What's Happening?
Tungsten prices have reached record highs in January 2026 due to China's tightened export licensing regime, which has significantly impacted the global supply of this critical mineral. China, which dominates over 80% of global tungsten production and
controls the entire value chain from mining to chemical processing, has introduced additional export licensing controls. This move has created a structural vulnerability in manufacturing sectors that rely heavily on tungsten for its unique properties, such as high melting point and exceptional hardness. The situation has prompted a response from Kazakhstan, where a joint venture between Cove Capital and Tau-Ken Samruk has announced a large-scale tungsten project. However, the success of this venture depends on Kazakhstan's ability to develop competitive downstream refining capacity.
Why It's Important?
The tightening of tungsten supply by China has significant implications for global manufacturing sectors, particularly those in the U.S. that depend on tungsten for machine tools, aerospace components, and advanced electronics. The price surge reflects a structural vulnerability in the supply chain, highlighting the strategic leverage China holds due to its control over tungsten processing. This situation underscores the importance of diversifying supply sources and developing independent refining capacities to mitigate reliance on Chinese exports. The joint venture in Kazakhstan represents a potential shift towards achieving strategic independence, but its success hinges on overcoming execution risks and building effective downstream capabilities.
What's Next?
The next steps involve monitoring the development of Kazakhstan's tungsten project and its ability to establish a competitive refining capacity. If successful, this could reduce global reliance on Chinese tungsten and stabilize supply chains. Additionally, Western governments may increase efforts to secure alternative sources and invest in refining technologies to counteract China's strategic leverage. The situation may also prompt further regulatory and policy responses aimed at safeguarding critical mineral supplies.
Beyond the Headlines
The current scenario highlights the geopolitical dimensions of mineral supply chains, where control over processing capabilities can translate into significant strategic power. The focus on refining capacity rather than just mining scale is crucial, as it determines the real chokepoint in the supply chain. This development may lead to increased investment in refining technologies and partnerships aimed at reducing dependency on single-source suppliers, thereby enhancing global supply chain resilience.
