The tungsten industry is largely characterized by dependence and uncertainty, but there is also the potential for profit. Tungsten prices have gone from about $180 to $430 per metric ton unit (mtu) over the course of three years. Last year, highs of up to $500/mtu were reported.

"That [the factors noted above] is why a company like IMC, which is 80 percent owned by Warren Buffet, would come to Woulfe Mining and want to purchase 25 percent of our tungsten project, and more importantly is guaranteeing to buy 90 to 100 percent of all the resource we can produce," said Smith.

He also said that people who have tungsten mines in operation, or about to come into operation outside of China, are in a very strong position not only to provide tungsten to the western world, but also to China, which has become a net importer of the metal.

But, Tungsten Investing News, asked Smith, are there other opportunities in the market like the Woulfe-IMC deal, where end users are looking to establish a relationship?

"Yes," he said. "I think that most people that are producing resources will be having similar conversations."

The interest in obtaining a supply outside of China is growing, and is a trend that is likely to continue. But while there are attractive opportunities, the risks must be assessed as well.

One risk is that China will engage in practices that reduce or impair competition in the mining space and among end users. This situation could occur in a variety of ways, such as through a restriction of supply or the flooding of the market and lowering of prices below economically viable levels.

To ignore these possibilities would be to overlook history. In the past, China has flooded the market with cheap tungsten, lowering the price the price of WO3 concentrate and APT, and causing exploration companies, miners, and, processors to close their businesses.

Ecclestone said, "the Chinese as both the largest producer and one of the main users have a vested interest in higher prices but that does not mean that they may not push prices down to achieve other policy or strategic goals."

With regard to supply disruptions that benefit Chinese toolmakers while hurting foreign competitors, Ecclestone noted that "if any investors doubt that that might happen then they would be naïve indeed."

This comment highlights one of the reasons why offtake agreements, contracts in which a buyer commits to future purchases, are especially attractive in the tungsten space. By signing them, miners are able to secure sales, a commitment that translates into reduced risk to equity investors.

While the metal is very much needed, it is also very scarce. Tungsten mines rarely produce more than 2,000 tons of ore per day, according to the International Tungsten Industry Association. Generally that ore contains less than 1.5 percent WO3 and frequently only a few tenths of a percent, meaning that large amounts of material must be processed to get relatively small amounts of metal.

Additionally, China is the dominant producer of tungsten, possessing the majority of known resources and the majority of known reserves. These two factors, along with the metal’s scarcity, contribute to the British Geological Survey’s listing of tungsten among the top items on its risk list.

When one recognizes the importance and the scarcity of this resource, the investment appeal becomes obvious. However, there is something that makes certain tungsten investments especially attractive, and that is location. World users are looking to secure supply outside of China.

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Tungsten is practically the only material used for electron emitters.  Although other, more electropositive, metals would yield higher emission rates, the advantage of tungsten is its extremely low vapour pressure even at high temperatures.

This property is also important for electrical contact materials. While more conductive metals like copper or silver evaporate (erode) under the conditions of an electric arc, tungsten withstands these.

Tungsten is one of the most important components in modern integrated circuitry and tungsten-copper heat sinks are used to remove the heat of microelectronic devices. 

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Tungsten is a metal that is critical to modern life, but until now it has largely remained below the investment radar. However, when a legendary investor such as Warren Buffet- or at least a firm in which he has major stakes- invests in a tungsten project, the metal is bound to become a subject of growing interest.

Last month, Woulfe Mining inked a deal with International Metalworking Companies (IMC), a member of Warren Buffet’s Berkshire Hathaway. The companies agreed to create a tungsten pipeline in South Korea.

The deal raised questions as to who has tungsten in their portfolio and what opportunities they see in the metal.

According to an investment note provided by Christopher Ecclestone, Principal and mining strategist at Hallgarten & Company, tungsten has long been a metal of interest to the cognoscenti. And though the metal has not attracted the interest of broader portfolio investors, heavyweight trading houses have started to circle around players of merit.

Tungsten is more than just an extremely hard metal. It is one around which modern life revolves, and in many of the applications for which it is used, there is no substitute.

"If you are going to work with steel in almost any shape, then you need tungsten to machine it," said Nick Smith, Manager of Investor Relations at Woulfe Mining. "Without tungsten western manufacturing comes to an end. You are not working with steel or metal without tungsten. There’s no global mining unless you have tungsten tip drills."

Tungsten has a wide range of applications across many industries, including aviation, electronics, and medicine. But its role in making carbide-cutting tools is one of the ones that is most widely recognized.

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