Could tungsten be the next commodity to go boom?

With the antimony market booming and setting the share market alight, Bulls N' Bears has gone looking for the next critical metal shouting out for attention from new technologies – and it could be tungsten.

Driven by demand in the industrial, renewables and defence sectors – and a shrinking supply – the alloy-hardening metal could soon join the chorus of critical minerals that are making all the noise. It could also trigger a quick market rerating for those who can find it and we’ll take a look at some of them shortly.

But first, the price of tungsten today is at a crossroads.

On the one hand, its use as a filament in incandescent lights, which drew more than 30 per cent of global production at its peak, has dropped to virtually zero. On the other hand, new and evolving technologies are rapidly taking up the slack, with some analysts suggesting a supply deficit may start to appear in the next year.

However, it is the coming together of several other factors recently that has forced an urgent need to find alternative tungsten supplies, placing the metal firmly on the critical supply list. They include the imbalance of production between non-Western and Western countries, against a backdrop of growing geopolitical risks and the growing demand from emerging technologies.

Perhaps the most influential factor on future prices may come from a decision by the United States to stop buying Chinese tungsten in the next two years and the simultaneous depletion of its strategic tungsten stockpile, which stands at just 10 per cent of its post-war peak and could be entirely exhausted by as early as next year.

So, it is not too much of a stretch to see a perfect storm brewing on the horizon, where tungsten prices rachet up higher and higher.

Present in the natural world in the form of wolframite and scheelite, tungsten has a long-held promise as a critical metal because of its unique properties. Featuring the second-highest melting point – 3422℃ – of any of nature’s elements after carbon, tungsten also has an enormous 980 MegaPascals (Mpa) of tensile strength.

Another feature of the hardy metal is that it is immensely dense, with a specific gravity (SG) – almost equal to gold – of 19.25 and beaten only by osmium, a member of the platinum group metals with an SG of 22.59. It is also notable as a thermal conductor, ranking only behind gold, silver, copper and aluminium.

Although most of the global demand comes from its use as a hardening alloy in steel used to manufacture cutting tools or drill bits and as an additive to armour plating in the defence sector, the metal is also widely deployed in the electronic technology – especially in mobile phones, providing the vibrator for the ring function and in some instances, as a thin tungsten alloy shield to protect users from absorbing micro particles of electromagnetic radiation.

As its natural properties would possibly suggest, tungsten has also found itself an increased audience from the booming space sector where it is used in rocket nozzles and the burgeoning renewable energy sector, particularly in the advancement of solar technology. Recently, scientists at Stanford University in the US developed a semi-transparent and low-cost solar cell using tungsten instead of silicon, allowing for the product to potentially replace glass windows.

Unlike other critical metals, however, tungsten is yet to enjoy the comparable price rise enjoyed in recent times by rare earths, niobium, lithium and antimony. To understand why, it is necessary to look at the supply and demand balance.

But before doing so, it is worth noting that tungsten is priced in US dollars per metric tonne unit (mtu), which translates to one mtu being worth 10kg, or 100mtu equivalent to one metric tonne.

The tungsten price has generally been volatile across the past century, trading normally at about US$250mtu (AU$365), but has had multiple surges during major geopolitical events such as World War I, the Korean War and the 1970s Cold War period when it reached as high as US$800mtu (AU$1170mtu). Another peak occurred in 2010 when it hit US$600mtu (AU$875mtu), reflecting trends across the broader commodity market.

It was then six years later that the wheels dramatically fell off, when the collapse of the Chinese Fanya Metals Exchange led to a collapse in prices from US$349mtu (AU$510mtu) in 2014 to US$182mtu (AU$265mtu) in 2016, after 40,000 tonnes – equivalent to six months’ worth of global supply – was ignominiously dumped on the open market.

Since then, prices have slowly trended northwards (apart from a COVID dip in 2020) to flatten out at US$332.5mtu (AU$485mtu).

China, as with several other critical metals, is by far the biggest producer on 63,000 tonnes per annum of tungsten with Vietnam, Russia and North Korea delivering a further 7000 tonnes into a total global market of 78,000 tonnes per annum.

With all these macroeconomic factors in mind, let’s have a look at some of the ASX-listed companies that are hoping to cash in on a rising Tungsten price.

EQ Resources: As a pure tungsten play, EQ stands out as a shining example of perseverance, having leased tungsten rights from a local road aggregate quarry operator for more than 20 years at Mt Carbine in Queensland – but without the financial means to push the project forward.

Mt Carbine has a rich history, having been discovered in the late 19^th century and was a major producer into the 1980s before being mothballed. However, the deposit is still considered relatively unexplored.

It was in 2019 that EQ finally caught a break and was able to purchase 100 per cent of the mine and mineral rights. With the financial help of German specialty metals giant, Cronimet Asia, in exchange for 50 per cent of the mine, the company was able to restart operations.

Now producing 9040mtu a month from its Australian venture, EQ also took the plunge earlier in the year to add to its portfolio by buying the operating Saloro mine in Spain. After some deft handywork by the company’s chief executive officer Kevin MacNeill to improve recoveries by almost 50 per cent to 65 per cent, it now contributes an additional 9018mtu of tungsten per month, taking EQ’s annual production to almost 217,000mtu.

