The Forgotten Strategic Metal
Investing in commodities tends to be centered around the largest ones by volume and total value: oil, gas, foodstuffs, iron, copper, etc., or around “trendy” commodities important for new technologies like battery metals (lithium, cobalt, nickel) and rare earth elements.
Despite their tremendous importance for modern industrial society, some important parts of the periodic table of elements are out of the spotlight.
A good example is Tungsten – a metal required for the manufacturing of semiconductors, rocket engines, and weapons. It is increasingly used in batteries and might even soon be used for nuclear fusion engines.
This makes it a very strategic metal. With almost 90% of its supply coming out of China and Russia, it is important in the context of exploding tensions between the West and the two major Eurasian powers.
At the time of writing, China represents 85% of the world’s supply, followed by Vietnam and Russia.
Source: Almonty
The Toughest Metal On Earth
Tungsten is exceptional for its strength. Its melting point is the highest of all known elements, at 3,422 °C (6,192 °F). It also has a very high density, similar to that of much heavier elements like uranium.
In addition to its mechanical resistance, tungsten is not very chemically reactive. This means it generally does not oxidize or corrode when exposed to adverse conditions. It does not react with water, is immune to most acids and bases, and does not react with oxygen at normal temperatures.
It also has the highest tensile strength of all metals, double that of stainless steel.
When combined with carbon, tungsten carbide forms the only natural material that can scratch diamonds.
Source: Chemistry Learner
Tungsten Supply
Tungsten was first discovered in the 1750s. The main resource for tungsten is wolframite (FeMnWO4), from which tungsten derives its W symbol in the periodic table. It is also found in scheelite (CaWO4). The name Tungsten comes from Swedish, meaning “heavy stone.”
It is a moderately rare mineral at 1.25g per 1,000kg of Earth”s crust, and highly concentrated deposits are somewhat rare, making commercial exploitation difficult.
The toughness of the metal makes it hard and energy-intensive to purify from ore and process into useful metal, increasing production costs further.
Tungsten Applications
Tungsten’s profile makes it useful in many industrial applications whenever its costs are justified by its extreme resistance.
This creates a diversified demand for tungsten, with many newer sectors growing quickly in addition to traditional industrial applications.
Source: Almonty
However, Tungsten might soon see more applications in improved versions of alloys (metal mixed together) called refractory alloys. These are extremely heat-resistant and are made by combining metals from the fifth and sixth periods of the periodic table of elements: molybdenum, niobium, tungsten, tantalum, and rhenium.
Scientists have recently discovered that you can make these alloys more flexible and less brittle, hence making them more useful (although they used a niobium-molybdenum-tantalum-hafnium alloy without tungsten).
Construction, Mining & Industry
Tungsten and tungsten carbide are commonly used to manufacture ultra-hard drill bits and other tools that are able to cut through steel, concrete, etc.
It is especially useful for drilling rock in mines thanks to both its heat and mechanical resistance and for processing metal in industrial processes.
The demand from this segment is relatively stable and mostly follows the overall global economic activity.
Source: Planetary.org
Defense
Tungsten is used to armor various military hardware, including tanks. Its density is also used for armor-piercing ammunition, from small arms calibers to ammunition for air defense, tanks, artillery, and missiles.
Due to this important role, the metal has long been classified as a strategic metal and was one of the resources stockpiled by the US Defense Logistics Agency. This agency might play an important role in the future, as it has long become a source of tungsten to the market, reducing its inventory.
In 2022, the US government has decided to reverse course and rebuild strategic reserves of “minerals essential to defense supply chains, such as titanium, tungsten and cobalt“.
These sell-offs have included 3,000 short tons of titanium, used in building military airframes, and 76 million pounds of tungsten ores and concentrates, used in military turbine engines and armor-piercing ammunition.
“Congress and Pentagon seek to shore up strategic mineral stockpile dominated by China”
Aerospace
Tungsten’s extreme heat resistance has made it a material of choice for rocket nuzzles, both for space rockets and missiles. So far, this has represented only 8% of tungsten’s global demand, but this might quickly rise with a new space race to the Moon and the growing demand to launch and maintain satellite constellations for space-based Internet like Starlink.
Space tourism, future asteroid mining, and point-to-point hypersonic travel via suborbital flights are all likely to increase demand for tungsten as well.
Tungsten is also used in planes’ rotor blades, propellers, inertial systems, etc.
Semiconductors
An often overlooked role of tungsten is in semiconductor manufacturing. Tungsten can be turned into a gas, tungsten hexafluoride, which is the densest known gas, 11 times heavier than air.
This gas allows for the depositing of tungsten in a 10-15 nm thin layer, using a process called “chemical vapor deposition”. The tungsten reacts with the silicon substrate and protects the silicon layer.
Tungsten microscopic needle probes are also used to test semiconductor devices. Tungsten might be useful in new types of computing systems like redox gates, using Tungsten (VI) oxide (WO3) and Vanadium (IV) oxide (VO2).
