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China has had a long standing monopoly on the tungsten market, and has taken some questionable moves to maintain their domination of the market.
By Leia Michele Toovey- Exclusive to Tungsten Investing News
China has had a long standing monopoly on the tungsten market, and has taken some questionable moves to maintain their domination of the market. Currently, the country produces about 85 percent of the world’s tungsten production. In the past, when western nations have increased tungsten production, China has opened up their exports, flooding the markets, and effectively devaluing the metal and forcing western producers to stop production.
Over the past few months, China has made a few key moves that will likely culminate in rising tungsten prices. The latest move involves China declaring tungsten a strategic metal, which means that the country will no longer offer any tax breaks, and instead will tax exports. Last March, the Asian nation announced that no new miner permits would be issued until mid 2011. The country also openly declared that it would curb domestic production to 80,000 tonnes per year. Its annual consumption of the metal is roughly 25,000 tonnes. The next largest consumer, the United States, requires around 11,000 tonnes per annum.
While China reins-in output, the global demand picture is improving. Tungsten’s most notable uses include light bulbs and aerospace technology. Tungsten is a wear-resistant metal that is used heavily in mining and manufacturing. It seems clear that as the economy improves, tungsten will be in demand. With China accounting for 85 percent of production, their cutback in output will mostly likely result in rising prices for the metal. Forecasters estimate that APT prices will hit $300 per mtu by 2012.
Company News
Tungsten miner Hazelwood Resources (ASX: HAZ) has received a maiden ore estimate for Big Hill tungsten deposit in Western Australia. The ore estimate conducted by Orelogy Pty Ltd, shows the potential for a 12 year initial mine life, recovering approximately 2.1 million metric tonne units of tungsten concentrate. The ore estimate forms one of the final elements of the pre-feasibility study for Big Hill. A detailed mine schedule is being integrated into the pre-feasibility financial model, which the company said it expects to be released around the end of April 2010.