China intends to limit exports of a vital metal, yet the market remains unconcerned.

• This weekend, China will restrict its exports of critical metal tungsten, coinciding with the reopening of alternatives to Chinese suppliers of the metal.
• Tungsten is an extremely hard metal used in weapons and semiconductors.
• Since 2015, the U.S. has not commercially mined tungsten. However, one of the world's largest tungsten mines is planning to resume production in South Korea this year.

China will restrict exports of tungsten this weekend, coinciding with the reopening of alternatives to Chinese tungsten suppliers.

During the past decades, Chinese businesses have been accused of flooding the global market with cheap tungsten, ultimately controlling 80% of the supply chain. Tungsten, a highly durable metal, is used in weapons and semiconductors.

The Chinese government has announced that businesses must apply for licenses to export certain tungsten and critical mineral products, which can be used for both military and civilian purposes, as part of new rules limiting exports of "dual use" goods. These measures will take effect on December 1st.

As U.S.-China tensions rise, the demand for non-China tungsten increases due to the U.S. Defense Department's ban on its contractors purchasing China-mined tungsten, effective January 1, 2027.

Christopher Ecclestone, principal and mining strategist at Hallgarten & Company, remarked that it was past the appropriate time for the Chinese to be working with tungsten.

"The message out there is that everyone needs more tungsten. The reason for this is not a Chinese ban, but rather the Chinese ban making it more profitable to mine tungsten."

Tungsten prices have not significantly reacted to China's announcement, according to Ecclestone. For mining the metal to be profitable, he estimates prices would need to trade $50 higher than their current price of around $335, measured in per metric ton units of ammonium para tungstate, where one metric ton unit is 10 kilograms.

Higher prices in the U.S. alone could encourage more tungsten production.

Despite China's restrictions on tungsten exports, the U.S. imposed a 25% tariff on Chinese tungsten in September. The majority of public comments on the U.S. tungsten tariffs were in favor of the duties, with some even requesting an increase to 50%.

Some U.S. mining projects may become more commercially viable due to expected tariffs under a Trump administration, which could lead to their reopening after years of closure, according to Cullen S. Hendrix, senior fellow at the Peterson Institute for International Economics.

'Friendshoring' tungsten

Since 2015, the U.S. has not commercially mined tungsten. However, one of the world's largest tungsten mines is planning to resume production in South Korea this year.

Last week, Canada-based announced that it had taken one step closer to fully reopening the Sangdong mine and processing plant with the installation of grinding equipment. The mine, located more than 10 hours east of Seoul by bus, had closed in 1994.

According to CEO Lewis Black, Almonty aims to restore Sangdong to approximately 50% of its potential output by summer 2025, as stated in a CNBC report following a ceremony showcasing collaboration with the local government.

South Korea's tungsten is mostly sourced from China, and Chinese firms may invest in other industries to maintain their market position indirectly.

The vice governor for economic affairs in Gangwon, where Sangdong is located, stated that the region is prepared to provide incentives to foreign investors in order to make the mine a foundation for other industrial companies to grow in the area. According to his estimates, the first phase of the mine will result in the creation of 250 direct jobs and 1,500 indirect positions.

Almonty has been operating a tungsten mine in Portugal since 2015. In 2015, the company acquired the mining rights to Sangdong and in 2021, it obtained $75.1 million for project financing from German state bank KfW IPEX-Bank. The overall investment in Sangdong so far has exceeded $130 million.

The U.S. will need to depend on "friendshoring" for tungsten in the near future, according to Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies. She pointed out that Almonty has agreed to provide 45% of the South Korea Sangdong mine's output to the U.S. through a long-term supply contract.

In June, the U.S. Geological Survey, a government agency responsible for analyzing natural resources, visited Sangdong to evaluate its potential. The largest source of U.S. tungsten imports in June was China, accounting for 45% of the total imports, according to the agency.

According to Emre Uzun, a ferro-alloys and steel analyst at Fastmarkets, the demand for tungsten in and outside China is expected to increase, keeping tungsten prices high in the near term. However, he predicts that starting late next year, increased non-China supply will help stabilize raw tungsten prices.

He stated that demand will increase outside China, but supply is predicted to increase as operations expand and projects progress, specifically referring to the Sangdong mine and tungsten projects in Kazakhstan, Australia, and Spain.

U.S. tungsten deposits

Although the United States does not produce tungsten, the U.S. Geological Survey has identified approximately 100 sites in 12 states with significant amounts of the metal, including Alaska, Arizona, California, Colorado, Idaho, Montana, North Carolina, New Mexico, Nevada, Texas, Utah, and Washington.

A Canadian company, Demesne Resources, plans to acquire the IMA tungsten mine in Idaho for $5.8 million. The CEO, Murray Nye, expects the mine to begin production by spring.

According to Nye, historical records show that the mine contains substantial amounts of tungsten, silver, and molybdenum, a metal commonly used to reinforce others. This, he believes, makes it a potentially profitable mine.