Tungsten – a modern day renaissance
By Luke Holland
Many speculators would postulate that diversified tungsten production peaked last century, since then it has slowly faded into the background, as China monopolized the market, however, recently rumblings of a renaissance is beginning to gather momentum. Tungsten is a critical element, sitting alongside big-name players such as lithium and titanium. These elements have made the VIP shortlist due to their vital centerpiece roles in national security and/or economic development. The unique properties of tungsten, its multi-sector importance, a lack of synthetic alternative, and geographical concentrated production are all factors making tungsten extremely important in the global economy. To put this in context, the United States have been maintaining a government stockpile of tungsten since the 1940s.
The price of tungsten had a major boost around 2007-2008 post Global Financial Crash, from less than US$200 per metric ton unit (MTU) in late-2008 to mid-2009 and peaked at US$480/MTU in 2011. This increase in price was attributed to the increased demand and China’s limiting supply. In recent times, the price of tungsten has fluctuated, mid- 2018 peaked at US$350/MTU. This was swiftly followed by a steady decline with prices settling around US$280/MTU. To better understand the price variation, it is important to consider the overall market trends.
The Tungsten Market size was gauged to be over USD 3.5 billion in 2017. A recent study conducted by Technavio outlined the tungsten carbide industry is forecasted to increase by USD 4,818.79 million from 2022 to 2027 at a CAGR of 4.23%. A Straits Research study placed the market value of Tungsten at USD 4411.6 million in 2022. According to Straits it is projected to reach USD 9320.3 million by 2031, growing at a CAGR of 7.8% during the forecast period (2023-2031). Both studies indicate that the increasing product deployment in a vast array of industries such as automotive, aerospace, defense, electronics, oil & gas, mining, etc., will augment the global market. Although the exact figures and growth projections differ, the overall trend is one of growth. This anticipation is evident across the globe as production and exploration for the hardest of all metals ramps up.
Currently, the worlds tungsten supply is dominated by China. In 2022, China produced the world’s largest quantity of tungsten, at approximately 71,000 metric tons. This supply is regulated by the government who limit the number of mining and export licenses as well as quotas on concentrate production. To put China’s dominance in perspective, Vietnam was the second-largest tungsten producing country that year, with an estimated production volume of only 4,800 metric tons.
The global market has observed with other commodities such as graphite and lithium, major world economies such as USA and Japan are positioning themselves to reduce their reliance on China, whether it be ramping up exploration within their own borders or signing trade deals with nations of a similar political persuasion. The geopolitical unrest in the South and East China Sea’s has been well documented, with China flexing its muscles through multiple ambitious economic programs, the most famous of which is the Belt and Road Initiative. Therefore, it is no surprise that Australia and South Korea brokered an alliance last year, lengthily tilted ‘The Memorandum of Understanding on Cooperation in Critical Mineral Supply Chains’. Much to Chinas disgust this will pave the way for easier trade of goods and critical minerals between the two countries.
Korea has a storied history with tungsten. The Shandong mine, located 187 km south of Seoul, was a major player in the post-Korean War economy, contributing more than 50% of the country’s export revenue, emerging as one of the largest global tungsten producers. As the commodity price dropped in the 1990’s this mine as well as many others in the country shutdown. The government switched its attention to manufacturing, this led to much success, with companies such as LG and Hyundai becoming world renowned. However, after three decades and a change in economic fortune, the sleeping giant has awoken. This mine being one of the largest tungsten mines in the world and one of the few long-life, high-grade tungsten deposits outside China. Almonty Industries (TSX-AII; OTC: ALMTF; ASX-AII) acquired it in 2015 when it bought Woulfe Mining, a Canadian Company. Lewis Black, CEO of Almonty Korea’s Canadian-based parent Almonty Industries outlined the company’s plans to offer alternative suppliers of tungsten, “It’s easy to buy from China and China is the largest trading partner of South Korea but they know they’re over-dependent,” Black said. “You have to have a plan B right now.” The mine has a predicted life of an impressive 90 years and is being reopened for US$75 million. The company has penciled in Project commissioning to be complete by the end of next year. This will be immediately followed by a yearlong ramp-up period.
