Outlook for 2025: Tungsten Supply Chain Dynamics
As we move into 2025, the tungsten market is set for significant changes driven by both geopolitical developments and strategic moves within the industry. In this blog, we will explore the key factors shaping the tungsten industry, including China's export restrictions, the U.S. efforts to secure domestic supply, and advancements in global tungsten mining operations. For investors and industry players, staying informed about these shifts will be crucial to navigating the coming year.
China's Export Restrictions: A New Era for Global Tungsten Supply
One of the most pressing issues in the tungsten market as we head into 2025 is China's decision to impose stricter export controls on critical materials like tungsten. Effective December 1, 2024, these new restrictions are expected to significantly impact global supply chains. The move is part of a broader trend in China's approach to critical minerals, following similar restrictions on other essential materials like antimony, gallium, and germanium.
Given tungsten’s strategic importance for military and industrial applications, these measures may have a more pronounced effect on Western economies. Historically, China leveraged its tungsten production to dominate global markets, flooding the market with low-cost tungsten to outcompete international producers. China currently produces approximately 80% of the world's tungsten, making this move highly consequential. The restrictions are part of a broader strategy to control "dual-use" materials that have both civilian and military applications. This could create disruptions, especially in sectors like defense and technology that rely heavily on tungsten for their advanced manufacturing processes. This shift is amplifying trade tensions and prompting nations to seek alternative sources for tungsten, which could drive up prices and make supply chains more volatile in the short term.
“Everybody needs more tungsten. That’s the message out there right now,” he said. “The thing that’ll prompt more tungsten is not a Chinese ban. It’s a Chinese ban causing [it to become more] profitable to mine tungsten,” said Christopher Ecclestone, principal and mining strategist at Hallgarten & Company.
Key Takeaways:
Export Licensing Requirements: Exporters must now obtain licenses to ship tungsten, increasing bureaucratic hurdles.
Geopolitical Leverage: The policy is aligned with China's broader use of critical minerals as a geopolitical bargaining tool.
Industry Impact: The defense, electronics, and semiconductor industries are among those most affected by tighter tungsten supply.
U.S. Response: Strengthening Domestic Supply Chains
In light of the new export controls, the U.S. is increasingly focused on reducing its reliance on Chinese tungsten. Initiatives like Guardian Metal Resources’ Pilot Mountain project in Nevada aim to establish a more secure domestic supply of this critical mineral. By developing local tungsten mining and refining capabilities, the U.S. hopes to mitigate the risks posed by foreign supply disruptions. This push is part of a broader effort by the U.S. government to strengthen its critical mineral supply chains, particularly for industries related to defense and high-tech manufacturing.
The Sangdong Mine: A Major Player in Global Tungsten Supply
On the production side, there are exciting developments in South Korea. The Sangdong Tungsten Mine, operated by Almonty Industries, has begun ore extraction in September 2024. This mine holds an estimated 50 million tons of tungsten resources with an average tungsten content three times the global average, positioning it as a major player in the global supply chain. As the mine ramps up production, it is expected to meet up to 10% of global tungsten demand, significantly reducing reliance on China.
Construction of the ore processing plant is progressing swiftly, and the plant will be one of the most automated facilities in the world. This is a strategic development for the tungsten market, as the Sangdong Mine will play a pivotal role in diversifying global supply, ensuring stability, and reducing dependence on Chinese exports.
Almonty has committed to allocating 45% of its production to U.S. buyers, which could significantly reduce U.S. reliance on Chinese tungsten.
Incentives from South Korea’s regional government further underscore the growing importance of tungsten production in allied countries. The first phase of the mine is expected to create 250 direct jobs and support 1,500 indirect positions, reflecting its potential as an economic catalyst for the region.
Key Takeaways:
South Korea's Role: The Sangdong mine is set to become a key player in non-China tungsten supply.
Supply Chain Security: Almonty's long-term contracts with the U.S. highlight the role of bilateral trade in critical minerals.
Economic Implications: The revival of the Sangdong mine signals a broader shift in how countries secure access to vital resources.
The Strategic Importance of Tungsten: A Critical Resource for 2025
Tungsten remains a critical material in various industries, particularly in defense, technology, and heavy manufacturing. As China’s control over tungsten exports diminishes, countries around the world are investing heavily in securing their own supply. The developments at Sangdong, the Pilot Mountain project, and other mining operations point to a future where tungsten is less reliant on a single dominant source.
As we look toward 2025, the tungsten market will undoubtedly experience shifts. The actions taken by major stakeholders—China, the U.S., and South Korea—will shape the global market, impacting everything from prices to the availability of this crucial material. For those invested in or dependent on tungsten, staying ahead of these changes will be key to ensuring supply chain stability in the coming year.
Current Price Trends:
Tungsten is typically measured as ammonium para tungstate (APT), with one metric ton unit (MTU) representing 10 kg.
The current price hovers around $335 per MTU, but analysts believe prices would need to rise by another $50 per MTU to make new mining ventures significantly profitable.
Global Supply Outlook:
The reopening of South Korea’s Sangdong mine and developments in Idaho are likely to stabilize supply.
Additional tungsten projects in Australia, Kazakhstan, and Spain are expected to increase global capacity.
Demand Drivers:
The semiconductor, electronics, and defense sectors are key drivers of demand.
New U.S. Department of Defense regulations prohibit the use of China-mined tungsten after January 2027, increasing demand for alternative sources.
Key Takeaways:
Price Trajectory: Prices are expected to increase due to constrained supply, with profitability dependent on prices exceeding $385 per MTU.
Demand Drivers: Semiconductor and defense industries continue to drive demand for tungsten, especially in the U.S.
Supply Chain Expansion: New production from South Korea, Idaho, and other regions is poised to stabilize global supply by late 2025.
As global demand for tungsten continues to rise, the ability to secure a stable supply of this critical material becomes more important than ever. With shifting dynamics in the tungsten market, including China’s new export restrictions and the development of high-grade mines like Sangdong in South Korea, companies are increasingly looking for reliable, long-term partners in the tungsten industry. Tungsten Metals Group offers a strategic advantage by ensuring a consistent, high-quality supply of tungsten from trusted and reliable sources and feedstock. As the market evolves, companies can turn to Tungsten Metals Group to navigate these complexities and access a dependable resource that supports manufacturing and technological innovation, providing peace of mind in an increasingly uncertain market.