The global supply chain for many essential minerals is heavily dominated by China, including tungsten. Tungsten, a metal that is almost as hard as a diamond and possesses a high energy density, is a crucial material in various industries such as weapons, autos, electric car batteries, semiconductors, and industrial cutting machines. Chipmakers like Taiwan Semiconductor Manufacturing Company and Nvidia rely on tungsten in their production processes, indicating its significance in the market.
Despite the Biden administration’s decision to raise tariffs on tungsten imports earlier this year, China has not imposed sweeping restrictions on the metal. The Chinese government did not include tungsten in its new regulations for enhancing oversight of domestic rare earths production, indicating a lack of concern regarding the new tariffs. The decision to overlook the tariffs could be interpreted as an effort to avoid escalating tensions with the United States.
Amid rising efforts to diversify away from China, there is a growing demand for non-Chinese tungsten in regions like the United States and Europe. The U.S. REEShore Act and European Commission tariffs further emphasize the shift towards a China-free supply chain. Companies like Almonty Industries are strategically positioning themselves to capitalize on this trend by developing mines outside of China, such as the upcoming mine in South Korea that aims to produce a significant portion of the global ex-China tungsten supply.
The expected surge in demand and limited supplies of tungsten have led to a spike in prices to multi-year highs, although prices have slightly declined in recent weeks. Market analysts have noted the potential game-changing impact of developments in the tungsten industry. Meanwhile, the U.S. faces the challenge of transitioning from a net seller to a buyer of tungsten due to limited domestic production capacity, highlighting the need to secure overseas supplies.
Although China currently dominates over 80% of the tungsten supply chain, challenges are emerging, including rising production costs and aging mines. Efforts by non-Chinese companies to enter the tungsten market, such as investments in South Korea, signal a shift towards diversification. The increasing competition and investments outside of China could potentially disrupt China’s stronghold on the global tungsten market.
The Future of Tungsten Supply
The looming question of the future of tungsten supply remains uncertain, with conflicting forecasts and projections. While China’s dominance in critical mineral supply chains has been established over the years, external factors such as geopolitical tensions and evolving market dynamics could reshape the landscape. Companies like Almonty Industries are positioning themselves as key players in the global tungsten market, offering alternatives to Chinese supply sources.
The global tungsten supply chain is undergoing significant transformations, with implications for market dynamics and geopolitical considerations. China’s dominance, while formidable, faces challenges from growing demand for non-Chinese sources and shifting regulatory landscapes. As the industry continues to evolve, stakeholders must navigate changes in supply chains and strategic partnerships to adapt to the shifting landscape of the global tungsten market.