China’s decision to cut back on exports of tungsten is causing investors to refocus on tungsten miners. These could emerge as THE hot mining prospect for 2025. China currently produces 80% of the global supply of tungsten, so any decision to take exports off the table by Beijing is going to hurt.
The decision is part and parcel of an ongoing trend towards resources nationalism within the industrial metals space which is being – partly – driven by China and the US, but expect other countries to follow suit. China is also cutting back exports on other critical minerals including bismuth, indium and tellurium.
How important is tungsten to US industry?
A big chunk of the tungsten imports that the US takes in still comes from China, so expect more attention on North American tungsten miners. Tungsten remains a key metal for aerospace and military manufacturing and is also used in the production of satellites and ammunition. China has shown that it knows what it is doing here.
Tungsten prices had been dropping but tungsten has been seeing a modest boost on the news from China – expect that to see further upside in February. Other factors have been making themselves felt, including port disruptions in San Diego and higher production costs. There is subdued downstream demand for tungsten at the moment. The Chinese economy is in slow-down mode and it is conceivable that an export restriction policy could see tungsten piling up in Chinese warehouses.
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North American tungsten traders holding onto inventory
However supply constraints are expected to persist outside China. Traders in North America are known to be holding onto their inventory. The US tungsten market is expected to see continued growth in 2025 as the government seeks to secure supplies and make sure supply chains remain robust. That defence sector requirement means tungsten will start to move higher up the mining agenda in government circles.
Canadian-listed Almonty Industries TSX:AII is going to start to see a lot of interest. The company has recently signed an off-take agreement with SeAH M&S, which is the biggest processor of molybdenum products in South Korea and which owns the second biggest molybdenum oxide smelter in the world. SeAH said it had agreed to buy 100% of the material produced by Almonty’s Sangdong molybdenum project for the life of the mine.
The project is 150 metres from Almonty’s tungsten project in Korea which will allow for significant synergies.
Shares in Almonty are off to the races, naturally, with intense buying in Toronto. The stock has doubled YTD and China’s actions are just going to add fuel to the fire on this one.
Fireweed Metals is looking red hot
Outside of Almonty, there is also intense investor interest in Fireweed Metals TSXV:FWZ which has been a beneficiary of funding from the US Department of Defense (US$22.5m) and the Canadian government (C$12.9m). Fireweed owns the Macpass District which is one of the biggest deposits of zinc, but also gallium, germanium and tungsten. China has banned all exports of germanium and gallium.
Fireweed Metals already has the backing of Canada’s Lundin family who have been the lead investors in multiple financing rounds for Fireweed. Shares in Fireweed have also been going ballistic this week. The stock has jumped from C$1.43 to C$1.76 in the last five days of trading in Toronto (as of close of the market on Friday). Shares were trading down at C$1.16 in September.
