EDITOR: | September 4th, 2017 | 12 Comments

Tungsten – When the Tough Get Going

| September 04, 2017 | 12 Comments
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Renowned as the toughest metal (well, at least for toughening up the toughest tools and drill bits), Tungsten has long been looking like a floppy loser. Recent weeks have seen Vanadium take off with the inevitable result that all those watching lithium from one side of the ship have raced to the other side to catch Vanadium soaring out of the depths. As we noted a few weeks back though a bunch of specialty and alloy metals have risen from the dead and Vanadium’s recovery may be the strongest but it is not the only one.
Tungsten has gained a second wind and its chart is now starting to show a steepening curve with the price of Ammonium Paratungstate now up 50% during 2017.

Source: Hallgarten/Almonty
This market is largely owned by the Chinese, with only one substantial Western producer. Thus if the price has been allowed to rise so steeply it’s because the Chinese are cool with that type of a move. From this we would also infer that prices could be allowed to rise more substantially as most of the Western projects on the drawing board are with such hefty capex numbers that it is unlikely they will even be considered before $400 per MTU has been reached.

Conclusion
Next a consolidation above the $300 per MTU mark and maybe even pricing at points north of $350 before 2017 is out.


Christopher Ecclestone

Editor:

Christopher Ecclestone is the EU Editor for InvestorIntel and is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten ... <Read more about Christopher Ecclestone>


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Comments

  • David Bennett

    Will be interesting to see whether the continued price rises will draw the Fanya stock into the market, which could have a dampening effect.

    September 5, 2017 - 9:32 AM

  • Christopher Ecclestone

    Which begs the question as to whether the FANYA stocks even exist, or exist to levels thought to be, or whether the Powers That Be in China have been liquidating them irrespective of whatever the end “holders” of the metals or the bankruptcy courts may think or want.

    September 5, 2017 - 6:03 PM

  • David Bennett

    I think it’s highly likely the stocks exist, given that many that follow the industry had been reporting concern during the Fanya build up of minor metal and rare earth stocks. They were pushing prices higher as ‘investors’ in the exchange were betting on endless price rises as the global economy recovered. A lot of their stock would have been bought at what now looks like a very high cost, but we’re getting closer to it. Obviously there’s always other possibilities, but I’d be very surprised if they didn’t exist at all. Perhaps the governament has moved it to the strategic stockpile for a very modest price – that would be handy for all. Except those investors I suppose.

    September 6, 2017 - 2:14 AM

  • Jack Lifton

    Christopher,
    Thanks for bringing the light of facts and reason to those in the (total) darkness of market ignorance. China, as you well know, controls the global tungsten market with more than 3/4 of global production under its ownership and even more of the tungsten “processing” and “fabricating” capacity actually now in China. Here’s a fair warning to small investors: In the BRICS conference just concluded in Xiamen (That’s not in Iowa) the not Marvel or DC Comics’ “villain” Vlad the Putin put forward the proposal that oil, gold, and “some” minerals be traded in Yuan rather than US Dollars. The man who puts the fear of unemployment in all elected US representatives went on to say that the world needs to become “multi-polar” so that US dominance of financial services (for US read Wall Street and Silicon Valley) does not give the US influence beyond its abilities. On a practical level I predict that this (devolution of dollar traded commodities) will happen by 2025 and that, of course, will put enormous pricing power and supply control into the hands of the economic planners of the Peoples Republic of China and the Russian Oligarch’s Lunch Club (The Russian government). Imagine that the Yuan fluctuates and the price of gold changes for no other reason! The USA is now self sufficient in oil, so, in fact, we can control our own destiny. But for gold and “other minerals” boy (or LGBT equivalent) would we be screwed. I invite globalists and multi-polarists to a great debate on Sir Richard Branson’s private island in the Caribbean (after the hurricane season) on which is the better way to drain the USA of influence and capital the fastest. And by the way, participants are urged to wear tungsten body armor in case any boat people from Florida, Louisiana, or Texas attempt a landing.

    September 6, 2017 - 9:06 AM

  • Bill C

    Who is the western producer of tungsten that you mention? I wonder why former sources of supply of tungsten in places like Cherry Creek Nevada , last produced during WW I, remain off the radar?

    September 11, 2017 - 10:49 AM

    • David Bennett

      Hi Bill – It’s probably Mittersill?

      September 11, 2017 - 11:33 AM

  • Bill C

    Initially I found only Mittersill Ski Club in Austria then nada. Must be a big Co. with interests in all these other countries where production is occurring outside China perhaps? Curious on tungsten producers so here goes.

    http://www.infomine.com/investment/tungsten/

    The list is dominated by Chinese producers : China Molybdenum, Zhaojin Mining, JDC Moly per Chris E.’s article and lo and behold there is a Cdn producer on the list called Almonty Industries , HQ in Toronto. Wonder if they mine out of the Canadian Shield? Looks very small with $0.55 Cdn per share price and like the others in the list, their stock has just recently climbed off a 2 yr. bottom which started in mid 2015 of approx. $0.20 per share. TSX-V:AII (CAD)

    What I’m trying to understand is whether Chris E. and pundits are thinking tungsten’s price is being manipulated by the Chinese Producers because they are the #1 producer/supplier? I couldn’t tell if that was what your thoughts are Chris from your article? anyone else? I am sure all the other producers love seeing the price up or climbing higher as its been slim pickings profit wise for quite a while. I know zero about tungsten and moly. South Korean Steel producers would care though and who else?