Importantly, EQ and Cronimet recently came to an agreement to simplify the ownership structure of Mt Carbine, with the latter selling its 50 per cent back to EQ for US$7.5 million (AU$11 million) in shares at a deemed price of 9c – 63 per cent above the stock’s current price.

A further deal in September with US-owned tungsten manufacturer, Elmet Technologies, led to an agreement to purchase $30 million worth of tungsten concentrate from EQ across five years. The deal also called for EQ and Elmet to jointly work with the US Government on future critical metals supply chains, cementing the company as a serious player in the sector.

With 100 per cent ownership of both Saloro and Mt Carbine and unit costs of production continuing to improve – currently running at about US$225mtu (AU$328mtu) – EQ has finally been able to focus on profitability by improving mining and processing methods. It now expects to generate more than US$80 (AU$116 million) in revenue for the current financial year.

Group 6 Metals: Previously known as King Island Scheelite, this is another pure tungsten hopeful, holding the rights to the Dolphin Tungsten mine on King Island near Tasmania. With 50 per cent of the known resource still unmined, the 4.43 million-tonne deposit, grading 0.92 per cent tungsten was set to restart within 12 months, before being beset with financial difficulties.

Currently, suspended from quotation, Group 6 has entered into discussions with its senior secured lending group in the hope of completing a recapitalisation, which although potentially damaging to equity holders, could ultimately bring the mine into production at a nameplate capacity of 200,000mtu per annum for an eight-year mine life.

Almonty Industries: With exposure to tungsten in Korea, Portugal and Spain, Almonty has taken a rather different approach to producing the metal. As a specialist in acquiring and optimising distressed and underperforming tungsten operations and assets, the ASX and TSX dual-listed company first recognised the potential upside to the sector when it bought the moribund, but giant Sangdong mine in Korea in 2006.

Although, no longer in production, at its peak the mine produced 50 per cent of the country’s export revenue in the post-Korean War decades and has been optimistically touted by management as still being capable of producing 50 per cent of the world’s tungsten supply outside of China.

Almonty has spent much of the past few years conducting studies on the project and building a pilot plant to test flotation processing technology in efforts to improve recoveries from 60 per cent to more than 80 per cent.

The company has also built a similar pilot plant at its Panasqueira mine in Portugal. But it is Sangdong that is expected to be the biggest contributor to its portfolio, adding an additional 2300mtu of to its current production of 200mtu within a year.

However, this is still a far cry from the dream of being the worlds biggest producer and much time, work and capital will be required to get it there.

Tungsten Metals Group: The newest company about to hit the boards, with an $12 million initial public offering (IPO) slated in the next month, has a focus on producing high-quality ferrotungsten through its Vietnam manufacturing facility in Vinh Bao, southeast of Hanoi.

By buying in the raw material before producing a refined product outside of China, the company hopes to use the listing and additional capital to raise awareness of its activities and expand operations. At a post IPO market capitalisation of $38 million, it has a potential price-earnings ratio (P/E) of one at full production.

Investigator Resources owns 25 per cent of the 12,000 contained tonnes Molyhil tungsten project, 220km north-east of Alice Springs in the Northern Territory.

The company elected to take up its option in May after a farm in agreement was inked with Thor Energy at the back end of 2022 to earn up to 80 per cent of the project from spending a total of $8 million in exploration and issuing $500,000 worth of shares. Part of the deal also included acquiring Thor’s 40 per cent interest in the nearby Bonya tungsten project – which has a 1500-tonne tungsten resource – that it now shares with Arafura Rare Earths.

Tungsten Mining, as its name suggests, is entirely focused on exploration for the hardening metal, with five projects on the boil in Australia. Its most advanced prospect is at Mt Mulgine in Western Australia’s Murchison region and it boasts a resource of 410,000mtu of tungsten, 71,000 tonnes of molybdenum, 1 million ounces of gold, 44 million ounces of silver and 92,000 tonnes of copper.

Running a close second to Mt Mulgine, with an estimated resource target of 330,000mtu, is the company’s Hatches Creek polymetallic project that lies 200km south of Tennant Creek in the NT.

Having picked up a 20 per cent interest in 2019 from GWR Group in return for reimbursing that company for past exploration expenditure, Tungsten crunched a deal in August to buy the remaining 80 per cent in exchange for 107 million shares at a deemed price of 8c each.

The company’s other projects – Kilba and Big Hill in the Pilbara – are complemented by its Watershed play, 25km north of EQ’s flagship Mt Carbine mine.

Although Minerals 260 is not currently exploring for tungsten, the company is the owner of the Aston lithium-rare earths project in the Gasgoyne and it also hosts the Nardoo Well polymetallic prospect. Acquired from EMetals last year, Nardoo – along with niobium, rare earths and tantalum – also boasts historical tungsten hits discovered by Whim Creek Consolidated in the early 1980s. That company found 23 tungsten occurrences grading up to 3.4 per cent within skarn mineralisation across a total 9km strike.

