WorldTungsten_Sept2012

© Metal-Pages Ltd. All rights reserved.

Tungsten projects progressing well, but significant new

production unlikely before the end of 2013

Problems in the ‘Eurozone’ continue to dampen

demand for commodities, including tungsten

Tungsten prices on the slide, but market fundamentals

are still strong and prices should recover when demand

returns

Mark Seddon

Tungsten Analyst

Tungsten Market Research Ltd

E: [email protected]

World Tungsten Report September 2012

© Metal-Pages Ltd. All rights reserved. 2 | P a g e

September 2012 World Tungsten Report

Supply

Supply of tungsten has struggled to match

demand growth in recent years, with output of

tungsten supplemented with sales of material

from stockpiles, particularly those held by

governmental organisations (e.g. China, Russia,

the USA). Additionally, the period of low prices

for tungsten in the 1990s and early 2000s led to

the majority of western producers exiting the

market, leaving China to dominate supply.

The market’s unhealthy reliance on Chinese

tungsten has continued despite a general

strengthening in prices since 2008. The Chinese

government has put in place a number of

measures to consolidate and control its domestic

tungsten industry and to limit production and

exports of most forms of tungsten. In spite of

pending WTO action with regard to China’s

exports of a number of products, including

tungsten, the Chinese government appears

unlikely to stop or reverse its plans for tungsten.

China is now the largest consumer of tungsten

accounting for over 50% of world demand,

according to the ITIA, as well as being the fastest

growing market. As a result, China will need a

growing portion of its tungsten output to satisfy

domestic demand and, if anything, exports of

tungsten (particularly intermediate products) will

be restricted even more in the future.

All of this presents a threat and an opportunity

for the tungsten sector outside of China. The

opportunities for increased output of tungsten

ores, concentrates and intermediate products are

clear as supplies from China are likely to become

more and more restricted. On the other hand,

China’s drive to add value to its tungsten

resources by exporting more processed forms of

tungsten, as well as producing and exporting

products that use tungsten, presents a real threat

to those western companies that are involved in

similar operations.

Supply from current operations in the tungsten

industry is unlikely to grow at a significant rate in

the coming years. In China, although there are

plenty of resources below ground, any new

operations or capacity expansions at existing

producers are more than likely only there to

replace mines/deposits that are becoming

exhausted. The days when China could ‘turn on

the tap’ and flood the market with cheap

tungsten are long gone. Most decisions regarding

future output of tungsten are taken with

domestic demand in mind.

Of the current major producers outside China

few, if any, are willing or able to increase

production to any major extent. At Cantung in

Canada, the largest mine producer outside China,

output is already at close to capacity and the

mine itself has less than 3 years of life left, based

on current resource figures. In Portugal, the

Beralt mine has very little scope for significant

expansion and the Mittersil mine in Austria

produces tungsten principally for in-house use

and is therefore unlikely to supply much material

to the free market.

New projects are obviously the way forward for

the tungsten market to secure future supplies of

material and there are a number of candidates

spread around the world. However, despite the

rise in tungsten prices and the evident needs of

the tungsten market progress has been slow. The

credit crisis and subsequent economic slowdown

in 2009, followed by the current economic woes

in the Eurozone, have affected confidence and

outside financing has been difficult to come by.

Additionally, the lack of knowledge regarding the

tungsten industry in the finance sector and the

fact that it has not been regarded as ‘critical’ ion



the way that rare earths have, for example, has

also hindered the progress of tungsten projects.

There are signs that this situation is beginning to

change and at the governmental level tungsten is

now regarded as a critical/strategic material. The

EU has categorised tungsten as a ‘critical raw

material’, while the British Geological Survey in

the UK put tungsten at the top of its list of

‘supply-risk’ materials. There seems to be more

awareness that an over reliance on Chinese

supply is not prudent or sustainable and that

tungsten projects should be encouraged.

However, earlier this year the USA, the EU and

Japan filed a challenge with the WTO against

China’s export restrictions on certain critical

materials, including tungsten. It is unlikely that

this will lead to China exporting more tungsten

and if consumers outside China want to secure

future supplies then projects in the West would

be a better bet.

