What's Happening?
China, which controls 80% of the global tungsten supply, has been aggressively purchasing scrap tungsten from American scrapyards, offering up to five times the market price for worn-out drill bits. This unusual activity comes despite China's own significant
tungsten production and recent export restrictions. The U.S. has not mined tungsten since 2015, relying instead on imports and recycling to meet its needs. Tungsten is crucial for various industries, including automotive, aerospace, and defense, where it is used in engine blocks, ballast plates, and armor-piercing munitions. The surge in scrap tungsten prices, which have increased by 350% since May 2025, highlights the growing demand and tight supply in the market.
Why It's Important?
The aggressive purchasing of tungsten scrap by China underscores the strategic importance of this metal, particularly for the U.S., which lacks domestic mining operations. Tungsten's role in critical industries such as defense and automotive makes its supply a national security concern. The U.S. military's reliance on tungsten for munitions, which cannot be recycled, further exacerbates the supply issue. As global demand for tungsten continues to rise, the U.S. faces increasing pressure to secure reliable sources, either through new mining projects or enhanced recycling efforts. The current situation highlights the broader challenge of mineral dependency and the need for strategic resource management.
What's Next?
Efforts are underway to address the tungsten supply challenge. Almonty Industries has begun mining at its Sangdong project in South Korea, with plans to supply a Pennsylvania facility that supports munitions production. Additionally, the U.S. is exploring joint ventures with Kazakhstan to develop tungsten resources. However, these initiatives will take time to impact the market, as new mining operations are not expected to commence in the U.S. in the near future. Meanwhile, the U.S. must navigate the immediate supply constraints by maximizing recycling and exploring alternative sources.
Beyond the Headlines
The tungsten supply issue reflects a broader geopolitical dynamic where China holds significant control over critical minerals, impacting global supply chains. This situation raises questions about the sustainability of current resource management practices and the need for diversification of supply sources. The U.S. may need to reconsider its approach to mineral resource security, potentially increasing investment in domestic mining and recycling technologies. The strategic importance of tungsten and similar minerals could drive policy changes aimed at reducing dependency on foreign sources.
