Vietnam's tungsten supply chain asserts its global market position

The mineral processing plant at Masan High-Tech Materials' Nui Phao polymetallic mine

Strained supply chain

With a strict lockdown policy, global trade witnessed a sudden and complete halt in imports and exports, disrupting the global tungsten supply chain.

Supply shortages have led to a high European spot price for APT – chemically extracted and separated tungsten concentrate. European prices for APT increased by nearly 39 per cent early last year according to the Argus Analytics outlook report.

There has been almost no new supply of the material in the market for years. According to World Trade Organization statistics, the US, Europe, and Japan consume about 55 per cent of the global supply of tungsten but only produce about 5 per cent.

Supply chain tension and rising prices have led US traders to seek new sources outside of China. The US is rich in minerals but has no tungsten mines at all. In 2013, EMC Metals – an American tungsten mining company – made efforts to open the Springer mine in Nevada to ease the pressure on domestic manufacturers. However, the US administration still has to import up to 40 per cent of its tungsten from China each year.

China is restricting tungsten exports to the US market, as highlighted in the United States Geological Survey’s (USGS) 2019 Mineral Commodity Summaries.

Global industry and defence cannot rely on the supply from Russia to cater for the shortage as it has struggled to compete with China.

A study on tungsten development strategy published in the US Journal for Resources, Conservation, and Recycling stated that 70 per cent of China’s tungsten reserves are Scheelite, a low-grade ore that requires energy-intensive mining. This could further undermine China’s capability to supply raw tungsten globally.

The latest forecasts all highlight that the supply strain is not likely to end soon. Global tungsten manufacturers and traders are facing two options, either partnering with countries that have existing mines or investing in new mines in other potential countries.

Applications for tungsten products

New supply from the world’s leading integrated supplier

The tungsten market regained its momentum late last year, after several years of oversupply and low prices. According to Mirae Asset Securities (MASVN), the recovery of the global economy has pushed the Tungsten price up to $350 per metric ton unit (MTU), an 11 per cent increase compared to the end of last year, and 24 per cent higher than the 2021 average.

The price of Tungsten will continue to increase in the coming time, MASVN said. The company believes that the demand for change in automotive technology from gasoline to electric vehicles and military conflicts are significant drivers of the tungsten price increase, which is projected to exceed the historic peak of $450/MTU established in 2011 when the world recovered from the 2008 economic crisis.

According to a report released by 360 Research Reports in January, the global tungsten market was valued at around $1.8 trillion in 2020 and is expected to reach nearly $2.4 trillion by the end of 2027 at a compound annual growth rate of 4.2 per cent.

According to data from the USGS, Vietnam possesses the world’s third-largest tungsten reserves with 95,000 tons, followed by Russia with 400,000 tons, and China with 1.9 million tons. Masan High-Tech Materials’ products from its Nui Phao mine have gradually gained worldwide recognition. The company is becoming a partner of choice for major businesses around the world as Nui Phao is also one of the world’s largest proven tungsten reserves, with 52.5 million tons of WO3 ore at an average grade of 0.21 per cent.

Now that production has returned to normal, many global manufacturers want to benefit from the tungsten supply chain from Vietnam. Some US manufacturers also believe that the supply from Masan High-Tech Materials not only enables them to ease their dependence on Chinese tungsten but also avoids the high import tariffs of 15 per cent imposed on products from China in 2018.

Masan High-Tech Materials’ market share is growing every year, making it a major supplier of key industrial minerals, including Tungsten, Fluorspar, and Bismuth.

The company currently focuses on going downstream for four product lines to improve the value of minerals. In 2020, it completed the acquisition of H.C. Starck Tungsten Powders and established a strategic alliance with Mitsubishi Materials Corporation through an investment of $90 million, equivalent to 10 per cent of Masan High-Tech Materials’ shares.

Craig Bradshaw, general director of Masan High-Tech Materials stated, “We are researching and developing advanced mineral materials and sourcing stable and long-term supplies.”

Masan High-Tech Materials has an extensive customer portfolio in the American and European markets and receives positive feedback on its product lines.

“Our strong market position is based on innovation, investment in technology, and highly skilled experts,” said Bradshaw.

The world needs a steady supply of advanced materials to meet major global trends in renewable energy, electric vehicles, recycling, urbanization, and sustainable development. Masan High-Tech Materials is not only ready to participate but also well-placed to lead technological developments in these areas. The company has avoided direct competition with Chinese producers. Instead, it has created a potential market to become a sustainable manufacturer, ensuring the long-term supply for its partners.