China, the world’s dominant supplier of tungsten, a critical metal crucial for numerous industries, is implementing export restrictions starting December 1st. This move, impacting a metal vital for everything from weapons to semiconductors, marks a significant shift in the global supply chain landscape and is sending ripples through international markets. This comes at a time when the US and other nations are actively seeking to diversify their sources of tungsten away from China, due to escalating geopolitical tensions and concerns over supply chain security. The timing, coupled with a renewed effort by countries like South Korea and the US to ramp up domestic production, signals a potential power struggle for control of this vital resource, driving up prices and altering the future of the industry.
Key Takeaways: China’s Tungsten Squeeze
- China’s Export Restrictions: Beginning December 1st, China will limit the export of tungsten, a critical metal used in various applications, requiring licenses for export of “dual-use” goods.
- Geopolitical Implications: The move is fueled by rising US-China tensions and the US Department of Defense’s ban on procuring China-mined tungsten starting January 1st, 2027.
- Global Supply Chain Shift: China’s dominance (previously controlling 80% of the supply chain) is challenged as countries like South Korea and the U.S. intensify efforts to reopen domestic mines and secure alternative sources of tungsten.
- Price Impacts: While current prices haven’t drastically reacted, experts predict a significant price jump (around $50 per metric ton unit) would be needed to make non-Chinese tungsten mining vastly more profitable.
- “Friendshoring” and Diversification: Nations are pursuing strategies of “friendshoring”—building supply chains with trusted allies—to reduce reliance on China and bolster their critical mineral supply security.
China’s Strategic Move: A Response to Growing Tensions?
China’s decision to restrict tungsten exports is viewed by many as a strategic move responding to increasing pressure from the West. For decades, Chinese businesses flooded the global market with cheap tungsten, effectively driving out competitors and establishing near-monopoly control. Now, faced with a growing push for diversification, especially from the U.S., China seems to be leveraging its existing market dominance to influence global prices and supply. This isn’t simply about economics; it’s about geopolitical leverage, impacting national security considering tungsten’s applications in military and high-tech industries. As Christopher Ecclestone, principal and mining strategist at Hallgarten & Company, puts it, **“It’s a bit late for the Chinese on tungsten. Everybody needs more tungsten.”** This statement highlights the growing global recognition of tungsten’s importance and the urgency to secure independent sources.
The Importance of Dual-Use Goods Restrictions
The Chinese Ministry of Commerce’s new regulations target “dual-use” goods, meaning materials with applications in both civilian and military sectors. This categorization underscores the strategic significance of tungsten and highlights the potential for such materials to become tools in geopolitical maneuvering. The licensing requirement for tungsten exports adds another layer of complexity to international trade, increasing uncertainty and potentially driving up costs for importers reliant on Chinese supplies.
US Countermeasures and Tariffs
The United States isn’t standing idly by. In September, the U.S. increased tariffs on Chinese tungsten by 25%, a direct response to China’s market dominance and a bid to incentivize domestic mining and processing. Public comments supporting these duties, some even advocating for a 50% increase, reveal a strong drive to safeguard U.S. interests and enhance national security. With a potential Trump administration on the horizon and the promise of further tariffs, the economic incentives for reviving domestic tungsten mining in the U.S. are significantly growing. As Cullen S. Hendrix from the Peterson Institute for International Economics notes, additional tariffs could greatly enhance the commercial viability of reopening domestic US mines.
The Rise of “Friendshoring”: Rebuilding Tungsten Supply Chains
The global response to China’s restrictions is indicative of a broader trend: “friendshoring”. This strategy involves diversifying supply chains by partnering with trusted allies and countries with shared values, reducing dependencies on single or potentially adversarial nations. South Korea, with its significant tungsten deposits in the Sangdong mine, is at the forefront of this trend. Almonty Industries, a Canadian company, is spearheading the reopening of this mine, aiming for 50% of its potential output by summer 2025.
South Korea’s Sangdong Mine: A Key Player
The Sangdong mine’s revival represents a significant step toward reducing global reliance on Chinese tungsten. The collaboration between Almonty Industries and South Korean local government is a testament to the “friendshoring” strategy in action, highlighting a commitment to mutual economic benefit while bolstering supply chain security. With Almonty committing 45% of Sangdong’s output to the U.S. market through a long-term contract, this mine becomes a focal point in the ongoing effort to diversify away from China. The U.S. Geological Survey’s visit to evaluate the Sangdong mine’s capabilities underscores the urgency and importance of this project.
Beyond South Korea: Global Efforts to Diversify Tungsten Production
The efforts to develop new tungsten sources are not limited to South Korea. Projects in Australia, Kazakhstan, and Spain are also underway, contributing to a wider global effort to reduce dependence on China. This diversification is crucial not only for economic stability but also for mitigating potential disruptions caused by geopolitical events or policy changes made by any single nation. This multi-faceted approach underlines the international community’s recognition of the risks associated with a concentrated tungsten supply chain and highlights the crucial need for global cooperation.
US Domestic Tungsten Production: A Long-Term Strategy
Although the U.S. hasn’t engaged in commercial tungsten mining since 2015, the country boasts considerable deposits. The U.S. Geological Survey has identified numerous potential sites across 12 states. Recent developments demonstrate a renewed focus on domestic extraction. Demesne Resources’ plans to acquire the IMA tungsten mine in Idaho signify an active effort to tap into domestic resources and support American industry. For Demesne, this undertaking is seen not just as a resource acquisition but also a future profitable enterprise. Although the process of establishing a mine and initiating production takes time (potentially years), the growing economic incentives, along with national security concerns, drive forward these re-opening efforts.
Conclusion: The Future of Tungsten
China’s tungsten export restrictions signal a fundamental shift in the global minerals landscape. The world is witnessing a strategic realignment in supply chains, driven by geopolitical tensions and a concerted effort to diversify away from over-reliance on a single nation. While China’s immediate impact is yet to be fully realized by current prices, the long-term effects are clear – pushing multiple nations to invest heavily in their own tungsten resources, boosting production and forging stronger international alliances toward supply chain independence and security. The rise of “friendshoring,” coupled with the renewed focus on domestic production in countries like the U.S. and South Korea, promises a more diversified and resilient global tungsten market in the future, though the journey to achieving true independence from China’s prior dominance will be long and complex.