The initial phase of production will average 2.3 million tons of tungsten oxide (WO3) per annum. The second phase, which will involve an expansion plan including a tungsten oxide plant, will increase production by 2.5 million tons, totaling 4.8 million tons per year. The mine, also known locally as ‘Pride of Korea’ has been reinvigorated and soon will be restored to its former glory. According to its owner, if all goes to plan it could produce an impressive 10% of the global supply when it opens next year. A similar story of mine rejuvenation is being told in Tasmania, Australia.
Group 6 Metals (ASX-G6M) previously known as King Island Scheelite Limited (ASX-KIS), is an Australian resource exploration and development company. The company’s primary focus in recent times is the redevelopment of the 100% owned Dolphin Tungsten Mine, on King Island, Tasmania which shut down in 1992 and has not been in use since.
Xenith Consulting were hired to provide a precise mine plan and schedule, outlining an 8-year open cut mine, with average annual production of 400,000 tons of ore per annum, yielding 200,000 mtu of W (1mtu = 10kg). After the open cut development, the mine will continue production as an underground operation at 300,000 tons of ore per annum. Production of tungsten, in concentrate will be largely at the same level due to the much higher grade in the underground ore body. In early July it was announced that that Group 6 Metals raised $3.7 million through a share purchase plan to support Dolphin. Under this SPP, the company issued 26.583 million shares at $0.14 each. Shortly afterwards, all the hard work paid off with the first shipment of high-grade tungsten concentrate departed the nearby Port of Grassy. The 13 tons of tungsten concentrate had an average grade of 69% tungsten oxide (WO3) with an estimated value of Aus$ 300,000 cost, insurance and freight. Commenting on the maiden shipment, Group 6 Metals Chief Executive Officer (CEO) and Managing Director Keith McKnight says: “The first shipment of tungsten concentrate, and recognition of sales revenue is a major achievement for the Dolphin Tungsten Mine (DTM). This is a significant step towards building cash flow to support the next phase of the company’s growth.
The production forecast for Q4 indicates a steady increase in ore processing to reach the monthly nameplate production. Discussing the forecast for Q4 Keith McKnight said: ‘The site team has been working diligently on ramp up and stabilizing the process plant operation in anticipation of receiving higher grade ore from the open pit following the commencement of production blasting. It is not unusual to encounter challenges when ramping up a new process plant, but it has demonstrated it can produce high grade concentrate at up to 70% of nameplate production which is a major positive for the project’. This ambitious project is not settling as a production-only mine with plans currently underway for the construction of a processing plant. The Dolphin Tungsten Project has contracted to construct a processing plant on site with an annual capacity of 400,000 tons of feed ore. Test work conducted over a period concluded that a simple and cost-effective gravity-based flowsheet coupled with a concentrate dressing circuit would be deployed. Once in production the processing plant has the potential to be expanded to increase plant recovery by the addition of another process step.
Elsewhere, the desire to discover a new world class tungsten deposit has certainly not been lost! Tungsten Mining NL (ASX-TGN) is an Australian based resource company with a focus on exploration and development of Tungsten deposits in across the country. The company has multiple projects the most promising of which is Mt Mulgine, located 350 km northeast of Perth, Western Australia. A quarterly report published last month stated that the current resource inventory sits at 41 million MTU’s (metric ton units) of WO3 (tungsten trioxide). This level of high-quality resource coupled with financial backing from the Federal Government’s Critical Minerals Development Program could bring Tungsten Mining on to the world stage.
Tungsten Mining’s Chairman, Gary Lyons, commented: ‘The $1m grant from the Federal Government highlights the importance of critical minerals to Australia, and of tungsten in particular.’
The demand for critical elements such as tungsten continues to grow, feeding an insatiable market. The military sector in particular is growing at double digit rates. For example, Almonty Industries has signed a 15-year deal to sell tungsten to USA-based Global Tungsten & Powders, who supplies the U.S. military. Tungsten is also crucial in oil and gas, mining and construction sectors. This increasing demand, coupled with falling supply is shining a positive light on the near future of tungsten. China is witnessing a fall in production due to more stringent environmental legislation, increased restrictions, and lower quality grades. The diversifying global market clearly defined by developments occurring not only in Korea and Australia but all around the world, it certainly seems like tungsten is returning to its former glory, a true renaissance, with opportunity for growth!