There have been a number of developments that

suggest that the progress of some of the major

tungsten projects has accelerated. For example,

Wolf Minerals received credit approval for £55M

from three banks in March this year, which

means that the company now has almost three

quarters of the £110M required to begin

production. At the Sangdong project in South

Korea, Woulfe Mining has recently announced

that it had signed an MoU for debt financing of

US$104M, while a unit of Warren Buffet’s

Berkshire Hathaway Inc. announced that it was

acquiring a 25% stake in the project. Northcliff

Resources Ltd. has now acquired full ownership

of the Sissons tungsten project in Canada from

Geodex, while Masan Resources is accelerating

the development of the Nui Phao project in

Vietnam. EMC Metals is working towards

restarting the Springer tungsten mine in the USA

and Ormonde Mining is progressing its

Barruecopardo project in Spain.

Despite all the developments at the various

tungsten projects, significant tonnages of

tungsten from new sources are unlikely before

2013 at the earliest. Any further delays in

financing, permitting etc. could push this back to

2014.



Significant Tungsten Projects

Project Company Planned output Start-up Remarks

Currais Novos Largo Resources 180tpy W in 2012 330tpy W from 2013

Q3 2011 Commercial production of tungsten in December 2011

Wolfram Camp, Australia

Deutsche Rohstoff 1,250tpy W Q4 2011 In production, first concentratres shipped in March 2012.

Mt. Carbine, Australia

Carbine Tungsten Ltd.

520tpy W from 2012 1,980 tpy W from 2014

Q1 2012

First shipment of concentrates in July 2012 from tailings. Hard rock mining from 2014

Nui Phao, Vietnam Masan Group 3,800tpy W Q2 2013 New investment certificate and mining licence secured

Sangdong, South Korea

Woulfe Mininig 3,150tpy W Q3/4 2013 Feasibility study completed in April 2012

Barruecopardo, Spain

Ormonde Mining 1,800tpy W Q4 2013 DFS completed February 2012

Hemerdon, UK Wolf Minerals 2,750 tpy W Q4 2013 Approx. 70% of funding secured

Molyhil, Australia Thor Mining 1,750tpy W Q4 2013 Updated DFS published in June 2012

Cookes Creek/Big Hill, Australia

Hazlewood Resources

1,600tpy W 2014

Sisson, Canada Northcliff Resources 3,500tpy W 2014 Feasibility study due for completion Q3 2012

Watershed, Australia

Vital Metals 1,000tpy W 2014 DFS in progress

Springer, USA

EMC Metals 1,100tpy W 2013/2014 Working towards strategic restart

Mt. Lindsay, Australia

Venture Minerals 1,500tpy W 2014 Pre-feasibility study completed Mar 2011

King Island, Australia

King Island Scheelite

800tpy W from tailings 2,750tpy W hard rock (+3 years)

2014/15 DFS completed February 2012, funding to be secured

O’Callaghans, Australia

Newcrest 3,800tpy W ?

Mactung, Canada

N. American Tungsten

7,000tpy W ? NI 43-101 technical report completed April 2009

Northern Dancer, Canada

Largo Resources 6,500tpy W ? Pre-feasibility study under way

Sautbay, Uzbekistan

Uzbek-Korean JV 1,200tpy W ? JV signed in August 2011 for US$120M project



Demand

Tungsten demand has historically correlated

quite closely with general economic activity,

particularly as tungsten is mostly used in mature,

industrial applications rather than in faster

growing newer technologies. In recent years,

growth in tungsten consumption has

outperformed world GDP growth as the influence

of China (and its high economic growth rates) has

increased. China now accounts for around 50%

of world tungsten demand according to the ITIA

and therefore has a commensurate effect on

world consumption.

In common with most metals, demand for

tungsten has suffered from the recessionary

conditions brought on first by the ‘credit crunch’

in late 2008 and 2009 and, more recently, by the

crisis in the Eurozone. In 2009, world tungsten

consumption fell by over 25% from the peak in

2007 before recovering all of that drop in 2010

and 2011. Preliminary data suggest that demand

in 2012 will have been affected by the problems

in the Eurozone and the recessionary conditions

in most of the European economies. World

demand may increase slightly in 2012, but the

most likely outcome is for flat or even negative

growth over the year.

