Tungsten is used in more everyday items such as lamps, transistors and alloys, a vital mineral for construction tools and components in airplanes and automobiles.
The Coronavirus pandemic wreaked havoc on the U.S. and global economies, particularly as businesses and manufacturers shuttered their doors while employees were either told to stay home or outright furloughed. This damaged the global trade markets causing an 11-year low of 41.5% in the April report for the Institute for Supply Management’s Manufacturing Index. However, the worst of the pandemic may be behind us as the Index climbed to 43.1% in April as reported recently¹ in Marketwatch.
As manufacturers set to ramp back up to produce everything from automobiles, airplanes, and construction tools, they will begin to return to normal production cycles. This also means they will face their normal litany of production challenges, which includes dealing with a strained supply chain on certain critical raw materials, such as tungsten.
Tungsten: The Most Valuable Material You’ve Never Heard Of
Tungsten is frequently used to make items that aren’t considered everyday products, but nevertheless are critical for almost everything that’s important, such as core drilling bits and diamond drilling bits used by the mining industry.
Among the most durable elements found on earth, tungsten is also used in more everyday items such as lamps, transistors and alloys, as well as construction tools and components in airplanes and automobiles. It is one of the most important raw materials on Earth people rarely ever think about.
Tungsten is valuable because of its strength and durability, and it offers one of the highest melting points of all elements on the periodic table. There would be no rockets and aerospace propel systems without it.
However, sourcing Tungsten has been a great challenge since there are no mines in the U.S. that produce this precious raw material.
China’s Domination of Tungsten Sourcing
China controls the market for nearly 35 precious minerals and metals that are important to the U.S. for production and manufacturing, and tungsten is among them. According to the USGS in its Mineral Commodity Summaries 2019 report², “World tungsten supply was dominated by production in China and exports from China.”
Furthermore, the second largest tungsten supplier, located in Vietnam, had sourced 6 million metric tons last year. Other regions outside of the U.S. such as Russia, Austria and the United Kingdom are also known to have important tungsten sources.
The issue at hand is that China has limited the amount of tungsten exports that can be shipped to the U.S., and this has caused great concern about the overall supply chain of tungsten.
“China’s government regulated its tungsten industry by limiting the number of mining and export licenses, imposing quotas on concentrate production, and placing constraints on mining and processing,” according to the USGS’ report².
New Tungsten Production Will Open the Global Supply Chain
Fortunately, new entrants into the market have begun mining projects throughout the world that are mining for tungsten. These efforts are critically important to increase supply levels and exports back to the U.S., which will benefit the overall global supply chain of tungsten for production and manufacturing.
One project of particular importance is the Korea Tungsten project located in the Sangdong Mine of South Korea, which hosts one of the largest tungsten resources in the world. This mine was the leading global tungsten producer for more than 40 years and it has the potential to produce 50% of the world’s tungsten supply. The project has become a center of focus recently for resource experts, miners, investors, shareholders, and other interested parties around the globe.
Global economies of this relaxed supply chain are anxiously awaiting production of tungsten from this region, especially since it will ease China’s stronghold on the overall supply of this precious raw material. What’s more, U.S. manufacturers are keenly watching, since additional supply of tungsten from South Korea would help avoid expensive import tariffs of goods shipped from China and enacted by the U.S. government.
The global trade wars have heated up recently, costing manufacturers in the process. Currently, the U.S. has imposed tariffs on more than $360 billion worth of Chinese goods, and China has also retaliated by imposing tariffs on more than $110 billion worth of U.S. products. The U.S. imposed three rounds of tariffs on Chinese imports in 2018, with a fourth round completed last September on many items with a 15% duty³.
Hopefully, the Sangdong Mine is one example of relief U.S. and global manufacturers will see from the mining and production of tungsten in an effort to ease the global supply chain of this precious raw material, which is sorely needed for some of today’s most important uses.
Lewis Black is CEO of Almonty Industries, a leading global company involved in the mining, processing, and shipping of tungsten concentrate. For more information please visit www.almonty.com.