Here’s a country to watch: Vietnam. It is positioning itself to become a player in one of the critical metals, tungsten. Critical because while it is not yet in short supply or there is any immediate concern that we could run short of it, it is controlled by China. And the rest of the world does not like that. As with rare earths, so with tungsten. China is the biggest producer, has enormous (in relation to the size of the market, which is globally around 140,000 tonnes a year) resources and — again like rare earth sales — wants to retain as much control of the global market as it can. You can see this in the processed form of ferrotungsten. The Chinese produce 80% of the world supply of mined tungsten and have restricted supplies to the rest of the world; through their control of tungsten, China wants to ride supreme in ferrotungsten, a super alloy with a melting point second only to carbon. Bolivia, Portugal and Russia also supply some ferrotungsten, but China is well out in front.
Vietnam is tackling China and tungsten on two fronts. First, it is getting into tungsten mining. What is regarded as a major deposit, Nui Phao in Thai Nguyen province is about to become the world’s second largest tungsten mine (it will be the biggest producer of bismuth and fluorspar as well). The mine is expected to produce around 4,000 tonnes a year of tungsten. Second, it is getting into the ferrotungsten and other downstream businesses. An Australian company, Hazelwood Resources (ASX:HAZ) has got its ferrotungsten plant already into production. The plant is meeting the stringent requirements of European and Japanese consumers, which between them need about 4,800 tonnes a year. An analyst at Perth-based broker Hartleys says Nui Phao will be a supply of tungsten on Hazelwood’s doorstep. In another downstream move, Munich-based HC Starck, the world’s leading trader in technology metals (they also handle molybdenum, niobium, tantalum and rhenium), is to build a tungsten chemicals plant in Vietnam.
Not that the Chinese are sitting still: Xiamen Tungsten has announced it will build a new hard alloy plant to meet increasing tungsten demand, this being on top of an earlier deal where Xiamen teamed up with China Minmetals Non-ferrous Metals to invest in two hard alloy manufacturing projects of 3,000 tonnes/year and 2,000 tonnes/year respectively which are expected to be put into production in August 2014.
China has about 60% of the world’s known tungsten and supplies 85% of the world’s needs. As the Vietnamese have noted, Europe, Japan and the U.S. between them consume 55% of the globe’s use but between them mine only about 5% (and much of that comes from Spain).
According to China Business Intelligence, Jiangxi, Hunan, Henan, Guangxi and Fujian are the major tungsten producing regions in China. In 2012 the total output of tungsten concentrates in the above provinces accounted for over 88% of the total output of tungsten concentrates in China. Jiangxi ranked the first with output of tungsten concentrates at 46,500 tons; in total, that province has more than 400 tungsten mines. Jiangxi Rare Earth Metals Tungsten Group plans to invest RMB1.54 billion ($254 million) to expand its overall tungsten smelting and processing capacity to a record 57,200 tonnes. The capacity to produce high end tungsten based products will reach 4,300 tonnes by the end of 2015.
According to the report, most of the tungsten enterprises in China have been upgrading their manufacturing chain from ore concentrate to the finished product such as hard alloy tools, and have narrowed the gap in terms of product innovation and product quality compared with foreign enterprises. The hard alloy sector is seen as the key growth area for the future and will help to push up demand for tungsten in China to 110,000 tonnes by 2017.
The rest of the world is only starting to get back into tungsten mining. But another huge leap is needed to compete with China on downstream development.