The tungsten market is entering the summer lull,

so there has been very little concrete news on the

demand side of the equation. However, this has

been more than made up for on the

macroeconomic front. The travails of the

Eurozone and the banking sector in a number of

European countries have dominated the

headlines and the impact on economic growth

worldwide could be significant.

A number of European economies are in

recession and even growth in Germany, which is

the largest economy in the region, is unlikely to

be enough to drag the whole of the regional

economy into positive growth in 2012. This is

likely to have a major impact on tungsten

demand as Europe is still a significant market for

tungsten. Europe’s share of world tungsten

consumption has been as high as 30% in the last

10 years, but its importance has waned and, with

the lower economic growth rates and the current

problems, Europe currently accounts for less than

15% of world demand. Nevertheless, the

difficulties experienced in Europe are a worry for

the tungsten industry as a whole because, while

demand for tungsten in Europe may be down,

European consumption of products that use

tungsten (e.g. cutting tools, drill bits, light bulbs

etc.) must also be factored into the equation.

There are also fears that the issues that have

plagued the European countries may spread to

the other major economies and that the

Eurozone crisis might ‘contaminate’ the global

market. China and the other BRICS countries

have been the engine behind global economic

growth in the last few years and this has been no

different for consumption of tungsten. However,

there are signs that growth in these countries is

slowing down and it may be that the tungsten

industry cannot rely on them to take up all of the

slack from slow or negative growth in other

regions. Growth in India for example has

dropped from double digits to a forecast 6-6%py

in 2012, while even in China, growth rate

forecasts are being downgraded and current

predictions are showing economic growth at

7.5%py for 2012 compared to over 10%py

between 2007 and 2011.



Trade

Despite the restrictions on exports of ores and

intermediate products, China is still the main

supplier of tungsten and tungsten products to the

rest of the world and is likely to remain so for the

foreseeable future. However, there is a

continuing shift in emphasis and, while supplies

of ores, concentrates and tungstates may come

from new projects, China will move further down

the value chain and look to export more

processed forms of tungsten and increasingly

those end products that contain tungsten.

The major trade flows for tungsten are obviously

from China, the main producer, to the larger

economies such as the USA, Japan and Europe,

the principal consumers. However, in recent

years, China has restricted exports of tungsten

and tungsten products, particularly for ores and

concentrates and intermediate products such as

ATP and oxides, in order to protect its domestic

tungsten industry. In fact, China is now a

significant importer of tungsten ores and

concentrates to the tune of an average of up to

10,000tpy (gross weight).

The principal exporters of tungsten ores and

concentrates currently are Russia, Canada,

Portugal and Bolivia, while the USA and Germany

are the main importing countries other than

China. For tungstates, exports come from China,

the Netherlands and the USA with principal

destinations being Germany, the USA and Japan.

Ferrotungsten is exported from China, the

Netherlands, Germany and Brazil, mainly to the

Netherlands, Japan, Germany, Austria and the

USA. Finally, the main trade flows for tungsten

metal (including waste and scrap) are from China,

Germany, the USA, the UK and South Korea to

Germany, the USA, the UK and Japan.

China has been gradually reducing its export

quota for tungsten. In 2012, the quota was set at

15,400t, which was 300t less than the 15,700t

quota in 2011, which itself was 300t less than the

2010 quota. In July, the Chinese authorities

issued the second list of quotas (H2 2012) for a

number of metals, including tungsten. The

second list covers 40% of the total export quota

for the year. The first batch, which covered 60%

of the quota, was announced in the last week of

December 2011. In the second list, the export

quota for tungsten and products was 7,587t,

compared to 11,380t in the first list.

To underline the difficult conditions in the

tungsten market in 2012, Chinese trade in

tungsten and tungsten products was down in the

first quarter of the year. China’s imports of

tungsten concentrate in the first three months of

2012 fell just over 8% against the same period in

2011 to 2,384t, according to official customs

data. Exports of tungsten trioxide from China fell

38% in the same three month period, while

exports of tungsten carbide were only down 7%.