Green Critical Metals is a budding graphite hopeful, as the owner of the earn-in rights to up to 80 per cent of the McIntosh Graphite project in the NT. It also has the tidy Torrington tungsten and topaz project in under its stewardship in the New England Orogeny of NSW.

Hosting tungsten in silexite, the abundant associated quartz-topaz rock at Torrington means it is also the biggest in-situ topaz resource in the world.

Choosing to ignore both minerals in favour of following up some historical lithium markers, the project’s history is rich in tungsten mining dating back to the early 1900s, with four small mining companies working the area to supply more than 5000mtu for the demands of World War I.

Further efforts were sporadically made to mine the metal between 1940 and 1980, only ceasing after metal prices declined. One thing that is clear from the records, however, is that the deposit graded consistently above 0.7 per cent, lending some support to its significance as a producing area.

In Tasmania, Elementos is busying itself with the Cleveland project. Drilling during the year was highlighted by a 1100m diamond hole that was aimed at identifying additional tungsten, tin, copper and fluorite mineralisation at the deposit, which already has 56,000 tonnes of tin, 22,200 tonnes of copper and 12,000 tonnes of tungsten.

The results announced at the beginning of this month have shined a significant spotlight on the “Foley Zone” tungsten mineralisation ranging across a 465.9m section with continuous zones, including a 319.5m chunk averaging 0.18 per cent tungsten. Higher-grade tungsten zones of up to 1.6 per cent were also discovered, alongside valuable critical minerals such as rubidium, molybdenum, bismuth and fluorspar.

European Metals owns the Cinovec project in the Czech Republic. While the company is focused on delivering a big, low-cost, hard-rock lithium mine at site, the deposit actually has its historical roots in tungsten dating back to the 14th century.

Newly-named Critica has set its sights on becoming a rare earths producer at its Jupiter target east of Geraldton in WA after revealing a series of high-grade intercepts. With a maiden resource due by the end of the year, the company has been compelled to refocus capital on what it sees as a potential company-maker.

Consequently, its Mount Lindsay tungsten-tin project in Tasmania has recently been put up for sale. Hosting one of the biggest undeveloped tin deposits in the world, it contains more than 80,000 tonnes of tin metal and a significant 13,000-tonne tungsten resource, with the sale expected to attract some early attention – particularly if tungsten prices look likely to run.

And finally, Apollo Metals is our last ASX-listed companies with a tungsten twist. As a holder of the Couflens exploration permit in France, covering the historic Salau tungsten mine, the company has been bogged down in legal proceedings for almost five years.

But, at least on the face of it, the project deserves an honourable mention because of its historical production of more than 900,000 tonnes. It is also still open at depth, with mineralisation of up to 2.5 per cent making it one of the world’s highest-grade mines.

Previously closed in 1986 because of low tungsten prices, the mine was taken over by Apollo from Couflens in 2017, with the former purchasing an 80 per cent stake in the project. After a series of promising initial results, including some gold samples from rock chips as high as 24 grams per tonne, the permit was suddenly cancelled in 2019 by a court in Toulouse due to concerns of financial capability and issues with the public consultation process.

Since then, the case has been back and forth between the Bordeaux Court of Appeals in 2020, which confirmed the earlier decision, followed by France's highest court – the Conseil d’Etat – in 2022. It reversed the appeal court’s view to allow the go-ahead, only for it to then be kicked back into touch once again by the Bordeaux court on the grounds of environmental concerns.

Apollo is now chasing compensation and awaiting a decision from the Toulouse Administrative Court and considering a potential second appeal to the Conseil d’Etat.

To the naked eye, it seems Apollo has been hit with a concerted effort by locals employing lawfare to hold up any progress. But should the company eventually find a way through the legal quagmire, it could finally find itself in control of a top-shelf tungsten asset against a backdrop of rising prices.

A final mention is due for unlisted company, Strategic Metals Australia, which owns the White Rock tungsten-tin deposit in NSW. Historical activity includes the mining of 500 tonnes of ore up to 1938 that still remain in dumps at site.

More recently, a JORC resource defined by Paradigm Metals of 260,000 tonnes at 0.7 per cent tungsten and 0.15 per cent tin was published, but the lode not considered economically viable at the time. The resource was then further upgraded in 2012 to 400,000 tonnes at 0.8 per cent tungsten and 0.15 per cent tin, with recoveries in excess of 80 per cent making it one of the higher-grade deposits in Australia.

To be fair, tungsten mining and ASX-listed companies exploring for the metal have had a chequered past in Australia. The price volatility, driven earlier by geopolitical events and more recently by China’s iron grip on the market, have made investment in production an extremely risky game.

However, it appears that the stars may be about to finally start aligning for the heavyweight metal. Not only are global supplies, including China, starting to dry up, but the metal’s elevated status onto the critical list in recent years, has also meant that governments around the world are starting to recognise the importance of securing a reliable future supply.

If, as forecast, 2025 is the year that the US finally drains its strategic reserve – coupled with its decision to stop buying Chinese material – then the tungsten price and its miners may well just start to feel the love from investors looking for the next “must-have” stalwart metal.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au