Global Tungsten Markets Renewed Growth Following Years of Oversupply

Roskill, a notable industry source in terms of analysing specialty metals noted last year that global tungsten markets were returning to growth following several years of oversupply and low prices.

In a 10 year outlook statement, Roskill said, “Tungsten market fundamentals have changed as demand from defence, industrial, and oil and gas applications has picked up, just as environmental policies in China have curbed supply and added cost pressures for producers.”

The issue of supply is potentially a long-term price driver as China is the largest producer of tungsten globally, accounting for more than 80% of supply of tungsten concentrates in 2017.

A tightening in environmental restrictions has impacted the supply of many metals mined in China, with coal being severely impacted in recent years due to both environmental and mine safety issues.

Roskill reported that China’s Ministry of Ecology and Environment had flagged a second round of central environmental inspections across all provinces within the next three years, an initiative that could result in either mine closures or the instigation of compliance demands that would result in increased costs of production.

This could potentially render some mines uneconomical, prompting the need for the manufacturing giant to source tungsten from overseas producers. Such a scenario where supply is constrained and demand increases should theoretically drive up prices.

Shining the spotlight on three ASX listed tungsten plays, it certainly appears that these stocks could be in the early stages of a recovery, and indeed in some cases recent developments have been transformational.

Reuters reported that shares in metals miner Apollo Minerals rose as much as 40% to 14 cents on Monday, representing its best day in more than two years. This came on the back of the company receiving approval to reinstall mine services at its high-grade Salau tungsten mine in France.

Management has already shortlisted preferred drilling contractors for the initial underground drilling program at Salau designed to confirm known zones of tungsten mineralisation and test for extensions of these zones as a precursor to estimation and reporting of a Mineral Resource Estimate in accordance with the JORC Code.

Discussing the significance of this development and in particular referring to the company’s potential to supply nearby markets, Apollo’s Executive Director, Hugo Schumann said, “The Salau mine has the potential to create significant jobs in the Ariege department and to provide a strategic supply of tungsten to French industrial companies who currently rely on China for most of its supply of this critical raw material.”

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