By contrast, average values of Chinese trade in

tungsten products was generally up significantly,

reflecting the higher prices for tungsten

compared to the previous year. The average

value of China’s tungsten trioxde exports was

generally up by around 15% in the first three

months of 2012 compared to the same period in

2011. Average values of tungsten carbide exports

from China were significantly higher at levels of

between 40 and 140% (although the average

value of exports to Thailand were up over

1,800%!). Import values were also up with the

average value of China’s imports of tungsten

concentrates higher by between 10 and 100% in

the first three months of 2012 depending on the

country of origin.



Prices

Tungsten prices have outperformed other similar

metals over the past three to four years,

illustrating the relatively strong fundamental

position in the tungsten market. However, the

current problems in the Eurozone have affected

economic growth in Europe and tungsten prices

have followed suit. European APT prices have

dropped by around 10% during 2012, compared

to a 15% fall in nickel prices over the same

period.

Fears that the Eurozone crisis would

‘contaminate’ the global economy seem to have

only been partially realised in the tungsten

industry, as Chinese APT prices for export are

only down by 5% during 2012. Interestingly

however, internal APT prices in China have fallen

by almost 20% in 2012, which would suggest that

a lack of demand is affecting the domestic

Chinese tungsten industry and by extension the

global market.

The global recession in 2009 led to a 20% fall in

APT prices, although most of this drop came in

the first half of the year as prices stabilised in

second half of 2009 on a brighter outlook for

world economic activity. The structural strength

of the tungsten market was illustrated by the

relative performance of tungsten prices when

compared to similar metals such as cobalt,

molybdenum and nickel. While tungsten prices

dropped by around 18% year-on-year in 2009,

cobalt prices dropped by 54%, molybdenum by

59% and nickel by 31% (although nickel prices

had already fallen by 43% in 2008).

Since the ‘credit crunch’ and economic recession

in 2009, the recovery in tungsten prices has also

been quicker and stronger than similar metals, as

the price index chart above illustrates. This is a

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Index of Prices: 2000 to 2011

Tungsten

Cobalt

Molybdenum

Nickel



major clue to the current tightness in supply of

tungsten to the market. This supply constraint

may be eased in the coming years by a number of

potential tungsten-producing projects that are at

various stages of development around the world.

Outside of China, significant tungsten projects are

located in Australia, Canada, South Korea, the UK

and Vietnam.

Chinese tungsten prices are obviously the main

barometer of global market levels as it is the

main producer and supplier of most forms of

tungsten from intermediates, such as APT and

oxides, to more processed products, such as

tungsten carbide and tungsten metal powders.

One product that China is no longer supplying

globally is tungsten concentrates, although

internal Chinese concentrate prices provide a

good indicator.

Chinese prices for tungsten concentrates, APT,

oxide and carbide have followed very similar

trends in 2012, as might be expected. Overall,

prices have fallen by between 10% for tungsten

oxides and 20% for both tungsten concentrates

and APT. Prices for tungsten carbide in China fell

by around 15% over the same period. There was

a slight improvement in tungsten prices in May

2012, but a lack of demand during the summer

‘lull’ have meant that prices continued their slow

decline between June and August.

Tungsten concentrate prices in China remain

depressed due to weak demand from smelters,

which are in turn suffering from a lack of

downstream tungsten demand. The short term

future for tungsten prices in China is for a further

drifting downwards as there appears to be a lack

of downstream demand affecting the upstream

industry. Global tungsten prices have fallen by

less than Chinese prices and there has been very

little business in the summer months with prices

remaining stagnant. The most likely scenario is

for a firming in tungsten prices in the final quarter

of the year as demand returns to the market.

Further forward, tungsten prices should return to

an upward trend if demand firms up towards the

end of the year and the beginning of 2013, as

supply from new projects is unlikely to impact on

the market until the end of next year at the

earliest.



