In a major strategic pivot, China is set to impose limitations on the export of tungsten, a critical metal integral to various industries ranging from defense to electronics. Starting this weekend, it will become mandatory for businesses to secure licenses to export tungsten and associated mineral products, marking a departure from years of unfettered access. Historically, Chinese firms have dominated the tungsten market, flooding it with competitively priced products and subsequently controlling an overwhelming 80% of the global supply chain. This shift in policy reflects not only China’s intent to reassess its role in the market but also the implications of rising geopolitical tensions, particularly with the United States.
The new restrictions align with a broader trend wherein nations begin to recognize and leverage their resource endowments as instruments of economic diplomacy. The new rules will come into effect on December 1, coinciding with increased interest from U.S. industries and government bodies to diversify their tungsten sources. As the U.S. Defense Department prepares to ban its contractors from purchasing China-mined tungsten starting January 1, 2027, alternative supply chains are taking shape.
Market observers are keenly monitoring tungsten prices, which have seen little fluctuation since China announced its export limitations. Experts suggest that for tungsten mining to become profitable outside of China, prices would need to rise significantly—upwards of $50 per ton above the current market rate of approximately $335 per metric ton of ammonium paratungstate. Notably, the hunger for tungsten is outpacing the supply, primarily driven by U.S. tariffs introduced in September, which raised duties on Chinese tungsten by 25%. These tariffs, designed to boost domestic manufacturing, signal a growing appetite for tungsten sourced from alternatives beyond China.
While it might take considerable time to bring new mining sites online, the evolving policy climate suggests a promising future for U.S. tungsten projects. Cullen S. Hendrix, a senior fellow at the Peterson Institute for International Economics, underscores that certain mining initiatives could become financially viable given the new tariff environment, marking a potential shift in the long-stagnant U.S. tungsten industry, which has seen no commercial mining since 2015.
Exemplifying the renewed focus on tungsten in non-Chinese markets is the anticipated revival of the Sangdong mine in South Korea, operated by Canada-based Almonty Industries. After closing in 1994, the mine is on track to start production again as significant investments in infrastructure and technology are put into place. Set to reach roughly 50% of its potential output by the summer of 2025, Sangdong’s reopening represents a pivotal moment in re-establishing a resilient supply base for tungsten outside Chinese influence.
The cooperative approach taken by Almonty with local authorities signifies not just an investment in a single mining operation but an impetus for broader regional economic development. Local leadership, such as Jeong Kwang-yeol, anticipates that the mine’s resurgence will create hundreds of direct and indirect jobs, thereby stimulating the local economy. This operational revival is expected to encourage foreign investment and foster a new industrial ecosystem centered around tungsten.
Beyond South Korea, tungsten mining prospects are emerging in various parts of the globe, including Kazakhstan, Australia, and Spain. Analysts predict that as operational capacities increase in these regions, the heightened supply will help stabilize raw tungsten prices and meet the rising demand. Emre Uzun, a ferro-alloys and steel analyst at Fastmarkets, articulates that while demand is poised to grow, the concomitant rise in supply should alleviate price pressure over time.
Moreover, the U.S. Geological Survey has identified numerous sites across twelve states with considerable tungsten resources, enhancing the case for domestic production. Companies like Demesne Resources are actively pursuing mining opportunities in Idaho, aiming to commence operations in spring and taking advantage of historic mining records indicating substantial tungsten deposits.
As the tungsten supply chain experiences seismic shifts, the evolving geopolitical landscape should serve as a wake-up call for industries reliant on this crucial metal. While China’s export limitations indicate a strategic response to a changing world, they also illuminate the vulnerabilities inherent in over-reliance on a singular supplier. The global market is witnessing a drive towards diversification, signaling that, while competition intensifies, opportunities for collaboration and innovation are equally ripe.
The future of tungsten production and supply is poised for transformation as alternative sources are developed and supported by favorable policy adjustments. Both the United States and its allies must recognize the critical importance of securing a sustainable tungsten supply, essential not just for economic growth but also for national security. In doing so, they can cultivate a more resilient and competitive industrial ecosystem.