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 surge in demand comes despite China's own substantial
tungsten production, which accounted for 67,000 of the 85,000 metric tons produced globally in 2025. The U.S. has not mined tungsten since 2015, relying instead on imports and recycling. The increased demand for tungsten is driven by its critical applications in manufacturing, defense, and automotive industries. Tungsten is used in tooling for engine blocks, ballast in racing cars, and armor-piercing munitions. The price of scrap tungsten has risen by 350% since May 2025, outpacing the increase in the price of refined tungsten metal.
Why It's Important?
The aggressive purchasing of tungsten scrap by China highlights the strategic importance of this metal, especially for the U.S., which lacks domestic mining operations. Tungsten is essential for various industries, including defense, where it is used in munitions that cannot be recycled. The U.S. military's reliance on tungsten for ammunition underscores the national security implications of this supply chain vulnerability. As global demand for tungsten increases, particularly in defense and automotive sectors, the U.S. faces potential supply shortages and increased costs. This situation underscores the need for the U.S. to develop domestic sources of tungsten or secure reliable international supply chains to mitigate dependency on foreign sources.
What's Next?
Efforts are underway to address the tungsten supply issue. Almonty Industries has begun mining at its Sangdong project in South Korea, with plans to supply a significant portion of its output to the U.S. for munitions production. Additionally, the U.S. is exploring joint ventures with Kazakhstan to develop tungsten resources. However, these projects will take time to come online, and there is no immediate timeline for restarting commercial tungsten mining in the U.S. In the interim, the U.S. will continue to rely on imports and recycling, with the latter becoming increasingly valuable as demonstrated by China's willingness to pay premiums for scrap tungsten.
Beyond the Headlines
The tungsten supply issue reflects broader geopolitical and economic challenges. China's control over critical minerals like tungsten and rare earth elements gives it significant leverage in global markets. The U.S. must navigate these dependencies while balancing environmental and economic considerations in developing domestic mining capabilities. The situation also highlights the importance of recycling and the potential for scrap materials to become strategic assets in the face of supply constraints. As the U.S. seeks to bolster its supply chains for critical minerals, it must also consider the environmental impacts and regulatory challenges associated with mining and processing these materials.