Statistics

Chinese exports of tungsten trioxide, Q1 2012

Destination Tonnes Y-o-Y change Value US$ Y-o-Y change

Japan 424 -12.94% $18,268,593 +12.86%

South Korea 126 -13.10% $5,504,384 +18.22%

United States 62 -11.43% $2,690,961 +13.73%

Sweden 60 -72.73% $2,618,324 -63.68%

53%

16%

8%

8%

15%

Destinations

Japan

South Korea

United States

Sweden

Others

0

100

200

300

400

500

600

700

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

China Tungsten Trioxide Exports: March 2011 to March 2012

Tonnage



Chinese exports of tungsten carbide, Q1 2012

Destination Tonnes Y-o-Y change Value US$ Y-o-Y change

Japan 344 +16.22% $20,215,626 +139.15%

United States 129 +18.35% $8,070,611 +74.24%

Thailand 114 +1,040.0% $6,789,371 +1,833.19%

India 41 +485.7% $65,884 -80.61%

Germany 31 -6.06% $2,050,808 +37.10%

48%

18%

16%

6% 4%

8%

Destinations

Japan

United States

Thailand

India

Germany

Others

0

50

100

150

200

250

300

350

400

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

China Tungsten Carbide Exports: March 2011 to March 2012

Tonnage



Chinese imports of tungsten concentrates, Q1 2012

Origins Tonnes Y-o-Y change Value US$ Y-o-Y change

Russia 716 +18.15% $13,288,417 +68.86%

Canada 568 +2.90% $12,941,958 +58.86%

Rwanda 383 +45.63% $7,873,170 +104.51%

Mongolia 301 +11.35% $4,832,901 +12.37%

Philippines 107 N/A $246,908 N/A

Bolivia 85 -21.30% $2,220,671 +13.53%

Columbia 74 N/A $1,719,343 N/A

30%

24% 16%

13%

4% 4%

3% 6%

Origin

Russia

Canada

Rwanda

Mongolia

Philippines

Bolivia

Columbia

Others

0

200

400

600

800

1000

1200

1400

1600

Mar Apr May Jun Jul Aug Sep Oct Nov Jan Feb Mar

China Tungsten Concentrates Imports: March 2011 to March 2012

Tonnage



-25000

-20000

-15000

-10000

-5000

0

5000

10000

15000

20000

25000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Note: Imports are expressed as a positive number, while exports are expressed as a negative

Trade in tungsten ores and concentrates, 2002 to 2010 (t)

Other

United States

Germany

China

Other

Russia

Portugal

Canada

Bolivia

-20000

-15000

-10000

-5000

0

5000

10000

15000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Trade in tungstates, 2000 to 2010 (t)

Other

United States

Switzerland

Japan

Germany

Other

United States

Russia

Netherlands

China



-15000

-10000

-5000

0

5000

10000

15000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Trade in ferrotungsten, 2000 to 2010 (t)

Other

Netherlands

Japan

Germany

Austria

Other

Netherlands

China

-30000

-20000

-10000

0

10000

20000

30000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Trade in tungsen metal, including waste & scrap, 2000 to 2010 (t)

Other

United States

United Kingdom

Japan

Germany

Other

United States

United Kingdom

Japan

Germany



In 2012, the International Tungsten Industry

Association (ITIA) celebrates its 25th

anniversary. In advance of the association’s

AGM in Beijing, Burghard Zeiler, the current

Secretary-General, and Michael Maby, the

former Secretary-General, were happy to sit

down and talk about the history of the ITIA and

its future aims.

According to Mr. Maby, the ITIA has its roots in

the Primary Tungsten Association (PTA), which

was set up in 1975 and introduced a tungsten

pricing indicator. The indicator tried to take in

tungsten contract business as well as the spot

business published by Metal Bulletin.

Unfortunately, a combination of factors, including

the decline in the tungsten industry in the 1980s,

led to the pricing indicator becoming less and less

representative and it was discontinued in around

1991.