    Interesting that there is quite a list of Cdn and New Zealand Juniors under Developers and Explorers on the Infomine Site. Almonty however is classified as a producer and like I said that rise from an approx. $0.20 per share – 2 yr bottom bottom is being taken advantage of as presently its $0.55. Not the healthiest looking 10 yr share price chart either. But I digress….

    Chris do you think this is a sustainable rally in tungsten?, or can you reference any sources giving their thoughts as don’t wish to inadvertently put you on the spot. A few happy So we have a few people worried re time frame for this tungsten commodity rally I guess.

    http://www.infomine.com/intelligence/company/31107/almonty-industries-inc/

    China. Mine production: 71,000 MT. …
    Vietnam. Mine production: 5,000 MT. …
    Russia. Mine production: 2,500 MT. …
    Canada. Mine production: 1,700 MT. …
    Bolivia. Mine production: 1,200 MT. …
    Rwanda. Mine production: 1,000 MT. …
    Austria. Mine production: 870 MT. …
    Spain.

    Tungsten never occurs as a free element in nature. Its most common ores are the minerals scheelite, or calcium tungstate (CaWO4) and wolframite, or iron manganese tungstate (Fe,MnWO4).

    Where is wolframite found in the world? – This mineral was historically found in Europe in Bohemia, Saxony, and Cornwall. China reportedly has the world’s largest supply of tungsten ore with about 60%. Other producers are Canada, Portugal, Russia, Australia, Thailand, South Korea, Rwanda, Bolivia, the United States, and the Democratic Republic of the Congo.

    September 11, 2017 - 1:52 PM

    • David Bennett

      Hi Bill, I’ve only just seen your large comment. Tungsten is a tricky element, it’s not traded on an exchange, so much of the business is done ‘over the counter’ as they say. China is the largest producer and consumer, the current drive on quotas is partly because there is a lot of mining going on in China that is illegal – it gets exported via Vietnam and China gets no revenue.
      The country is trying to drive people to purchase end use products from China, rather than export ore. They are trying to move up the value chain on many metals / rare earths. Makes sense for a long term vision.
      I wouldn’t bet the house on any sustained commodity rally – as the price increases, more and more deposits become viable, there are mines out there that shut down when the price is poor (see cantung) that awaken when the price recovers, so you get a pretty unstable peak / trough cycle.
      It’s not all that different to what you’ll see with Lithium. There is A LOT of lithium on the planet, but until recently there hasn’t been enough desire to go hunting for it. That will change and over the next decade you’ll see a ton of new world record deposits springing up, a fraction will survive to production.
      Tungsten is a very difficult element to work with. It’s deposits tend to be very spotty, or lumpy and there are often a lot of teething troubles with the processing plants. Investment value is found in near-term producers, but I’d be very cautious. Junior
      Mining value shares are about the riskiest things to invest in after all!

      September 12, 2017 - 5:25 PM

  • Bill C

    Also not sure what is meant by FANYA – apologies if I should know that.

    September 11, 2017 - 1:54 PM

  • Bill C

    About Almonty Industries Inc.
    The principal business of Almonty Industries is the mining, processing and shipping of tungsten concentrate from its Los Santos mine in western Spain and its Panasqueira mine in Portugal, as well as the refurbishment of its Wolfram Camp mine in north Queensland, Australia, the development of its Sangdong tungsten mine in Gangwon province, South Korea, and the development of the Valtreixal tin/tungsten project in northwestern Spain. …Interesting in that a debt holder of Almonty with Sr. Mngt are seeking TSX approval to convert a $4M Debenture and $326K outstanding interest into shares at $0.60. OK I’ll keep reading at least out of general education. Flip of the coin or not. No more on AII.

    September 11, 2017 - 2:01 PM

  • Jack Lifton

    Those who believe that the Chinese are manipulating the tungsten price are correct, but it is important to look at why this is being done. It is so that Chinese miners and refiners can be profitable and not require government subsidies in the form of loans and debt forgiveness. China produces tungsten, because Chinese industry and its military need tungsten and China’s goal is to be self sufficient in all critical materials needed for its domestic economy as soon as 2025 when China plans to declare independence from any need for non Chinese produced and sustained technologies. The price will rise to where China needs it to be not to where speculators want to drive it. I think Almonty will wind up supplying everyone but China, and I think the Chinese will be just fine with that. The Chinese are rapidly cornering the supplies of the critical raw materials they see that they need for resource independence. Myopic non Chinese governments and markets are glad to pave the way for some immediate gratification.

    September 12, 2017 - 7:50 PM

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