A metal ore-filled stone is depicted these inside a German mine owned by Saxony Minerals and Exploration.
Picture Alliance | Getty Images | Picture Alliance
BEIJING — China dominates the supply chain for many of the country’s essential nutrients, but so far it’s held off on sweeping restrictions on at least one: metal.
The steel has a high energy density and is almost as hard as diamonds. That’s made tungsten an important substance in arms, autos, electric car batteries, electronics and technological cutting machines. Taiwan Semiconductor Manufacturing Company, a manufacturer of semiconductors and Nvidiaboth use the material.
” I do n’t expect any saber-rattling over tungsten,” said Lewis Black, CEO of Canada-based Almonty Industries, which is spending at least$ 75 million to reopen a tungsten mine in South Korea later this year.
” If you get too aggressive about growth, [it becomes a condition that’s ] biting the hand that feeds you,” he said, adding that “tungsten has always been a political material. “
China did not include metal in new regulations to increase its oversight of local rare earths production, despite the Biden administration’s May-imposed tariff increases.
But China might not be too concerned, because the Chinese government ignored the new taxes… Because the Chinese do n’t want tensions to rise, they completely ignored it.
Lewis Black
CEO of Almonty
Because Biden only imposed tariffs on three of China’s 25 corporate metals, Black said,” the tariffs were more of a warning picture. “
” Unlike in the past, when some imports of rare earths were restricted, China might not be too worried,” he said. Because the Chinese do n’t want tensions to rise, they completely ignored it. “
asked next month if China may respond to the most recent U. Ș. Ș. tariffs on tungsten, China’s Ministry of Commerce spokesperson He Yadong did n’t announce countermeasures. Otherwise, he called on the U. Ș. to eradicate the extra duties.
Fastmarkets, a provider of product value reporting and analysis, reported earlier this year that China has lowered its tungsten mine production quotas as a result of economic restrictions.
Leaving China and moving elsewhere
Black does not doubt that his business will gain from expanding its efforts to avoid China. According to Almonty, the upcoming plant in South Korea has the potential to produce 50 % of the world’s ex-Chinese metal offer.
The need for non-Chinese titanium is already rising.
” We see in the U. Ș. Ș. , in Europe, they ask their vendors for a China-free offer network,” said Michael Dornhofer, founder of metal consulting firm Independent Supply Business Partner.
A fresh working class on the United States was announced last month by the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party. Ș. essential minerals coverage.
Soaring metal rates
Prices have increased to multi-year highs despite declining over the past few months as a result of higher demand and limited materials of metal.
Dornhofer claimed in an interview in late May that he was seeing Chinese customers making more titanium.
” Since the beginning of this yr, they are not only asking for Western focus, but they are buying important quantities, paying even more than American companies are willing to give,” he said. ” Definitely [going to be ] a game changer. “
Tⱨe U. Ș. CNBC asked for opinion on this account, but the Bureau of Industry and Security at the Department of Commerce did not respond right away.
Just six companies are there in the United States, according to Brandon Beylo, brain of investment research at Macro Ops, in an email. Ș. with capacity to produce titanium. He added that the U. S. has n’t produced tungsten domestically since 2015, implying a potential U. Ș. Ș. supply had come from abroad.
He said the firm does n’t own tungsten-related stocks, but that he’s personally looking for ways to access the physical product. There are no prospects for investing metal.
Another metal players visiting South Korea
Despite Chinese exports of the material from North Korea, northern Africa, and Myanmar, local production costs are rising as the mines years, according to Argus, which notes that China controls more than 80 % of the metal supply chain.
” This presents an opportunity for jobs outside China,” Mark Seddon, director, consulting and insights at Argus, said in a June 28 conference.
Another non-Chinese businesses in the metal offer network are relocating to South Korea.
In February, IMC Endmill, an affiliate of Warren Buffett-owned IMC Group, signed an agreement with the Daegu city state for a 130 billion Asian gained ($ 93. 6 million ) purchase in a metal powder production facility, according to a local media report.
CNBC asked for post on a delay-sensitive IMC Group response.
Over the past few decades, China’s position has grown in the world’s essential nutrients supply chains.
Dornhofer noted that efforts to produce metal outside of China have been stalled for years, including programs for a plant in New Brunswick, Canada, that would have substantially increased the world’s metal capability.
He claimed that all of these initiatives have been on the tables since 20 centuries ago. ” When people tell you in two years, three times they will be in operation, it’s a question of whether you believe them. On the other [hand], the metal is in the ground. It’s still there. “
Almonty claims to be the biggest tungsten producer outside of China, with operations currently largely in Portugal and Spain. The upcoming me in Sangdong, South Korea, closed in the 1990s.
Black anticipates that his company will only account for 7 % or 8 % of the world’s tungsten supply once the mine reopens later this year.
” We’re not crowding out any Chinese,” he said. ” We do n’t intend to. “
” Now if we’re going to produce 30 % to 40 %, I’m taking a battle with China, which would n’t be a smart thing to do. “
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