TUNGSTEN
The China factor: 82%Price forecast: Current: US$445 per lb. 2013: US$485 per lb.Analyst pick: Woulfe Mining (WOF-V)
Tungsten is another metal that China dominates when it comes to production. In the 1980s and ‘90s, China flooded the market with its-low cost production, driving down the price and driving producers in the rest of the world out of operation. Over the last few years, as it has with other technology metals, China has been restricting exports to conserve resources for future domestic needs and has forced illegal mining operations to shut down.
That’s why Ecclestone is bullish on tungsten. It’s an extremely hard metal used for cutting tools as well as in the aerospace industry, military applications and electronics, and users outside of China are looking for a secure source of supply.
Since 2010, the price has jumped to about US$445 per lb. from US$250 per lb. Ecclestone expects the price will likely peak at US$485 per lb. in 2013 but will remain in the US$400-range.
“Prices may peak in 2013 and then start a light decline, mainly because Western world production will pick up,” he writes in a December 2011 report.
But production won’t be enough to seriously move the price lower because China’s strategy is unknown.
Ecclestone recommends would-be tungsten investors to check out Woulfe Mining (WOF-V). It’s trying to revive what was once the world’s largest tungsten mine, in South Korea.
The Sandong tungsten-molybdenum mine shut down due to low metals prices in 1992 after 40 years of production, and Woulfe has been busy proving up National Instrument 43-101 resources. The company is aiming to put out a feasibility study by the end of the first quarter.
Woulfe’s predecessor company, Oriental Minerals, tried unsuccessfully to restart the mine between 2007 and 2010, but Ecclestone believes the new management is much more capable. One of the company’s major shareholders is Korea Zinc, the world’s biggest producer of refined zinc.
— The author is a chase producer at BNN and a former staff writer with The Northern Miner.