S. states could harbor significant tungsten deposits. This assessment ignites hope that with adequate investment and interest, the U.S. could mitigate its reliance on Chinese tungsten through domestic production.
As global demand for tungsten rises—fuelled by its critical role in various high-tech applications—new players are set to emerge in the tungsten market. However, analysts predict that it may take time for non-Chinese sources of tungsten, such as projects in Kazakhstan, Spain, and Australia, to ramp up production sufficiently to stabilize prices and mitigate fluctuations caused by China’s export limiting.
The upcoming restrictions imposed by China serve as a stark reminder of the changing dynamics within the global market for critical minerals. As nations navigate this shifting landscape, proactive measures will be crucial in securing stable and diversified tungsten supplies, particularly in the face of geopolitical uncertainties. The interplay between export restrictions, domestic production capabilities, and global demand will likely dictate the future of tungsten and its vital role in both military and civilian industries.