The ITIA itself was inaugurated in 1988 and its

first meeting was in February 1988. Membership

quickly grew to 64 by the end of the year and

despite some initial reticence from Asian

members, there were eight companies from

Japan participating in the 1989 AGM in Tokyo,

ITIA executives told Metal-Pages. Chinese

companies took longer to come on board, but by

1993 there was sufficient support for the 6th

AGM and 6th International Tungsten Symposium

to be held in Guangzhou, hosted by the

Nonferrous Metals Society of China and the China

Tungsten Industry Association.

Initially, the main activities of the ITIA were to

recruit new members using a regular bulletin and

then a newsletter. A programme of industry and

general papers to attract paying delegates to the

AGMs and symposia also helped build the

association and supplement its income from

subscriptions. Mr. Maby said that perhaps as

importantly, the ITIA began collecting statistics to

provide transparency to the industry, focusing on

production, consumption and stocks for various

tungsten products, although at the time Chinese

companies did not contribute to this data.

Annual Market Reports were released and the

ITIA also monitored health and environmental

issues that affected the industry.

A point stressed by both Mr. Maby and Mr. Zeiler

was that the ITIA was set up to cater for the

entire industry rather than a particular interest

group, unlike some associations than tend to be

forum for producers and where consumers tend

to be sidelined. The composition of the ITIA lends

itself to more open debate and argument, which

is a healthy situation for the many companies

that depend on tungsten for their survival.

A major focus for the association’s time and

resources and a concern for Mr. Maby in his last

years as Secretry General has been the ITIA

Health, Safety and Environment Committee and

more particularly the tungsten industry’s

An Interview with the ITIA



response to the EU’s REACH legislation. Most of

the work has been completed with the setting up

of the REACH consortium for tungsten. Ten

tungsten substances are now registered, which

covers most of the materials of interest to ITIA

members, Mr. Maby said.

While the REACH legislation will continue to

occupy some of the ITIA’s budget and efforts, Mr.

Zeiler believes that going forward the association

sees its focus to be on issues such as education

and informing a wider audience about tungsten.

Rather than lobbying, the role of the ITIA is to

provide sound scientific research and data to

inform governmental decision making, most

pertinently in the field of health and safety. As a

result, the association monitors proposed

legislation relating to tungsten and develops

scientific data on the impact of tungsten on

health and the environment through sponsoring

the relevant scientific research. The ITIA is

looking to be proactive rather than reactive with

legislative bodies on HSE issues, because as Mr.

Zeiler said it is almost impossible to overturn

legislation once it has been enacted, particularly

where general public health is concerned.

As part of a broad education brief, the ITIA

creates awareness and promotes current and

new applications for tungsten and tungsten

products. However, as Mr. Maby mentioned,

uses for tungsten are well known and established

and most of the research into new applications

for tungsten or new ways of using tungsten in

current applications is carried out by the member

companies themselves. The association does

have a technical consultancy that is available to

advise members if required on subjects such as

mine development, processing etc. In the wider

community the ITIA is preparing an education

pamphlet for schools and providing information

through a new website and various brochures on

different aspects of the tungsten industry.

Recycling and sustainability is seen as a recent

phenomenon, but an increasingly important one.

The ITIA recognises this and another mission for

the organisation is to increase awareness of

recycling of tungsten metal and other products

containing tungsten within the industry and in

the community.

China plays a key role in the global tungsten

market and the ITIA has been keen to promote

and maintain contacts with industry associations

in China, most especially the China Tungsten

Industry Association (CTIA). In fact, as Mr Maby

pointed out, the CTIA was originally a member of

the ITIA until most of the main members of the

CTIA also became members of the ITIA. To this

end, the ITIA is planning to sign a memorandum

of understanding with the China Non-ferrous

Industry Association (an umbrella organisation

that includes the CTIA) for cooperation in the

areas of statistics (collections and collation), HSE,

and recycling and sustainability.

It is fitting in this context that the ITIA’s 25th

anniversary annual general meeting will be

hosted by China Minmetals Corp. and held in

Bejing, China in September 2012. The association

is committed to providing regular meeting fora

for the tungsten industry worldwide. As

Secretary-General Zeiler said in the interview

“The tungsten industry is like a family and the

AGM is the family’s Christmas party”.

WorldTungsten_Sept2012

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