Minerals in Motion: Issue 02

Tungsten is classified as a critical mineral by several jurisdictions, including the United States and the European Union. Its pricing is now reflecting why.

The cost for  Ammonium Paratungstate (APT), the key intermediate for refined tungsten, has more then tripled since 2024. The scale of the increase reflects tightening physical availability rather than routine commodity volatility.

Interestingly, even though Tungsten is a small market - roughly $6-7 billion annually - it is embedded in semiconductor fabrication equipment, aerospace components, military systems, and high-temperature industrial applications.

Though supply concentration has long been visible, what has changed is the degree to which that now shapes price formation and procurement risk.

China accounts for the majority of global mine output and most downstream processing capacity. Production outside China remains fragmented and limited.

Since late 2024, export licensing requirements have tightened. Only a restricted list of exporters is authorised to ship tungsten products, and expanded dual-use documentation has slowed approvals leading to export volumes declining year-on-year. This is consistent with broader oversight measures applied across other strategic materials.

At the same time, more mined material is being directed toward domestic value-added manufacturing rather than exported as intermediates.

Parallel to these controls, global defence production has reached higher levels following the Russia–Ukraine and Israel–Hamas wars. Ammunition replenishment cycles and weapons-system manufacturing have increased demand for high-density materials, including tungsten.

With limited non-Chinese capacity positioned to scale in the short term, reduced export flow has translated directly into higher prices.

The dislocation reflects longer-term capacity decisions as well.

Over the past three decades, several Western economies reduced domestic tungsten mining and allowed strategic stockpiles to decline. The United States has not operated a commercial tungsten mine since 2015 and remains import-dependent.

Rebuilding capacity is slower and more capital-intensive than policy discussions often imply. Tungsten markets lack deep futures trading and broad hedging mechanisms. Project financing depends heavily on long-term offtake agreements, extending development timelines.

Strategic intent and operational readiness remain misaligned.

Tungsten’s industrial importance exceeds its market size.

It has the highest melting point of any element and exceptional density. Tungsten carbide, second only to diamond in hardness, is essential for cutting tools and wear-resistant components that underpin mining, machining, and semiconductor equipment production.

In defence systems, tungsten is widely used in armor-piercing and other high-density applications where performance constraints limit substitution. In many cases, alternatives reduce efficiency or increase total system cost.

Multiple sectors are drawing simultaneously from a constrained supply base. In concentrated specialty materials, supply adjustments tend to reprice rapidly.

For manufacturers, In the near term, cost absorption or margin compression is more likely than material switching.

Efforts to diversify supply are underway but incremental.

The U.S. Department of Defence has supported feasibility work at projects such as Mactung in Canada, though commercial output remains several years away. The U.S. military has indicated that by 2027 it intends to halt procurement of tungsten mined or processed in China or Russia.

South Korea’s Sangdong mine - operated by Almonty Industries - is one of the most advanced non-Chinese restart projects, with initial production largely secured through long-term offtake agreements. In Europe, Tungsten West is seeking financing to restart the Hemerdon deposit in the United Kingdom.

Central Asia is attracting renewed attention as Kazakhstan and Uzbekistan are positioning themselves as future suppliers, supported by foreign investment and government-backed partnerships. Several initiatives aim to develop local processing capacity alongside mining, reducing reliance on concentrate exports.

Lastly, recycling markets  particularly in Europe - provide incremental support. However, these efforts represent diversification at the margin rather than structural rebalancing.

Tungsten ore is dense and often occurs in narrow vein systems, requiring selective underground mining. Processing involves multiple concentration stages and high-temperature chemical conversion before reaching APT and downstream carbide products. Metallurgical capability is concentrated in a limited number of facilities globally.

Even with policy backing, new capacity cannot scale quickly.

Three variables will shape the next phase:

Tungsten is not a large market. It is, however, deeply embedded in systems where substitution is constrained and delay is costly.

The recent price movement illustrates how quickly concentrated critical-mineral markets can tighten when geopolitical controls and synchronized industrial demand align. The constraint is structural, not merely cyclical.

CME Group is developing a futures contract for rare earth elements - potentially the first exchange-traded hedging tool for the sector. ICE is reportedly assessing a similar move.

Rare earth pricing today is largely shaped within China through domestic spot markets. Outside China, the absence of formal derivatives has limited price transparency and made project financing more difficult. Without hedging tools, producers and lenders carry higher revenue uncertainty.

A listed futures contract would not change supply concentration. It could, however, improve risk management. Forward pricing would offer miners, processors, and manufacturers clearer visibility and may lower one barrier to capital formation.

The key question is adoption. Contract design and liquidity will determine whether rare earths begin transitioning from opaque spot pricing toward institutionalised risk management.

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