As of December 1st, 2023, China will implement new export restrictions on tungsten, a critical metal essential for various industries, including defense and semiconductor technology. This marks a significant policy shift for a nation that, for decades, dominated the tungsten market by flooding the global economy with inexpensive supplies. Analysts noted that Chinese businesses once controlled around 80% of the tungsten supply chain, leveraging low prices to eliminate competition. Now, amidst rising geopolitical tensions, particularly with the United States, this monopoly appears to be unraveling.
The export limits come on the heels of China’s Ministry of Commerce announcing a requirement for businesses intending to export tungsten and other “dual-use” goods—products suitable for both civilian and military applications—to obtain licenses. This move is viewed as a strategic pivot, reflecting increased demand for tungsten sourced from countries outside of China, primarily due to national security concerns.
The dynamics of U.S.-China relations heavily influence this new tungsten market landscape. The U.S. Defense Department has already advised its contractors to stop using tungsten sourced from Chinese mines by January 1, 2027. Industry experts suggest that this timetable aligns with a broader trend of nations seeking to diversify their supply chains to mitigate risks associated with geopolitical uncertainty.
This changing environment is generating heightened awareness and urgency regarding the need for alternative tungsten sources. Christopher Ecclestone, a prominent mining strategist, emphasizes that the current market landscape necessitates the exploration and mining of tungsten outside China, potentially making it more profitable as Chinese restrictions lead to heightened prices. Yet, despite these upcoming changes, tungsten prices have remained relatively stable, hovering around $335 per metric ton of ammonium paratungstate—a precursor for tungsten production.
In light of these restrictions, the U.S. has escalated its own tariffs on Chinese tungsten by 25%, further steering investors’ attention towards domestic production initiatives. While the U.S. has not engaged in commercial tungsten mining since 2015, recent developments present potential avenues for revival. Almonty Industries, a Canadian company, is advancing plans to restart operations at the historically significant Sangdong tungsten mine in South Korea. Once operational, the Sangdong mine could fulfill approximately 50% of its capacity by summer 2025.
Moreover, the South Korean government is keen to attract foreign investments, primarily to establish the mine as a cornerstone for local industrial growth, potentially creating hundreds of jobs in the region. The commitment from Almonty to supply U.S. markets further underscores the growing interdependence between these two nations amid China’s imminent restrictions.
Looking into the future, experts anticipate a greater demand for tungsten not only in traditional markets but also in emerging industrial sectors. Gracelin Baskaran from the Center for Strategic and International Studies highlights that the U.S. will increasingly look toward “friendshoring”—sourcing materials from allied nations—as part of its national security strategy regarding critical minerals. This approach is expected to support the growth of tungsten projects in countries like Kazakhstan, Australia, and Spain.
Although domestic extraction within the U.S. may take years to gain traction, recent findings from the U.S. Geological Survey reveal roughly 100 sites across 12 states that are rich in tungsten deposits. This includes significant sites in places like Idaho and California, indicating that untapped minerals could soon play a pivotal role in fulfilling domestic demand.
China’s decision to limit tungsten exports represents a significant turning point in the global tungsten market. As the geopolitical landscape evolves, the need for diversified supply chains is paramount. Countries like the U.S. are preparing to invest in domestic capabilities while simultaneously fostering international partnerships. The road ahead is complex, influenced by market prices, regulatory complexities, and increasing demand for tungsten in a variety of applications. Ultimately, as new mining initiatives come online and tariffs reshape trade relationships, the global tungsten market will likely experience shifts that will redefine the industry for years to come.