The fundamentals for tungsten, a crucial ingredient in toolmaking, including oilfield and mining drill bits, are indeed impressive. The metal that sold for around $50 a tonne in 2000 is now changing hands for $400/t, an eight-fold increase. For years China has had a lock on the supply of tungsten, producing some 80 percent of global consumption, but that is beginning to change as the country implements export restrictions and suspends mining permits in an effort to protect its domestic market. Other countries with tungsten deposits include Russia, Canada, South Korea, Bolivia, Austria, and Portugal – opening up possibilities for juniors eager to crack the Chinese monopoly. Tungsten, however, is not exactly easy to find. The British Geological Survey ranks it among the scarcest elements on earth – rarer than even rare earths. As supply tightens, the demand for the brittle grey and white metal is equally compelling. Tungsten is the hardest metal on the planet, 100 times more resistant than steel, and toolmakers have no substitute for it.
In this exclusive interview, Tungsten Investing News speaks with Christopher Ecclestone, a mining strategist at Hallgarten & Company, who examines the current market for tungsten particularly in light of recent changes implemented by China.
Tungsten Investing News: The tungsten market is under similar pressure to rare earths in that China controls the majority of supply. However, depleted reserves and rising domestic demand have led China to restrict its exports; can you help investors understand what this means for the tungsten market?
Christopher Ecclestone: It’s good news for tungsten. I think that the situation in China is one where China has depleted a lot of its tungsten assets over the years by predatory pricing and has dissipated the value of what they have left. Now they’ve suddenly realized that if they want to have a serious machine tool industry in the future, they need to have a lot of tungsten. And selling it to foreigners does not achieve that goal.
I don’t think that China is trying to hike the price of tungsten. But I think that they are just saying “well we’re going to get keep our tungsten for ourselves and you can go look for your own somewhere else.” The effect of that has been to remove what has been 20 to 30 years of Chinese dumping and now the tungsten price has bounced up.
Cheers!
masspower