So, overall, tungsten demand for semiconductor manufacturing tends to follow the industry’s (growing) overall production volume.
Automotive
A new segment for tungsten demand is in battery manufacturing. This is causing a strong growth in demand for automotive applications, which was confined to high-performance crankshafts, pistons, gears, and other mechanical parts before the development of EVs.
2kg of tungsten goes into every EV, used in the cathode and anode of the battery, as well as the semiconductors.
Tungsten might also benefit from the demand for hybrids beyond the battery component, thanks to hybrids being more demanding for high-resistance gearing systems.
“The major automakers seem to be pulling back from EVs and hybrids seem like a bigger bet over the short term at least. And tungsten is even more vital for hybrids because of its importance in the gearing system.
Tungsten is crucial here because its extraordinary strength and heat resistance can stand up to the vehicle’s constant changing between its electric and gasoline or diesel-powered modes.”
Lewis Black, director, president, and CEO of Almonty Industries
Energy
Hydrogen
Besides batteries, tungsten might also be used for low-carbon energy generation.
One application is using it as a catalyst to produce hydrogen. Recently, researchers have found that an alloy of ruthenium, silicon, and tungsten (RuSiW) could be used to produce hydrogen.
In this method, tungsten stabilizes and makes the active part (ruthenium) more durable. This method could replace much more expensive and environmentally damaging catalysts for hydrogen production, like platinum or iridium.
Fusion
Another application of tungsten could be in nuclear fusion, the holy grail of sustainable energy generation. This follows a new record of a 6-minute-long fusion reaction established by the WEST (tungsten (W) Environment in Steady-state Tokamak).
“We need to deliver a new source of energy, and the source should be continuous and permanent. These are beautiful results. We have reached a stationary regime despite being in a challenging environment due to this tungsten wall.”
– CEA scientist and CICLOP chair Xavier Litaudon
This shows that while advanced physics and magnetic field will be key to unlocking fusion, leveraging advanced materials like tungsten might contribute a great deal as well.
Others
Tungsten has several other niche applications, some old and some emerging, which are less relevant to the overall demand.
It is, for example, used in:
Tungsten Companies
1. Almonty Industries (AII.TO)
Almonty is a tungsten miner which is currently mostly producing from a mine in Portugal, in operation for the last 125 years.
The company has been working on expanding the Portuguese mine and owns undeveloped deposits in Spain.
Source: Almonty
The company’s most important project is the ongoing development of a new mine in Sangdong, South Korea.
The mine contains more inferred resources than all of its other deposits combined.
Source: Almonty
As one of the only active and producing tungsten miners in Western countries, Almonty is a key strategic supplier for the defense industry.
So it is an important company for reducing dependence on Chinese supply.
While China prepares to open a huge tungsten mine in Kazakhstan, Almonty is poised to “substantially shift the politics involved with securing tungsten” when the Almonty Korea Tungsten Project’s Sangdong mine comes online within a few months. When it begins production, it will be one of the world’s largest tungsten mines, accounting for 30% of the non-Chinese supply.
Lewis Black, director, president, and CEO of Almonty Industries
The Sangdong mine’s location makes it a perfect supplier to the defense industry, with South Korea a new giant in mass production of “low tech” military gear like tanks, artillery, and ammunition (compared to fighter jets, aircraft carriers, etc.).
Because of its strategic position as essentially the sole large supplier in the West, Almonty was offered a guaranteed price by Plansee. Plansee is a high-performance metal manufacturer and one of Almonty’s larger clients, as well as the owner of 15% of the company.
The minimum guaranteed price was $235/MTU (metric ton unit), with no upper threshold. As Sangdong Mine is aiming for cash costs of $110/mtu, this should virtually ensure a high profit margin for the project.
2. China Molybdenum / CMOC Group (603993.SS)
The reason why Almonty is one of the only non-Chinese tungsten manufacturers is that China has for a long time been the lowest-cost producer of this metal, with virtually only Almonty surviving this competition without subsidies. In addition, tungsten production was heavily subsidized by the state for strategic reasons.
China Molybdenum has molybdenum and tungsten mines in China, copper and cobalt mines in Congo, and niobium and phosphate mines in Brazil.
The cobalt operations make CMOC the second-largest cobalt producer in the world.
The Brazilian operations are the country’s second-largest producer of phosphate fertilizers, making CMOC the second-largest producer of niobium in the world.
Source: CMOC
The company also owns IXM, a global base metal trader with 300 employees and more than 5 million metric tons of metal traded.
The company is looking to innovate to keep production costs low, notably thanks to the Chinese mines being “the first in the world to introduce 5G technology to autonomous mining equipment and a pioneer in deploying electric mining trucks”.
While not purely a tungsten company, the company has evolved to become a world-leading producer of “niche” metal. This position will be reinforced with an expansion into lithium in Bolivia through a partnership with battery giant CATL (CATL owns 25% of CMOC since 2022).