Tungsten, a crucial metal in various industries such as weapons, autos, electric car batteries, semiconductors, and industrial cutting machines, is predominantly sourced from China. With its high energy density and durability, tungsten plays a significant role in modern manufacturing processes. Despite its importance, China has not imposed strict restrictions on tungsten exports like it has with other critical minerals. This leniency could be attributed to the metal’s diplomatic nature, with experts like Lewis Black, CEO of Almonty Industries, suggesting that being too aggressive in diversifying away from China could lead to unforeseen consequences.
In contrast, the Biden administration raised tariffs on tungsten imports earlier this year in an attempt to protect domestic industries. However, China’s response to these tariffs was minimal, signaling that they are not overly concerned about the restrictions. The lack of retaliation from China could be seen as a strategic move to prevent escalating tensions between the two countries. The Ministry of Commerce spokesperson, He Yadong, called on the U.S. to remove the additional duties rather than announcing countermeasures, indicating a calculated approach by the Chinese government.
As concerns about overreliance on Chinese tungsten supplies grow, countries like the U.S. and Europe are taking steps to diversify their supply chains. Initiatives such as the U.S. REEShore Act and the extension of tariffs on imported Chinese tungsten carbide by the European Commission aim to reduce dependency on Chinese sources. Almonty Industries, with its forthcoming mine in South Korea, is positioned to contribute significantly to the non-Chinese tungsten supply. The increasing demand for China-free tungsten sources is a clear indication of the shifting dynamics in the global tungsten market.
Despite the push for diversification, China still dominates over 80% of the global tungsten supply chain. Efforts to establish tungsten production outside of China have faced considerable hurdles, with projects taking years to materialize. The aging mines in China, coupled with rising production costs, present an opportunity for projects in other countries to fill the supply gap. Companies like IMC Endmill investing in tungsten manufacturing facilities in South Korea exemplify the trend of non-Chinese companies looking to gain a foothold in the tungsten market.
The future outlook for the tungsten market remains uncertain, with prices reaching multi-year highs due to limited supplies and increasing demand. The U.S.’s transition from a net seller to a buyer of tungsten underscores the need for strategic planning and investment in domestic production capabilities. As China continues to wield significant influence over the global tungsten supply chain, diversification efforts and collaborations with other key players in the industry will be crucial in ensuring a stable and sustainable market.
While China’s dominance in the tungsten market poses challenges for other countries seeking to secure their supply chains, opportunities for diversification and innovation abound. The diplomatic nature of tungsten, coupled with its strategic importance in key industries, demands a coordinated international effort to reduce dependency on Chinese sources and establish a more resilient tungsten market. By fostering partnerships, incentivizing domestic production, and exploring new avenues for sourcing tungsten, stakeholders can navigate the complexities of the global supply chain and create a more balanced and secure tungsten industry for the future.