Won't Anyone Dig for Tungsten?

0 votes
asked Oct 19 by sonn2019 (20,400 points)

Director of Tungsten Market Research Ltd. in London, and formerly managing director of Roskill Information Services, Seddon says the world's largest non-Chinese tungsten mine will be exhausted by next year. Yet investors are refusing to fund new mines, as he explains here to The Gold Report's sister title, women faceted tungsten

The Mining Report: Tungsten is often called "rare". Just how rare is it?

Mark Seddon: It's not that rare compared to a minor metal such as rhenium, which is used in superalloys. The total rhenium market is maybe 70 or 80 tons per year, whereas the tungsten market is currently around 80,000 tons per year of tungsten metal content. So tungsten's nothing like a rare earth element (REE), but it is considered a strategic metal.

TMR: How is tungsten strategic or critical?

Mark Seddon: It's strategic in that it has industrial uses. It's used in hard metals, cutting tools, etc. It has military applications, as well. The US Defense Logistics Agency built up a stockpile of tungsten over a number of years, which it has pretty much sold off now. And tungsten is a critical metal due to China's dominance of the market. China accounts for 80% or more of supply in various forms.

TMR: Tungsten is often compared to rare earths, but the latter's price is highly dependent on high tech. This is not true of tungsten, correct?Mark Seddon: Yes. Tungsten's main uses are industrial; the largest end user is in cemented carbides, what are known as hard metals. Those can be used in things like cutting tools, mining tools, drill bits and wear parts. So tungsten's demand curve tends to follow gross domestic product growth quite closely, whereas REE demand growth is more volatile.

TMR: But tungsten prices are rising.

Mark Seddon: Yes, tungsten has risen in price because of a change in Chinese policy. Some 10-15 years ago, you could buy as much tungsten as you wanted from China, and the price of ammonium paratungstate (APT) fell to about $100 per metric ton unit ($100/mtu). APT rose to a peak of $470/mtu in 2011 and was above $400/mtu in 2013.

Recently, the market has been a bit quiet. Today, APT sells for about $370.TMR: So would it be reasonable to say that, as with REEs and other metals, the Chinese have decided they want to keep production for internal use?

Mark Seddon: China is now less interested in exporting natural resources and much more interested in adding value to them. Internal demand in China for tungsten, REEs and so on has been increasing as its GDP has grown, recently about 7-10%/year.China has made very little investment in new tungsten mines, so it is really struggling to maintain production at current levels, which also would put pressure on exports because, obviously, it just doesn't have the material available for export.

TMR: Given the tightening of supply, where can we expect tungsten prices to go by 2020?

Mark Seddon: In the short term, I expect that prices will end 2014 quite a bit higher than now and continue rising in 2015. The only significant new supplier that has entered the market recently is the Nui Phao project in Vietnam. This is owned by the Masan Group, which is privately held. It came onstream in 2013, and is, as far as I know, still ramping up to production capacity.

In the longer term, major new tungsten supply will likely not enter the market until the second half of 2015. So the pressure on prices is really going to be upward, especially considering that Europe expects reasonable economic growth this year and slightly better than that in 2015. My feeling is that production shortages will result in rising prices at least until 2016-2017. Then, depending on how much new supply enters the market, a leveling off may occur.

TMR: Given that there's no futures market for tungsten, prices are determined by individual end-user contracts, correct?

Mark Seddon: Yes. Tungsten prices are discovered, if you will, from data on ores, concentrates and APT provided by such publishers as MetalBulletin, Metal-Pages and Platts. The main price that's followed is ATP. There are two prices in China: the internal Chinese price and the export price, which is a shipped-on-board Chinese port price. There's also a European APT price. However, because China dominates the market so thoroughly, Western prices tend to follow the Chinese example.

field1
gfhgff

Your answer

Your name to display (optional):
Privacy: Your email address will only be used for sending these notifications.
Anti-spam verification:
To avoid this verification in future, please log in or register.
Welcome to Questions and Answers, where you can ask questions and receive answers from other members of the community.
...