The emerging new forces in one of the most critical of metals — tungsten
Warren Buffett and one of New Zealand’s richest families are backing it, the Chinese are restricting the exports of it, and the price is staying buoyant. I am talking about tungsten (again) the hardening metal that is well and truly one of the world’s most critical metals (including being near the top of the British Geological Society’s “Risk List”). Most recently I wrote about it in the context that one of InvestorIntel’s members Tasman Metals (TSXV: TSM) had picked up six tungsten targets.
For those just catching up on the tungsten story, China produces 80% of the world’s supply of that metal and is now restricting exports to conserve its resources. But the country’s industrial growth has now also made China the world’s largest user of tungsten. So there is a big effort outside China to find new supplies, with many projects being dusted off ones that were abandoned or closed when China flooded the world with tungsten in the 1990s and drove down the price. (China then had a serious balance of payments problem so resorted to dumping all sorts of metals in order to earn much needed foreign currency; it also had the added benefit of driving out of business most foreign mines producing those metals.)
Now an Australian company, Elementos (ASX: ELT), which has tin and tungsten projects in the island state of Tasmania, has produced a listing of the largest undeveloped tungsten resources in the world. It makes interesting reading, so here are the details are of the potential new forces in the world of tungsten mining.
There’s Mactung in the Yukon, owned by North American Tungsten Corp (TSX: NTC) which has a resource (inferred, probable, indicated) of 53.4 million tonnes at varying grades. Projected mine life is 11.2 years for the underground operation — where the higher grade material is to be found — with the potential to add 17 years by developing an open pit to exploit near surface, lower grade resources.
Next on the list is Northcliff Resources (TSX: NCF) which has the Sisson tungsten-molybdenum project in central New Brunswick, Canada. This company has just closed a financing deal with a subsidiary of Todd Corp, a family-owned New Zealand company which has a growing portfolio of mineral investments. (Todd was founded in 1885 to process hides and wool and went on to start New Zealand’s first oil company and then assemble Chrysler vehicles and the British-made Hillman and Humber cars.) Sisson contains 22.2 million metric tonne units (mtu) of tungsten (mtu = 10 tonnes of contained metal) and 154.8 million pounds of molybdenum.
Then there’s Northern Dancer owned by Largo Resources (TSXV: LGO). As described by the company, this project is located in south central Yukon along the B.C./Yukon border with direct access from and to the Alaskan Highway. Largo says it has one of the world’s largest undeveloped tungsten-molybdenum deposits with a forecast 49-year mine life and is projected, over its first 23 years of operation, to produce 8,300 tonnes annually of tungsten (and annual output of 2,670 tonnes of molybdenum).
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Far nearer production is Wolf Mining (ASX: WLF) which has the Hemerdon tungsten and tin project located near Plymouth on Britain’s south coast.
Then there’s Nui Phao in Vietnam which says it has one of the world’s largest identified tungsten deposits outside China, owned by unlisted Majan Resources. As I reported here two months ago, Vietnam is tackling China’s tungsten dominance 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.
King Island Scheelite (ASX: KIS) has had disappointments in trying to find projects partners for its deposits on KIng Island, located in Bass Strait just off the Tasmanian coast. This is another old project. As described by the company, the former mine at Dolphin was run as an open pit up until 1975, and as an underground mine until closure in 1990, due to the tungsten process collapse. The underground operation at nearby Bold Head also closed at this time. All equipment was removed after closure, the pit allowed to flood, and the site fully rehabilitated.
Woulfe Mining Co (TSXV: WOF) has a 100% interest in the Sangdong tungsten/molybdenum Project located in South Korea. The Sangdong deposit hosts what the company describes as “one of the largest tungsten resources in the world“, and reminds us that the mine was the leading global tungsten producer for more than 40 years prior to closure in 1992. Low metal prices, not the exhaustion of resources, led to the mine’s premature closure. Woulfe is planning downstream processing to produce ammonium paratungstate (APT) with commissioning scheduled for 2014. Project financing is underpinned by the recent announcement of the deal with The International Metalworking Companies B.V., 80% owned by Warren Buffett’s Berkshire Hathaway. Under the agreement, IMC will contribute $35 million cash for a 25% interest in the Sangdong mine and concentrator, and will construct and have a 55% interest in the APT plant.
Note: These projects are discussed as a list compiled by Elementos. InvestorIntel has not undertaken independent verification and information here includes statements made on company websites.
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